Washington commanders may have engaged in “illegal” behavior, Congress told the FTC

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Washington Commanders and owner Daniel Snyder “may have been involved in a worrying, protracted and potentially illegal pattern of economic behavior” that allegedly involved withholding as much as $ 5 million in refundable season ticket holders and also hidden money that is supposed to be shared among NFL owners, according to a letter sent from the House Committee on Oversight and Reform to the Federal Trade Commission on Tuesday.

The 20-page letter, a copy of which was procured by The Washington Post, recently describes allegations made by Jason Friedman, a former vice president of sales and customer service who worked for the franchise for 24 years. The letter says Friedman told committee members that the team maintained “two sets of books,” including a set of financial records used to underreport certain ticket revenue to the NFL. The letter cites evidence that the team’s financial inadequacies may have extended to tickets registered in the name of Commissioner Roger Goodell. It refers to evidence which it says indicates that the revenue obtained by the team through these practices was internally known as “juice”, and it describes allegations that the commanders wrongfully attributed such revenue to having been obtained through a Navy-Notre Dame college football game. at FedEx Field or a Kenny Chesney concert so it would not be part of the NFL’s revenue sharing pool.

The allegations of financial inadequacies emerged as the committee reviewed documents and interviewed witnesses in its investigation of the team’s workplace and the NFL’s handling of the case. The team has broadly denied such allegations, and the oversight committee has not verified them beyond the evidence in the letter.

“In view of the Federal Trade Commission’s (FTC) authority to investigate unfair or misleading business practices, we provide the information and documents that the Committee has disclosed for your review to determine whether the Commanding Officers have violated a law enforced by the FTC, and further action is warranted, “the committee’s letter states.” We request that you take any other action you deem necessary to ensure that all funds are returned to their rightful owners and that those responsible are held accountable for their behavior.”

Chiefs did not immediately respond to a request for response to news of Tuesday’s letter. Earlier this month, the team said it had not committed any financial irregularities.

“The team categorically rejects any proposal of economic inadequacy of any kind at any time,” the commanders said in a statement. “We adhere to strict internal processes that comply with industry and accounting standards, are audited annually by a globally respected independent audit firm and are also subject to regular audits by the NFL. We continue to cooperate fully on the committee’s work.”

The letter was signed by rep. Carolyn B. Maloney (DN.Y.), chairman of the committee, and rep. Raja Krishnamoorthi (D-Ill.), Chair of the Subcommittee on Economic and Consumer Policy, and addressed to FTC Chair Lina M. Khan. It was copied to the Republican leaders of the committee, Goodell, and Attorney General Jason S. Miyares (R) of Virginia, Brian E. Frosh (D) of Maryland, and Karl A. Racine (D) of DC

“We are writing to share evidence that the Washington Commanders have uncovered business practices that have been uncovered during the committee’s ongoing investigation into team workplace dishonesty,” the letter said. Evidence obtained by the committee, including emails, documents and statements from former employees, suggests that executives and team owner, Daniel Snyder, may have been involved in a worrying, protracted and potentially illegal pattern of financial behavior that has made thousands of victims of team fans and the National Football League (NFL).

The NFL did not immediately respond to a request for comment.

A spokesman for the Supervisory Board Republicans said Democrats “attack a private company using the allegations of a disgruntled former employee who had limited access to the team’s finances, was fired for violating team policies and has its own history of creating a toxic work environment” . ” Republicans will give the FTC “additional context to ensure they have the full story when assessing Democrats’ latest letter and not just one-sided, cherry-picked information,” the spokesman said.

Eight days ago, the commanders said in a statement that “absolutely no ticket revenue has been withheld from the commanders at any time,” adding that any person “who testified to withhold revenue has committed perjury, simply and okay. “

That led attorney Lisa Banks to say the team had “slandered” Friedman, one of her clients. Banker and attorney colleague Debra Katz called Tuesday’s letter “condemning” and said in a statement: NFL owners and the team’s fans. “

The committee said in the letter that it interviewed Friedman on March 14. Friedman “provided a detailed account of the commander’s toxic work environment, culture of impunity and lack of accountability from the boss’s leaders” and “also described a pattern of deeply worrying business. Practices led by top management, including Mr Snyder,” it said. the letter.

