The Swiss Attorney General’s Office and the FBI announced early this morning that nine FIFA officials have been arrested, after raids in their five-star hotels in the early morning hours in Zurich.
The FIFA executives had been gathering in preparation for FIFA’s annual meeting which included a presidential election on Friday. The Swiss officials confiscated all materials with those FIFA executives. One of those officials is current CONCACAF president, Jeffery Webb. Webb had promised to end corruption in the region after Jack Warner was forced out of the presidents position because of similar charges.
The Swiss charges were linked with an FBI investigation that was revealed this morning – detailing more corruption in the CONCACAF and CONMEBOL regions that took place in the US, Central and South America. Involved with those charges of racketeering, wire fraud and money laundering are José Hawilla, the owner and founder of the Traffic Group and Traffic USA. According to the FBI indictment that was opened early this morning in federal court in Brooklyn, New York, Hawilla waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice. Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.
The FBI report states that on May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.
The statement said, “All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.”
Aaron Davidson, chairman of the board of governors of the North American Soccer League and president of Traffic Sports was also listed in the indictment.
Davidson worked as an attorney for Traffic Sports under Brazilian Traffic Sports executive, Julio Mariz. When Mariz returned to Brazil to run Traffic Sports Davidson took over as president. He has played an important role with both Traffic Sports and Traffic USA. Davidson negotiated marketing, ticket and TV rights with both CONCACAF and CONCABOL.
In 2012, Traffic won many of the marketing and TV rights for CONCACAF tournaments. The rights were formerly owned by Soccer United Marketing (SUM), MLS’s marketing arm.
In April of 2014 a new multi-year renewal agreement was reached between CONCACAF and Traffic with rights to the next four editions of the biennial Gold Cup (2015, 2017, 2019, 2021), as well as seven additional seasons of the annual CONCACAF Champions League, from the 2015/16 edition through the 2021/22 tournament.
Mariz was a supporter of Davidson, and each were advocates for breaking away from the USL and starting a new Division II league in the US. Davidson was the leader of the Team Owners Association (TOA), started in 2008, who eventually split from the USL to create the current NASL in 2010. In 2011, the league won sanctioning from USSF – but Traffic Sports USA had to invest heavily in the league to prop it up in the initial years. At one point, they owned three NASL teams while they looked for owners.
Currently Traffic USA owns only one team in the league, the Carolina RailHawks. Davidson told WARL reporter Neil Morris in April that Traffic was in negotiations to sell the team.
In September of 2014, Traffic sold another one of their teams, the Fort Lauderdale Strikers, to a group from Brazil. It is possible that Traffic has been aware for some time of this pending indictment and was clearing its stock of teams in the US.
The charges leave more questions than answers for Traffic and the NASL. Who takes over as President of Traffic Sports USA? Who will fill the chairman position at the NASL?
Davidson has yet to be formally indicted, and could possibly plea-bargain a deal. If he does not and is indicted, he could serve jail time depending how high up he was in the corruption charges and how badly the Justice Department wants to make an example out of him. Davidson is a U.S. citizen and a licensed attorney.
When NASL was formed, Traffic was (and is now) the major capital contributor to the venture, and the group owns the majority of B stock (66%) in the league. The league has a class A and class B stock ownership structure. The class A stock (representing all team owners in the league) is diluted each time a new owner enters NASL, according to a 2010 flowchart which was supplied to Northern Pitch. The flow chart also showed Traffic contributing $4.5 million, which would eventually get paid back with payments of $450,000 for the first 10 teams that entered the league. If the 2010 document is accurate, Traffic also received 30% commissions on commercial rights of media, sponsorships and merchandising.
All NASL owners vote with class A rights. Class B stock does not vote but gives Traffic the control (veto rights) they needed for limited issues, based upon their risk, to control their return on equity and return of equity, if that ever happens.
A source familiar with the league body said most issues don’t revolve around that class B share. “The rights assigned to their shares only come up in very narrow circumstances like budget or approving a new expansion team,” the source said. “I’ve been told they seem to be good citizens and are certainly not dictators in that board room.”
Another source familiar with the league believed the NASL board should generally be unaffected, but was concerned about the team Traffic does own, the Carolina RailHawks. They also felt prospective new team owners would most likely be more cautious than usual with the leagues connections to Traffic Sports USA.
The RailHawks supporters group released a statement this morning calling for Traffic USA to double their efforts to sell the team.
What happens to the TV, ticket and marketing rights of CONCACAF for North and Central America that were won by Traffic is still to be seen as well – as the CONCACAF TV and marketing rights to Copa America, and Gold Cup. If there was collusion or bribes between CONCACAF and Traffic or other marketing and TV rights groups like Full Play Group who were also indicted, it is possible those rights would have to be renegotiated.
The NASL has yet to release a statement. NASL president Bill Peterson, director of legal affairs Rishi Sehgal and director of public relations Neal Malone all were contacted, but did not return messages.
Minnesota United owner Dr. Bill McGuire said, “At this time, I don’t really want to say anything until I understand what’s actually going on, and all I currently know is from a few media reports.”
Edited 5-28-15
The NASL Board of Governors released a statement Wednesday afternoon saying they have suspended Chairperson Aaron Davidson, along with all business activities between the league and Traffic Sports, effective immediately. They also stated that Commissioner Bill Peterson will serve as acting Chairperson.
Northern Pitch received a copy of the indictment and found that Davidson is accused by the US Govt. of being deeply involved in bribes and obstruction of justice. For more on this story click here.
Leave a Reply