Friedman “provided the committee with information and documents indicating that the commanders routinely withheld the security deposit, which should have been returned to customers who had purchased multi-year season tickets for certain seats, referred to as seat lease contracts,” according to the letter. Friedman told the committee that “team leaders instructed employees to set up roadblocks to prevent customers from obtaining the security deposit they should have – which effectively enabled the team to keep that money,” the letter said.

Commanders refuse to withhold revenue. Attorney claims evidence presented.

According to the letter, Friedman told the committee that the team would not accept reimbursement requests via email and failed to inform all tenants of a change made after 2000 that no longer required a security deposit for new club seat lease agreements. Friedman told the committee that some customers forgot the payments or, in the case of company accounts, could have taken over the account without knowing they had to ask for the refund.

“So basically the team is holding on to these security deposits, many of which should be left in the hands of customers or former customers,” Friedman told the committee, according to Tuesday’s letter.

According to the letter, Friedman told the committee that at one point the team had a “struggle to reach out as passively as possible to anyone who had a deposit at the archive that could be refunded in one of the three local jurisdictions” in Maryland, Virginia. or DC, based on applicable laws of that jurisdiction. But even then, the team deliberately created additional barriers to reduce the likelihood that tenants would follow up by demanding a letter for a refund request, Friedman tells the committee.

The committee’s letter states that as of July 2016, based on Friedman’s interview and documents he provided to the committee, “the team had a non-returned security deposit of ‘approximately 2,000 accounts’ belonging to customers and fans totaling ‘approximately $ 5 million’.”

Some team leaders used the term “juice” to refer to revenue that was intentionally misallocated in the franchise’s accounting system and attributed to unrelated events, Friedman told the committee. According to the letter, Friedman testified that Snyder and Mitch Gershman, then the team’s chief operating officer, would instruct him to “identify security deposits that are in dormant accounts, where in my opinion the customer is likely to come forward and ask for their refund is so as close to zero as possible, and then return the security deposit in the system and convert the credit that would then be in the customer’s account into juice. ”

Such allocations would be made in part to avoid contributions to the pool of local revenue that NFL teams must share with the league and other franchises, Friedman told the committee. Friedman told the committee that this practice “occurred over several years” and “was carried out as directed and in favor of Mr. Snyder,” the letter said. It ended around 2017, Friedman told the committee, after Snyder ordered it to stop through Stephen Choi, the team’s former CFO.

Gershman and Choi did not immediately respond to requests for comment.

Congress is investigating allegations of financially inappropriate command from the commanders

According to the letter, Friedman told the committee that he was instructed by Choi: “Dan does not want us to mess with it anymore. Just let it be. Do not touch any of the money. Do not try to get it back to the customers, do not try to turn it into juice, just let it be. “

According to a spreadsheet that Friedman provided to the committee, two season tickets that appeared to be registered under Goodell’s name in July 2016 had a non-returnable deposit of approximately $ 1,000. The security deposit appeared to have been collected before Goodell’s election as NFL commissioner in 2006, according to the spreadsheets. The letter states that the committee “has not determined when the security deposit was paid or whether it has since been returned.”

The spreadsheets, according to the committee’s letter, also appear to show the 28-seat security deposit held by the NFL at various times, with a non-returned security deposit of approximately $ 13,000 from 2016. The committee offered to provide Friedman’s spreadsheets to the FTC.

According to the letter, the Friedman committee said team leaders “began deliberately underreporting ticket revenue in the team’s electronic database that should have been shared with the league” after a 15-year dispensation from the NFL that set a ceiling on the amount the team should share. from its club seat income expired in 2012.

“Managers have apparently accomplished this by incorrectly treating or misappropriating a portion of the ticket revenue from Commanders matches as fees related to special events, such as concerts or college football matches, which were not subject to revenue sharing with the NFL,” the committee letter states. . .

Daniel Snyder promised support for the NFL’s investigation. His actions tell a different story.

Friedman told the committee that he “mistakenly treated” $ 162,360 of revenue from Commander’s game tickets as being derived from a Navy-Notre Dame game at FedEx Field, based on instructions from Choi in an email on May 6, 2014. “The juice goes to the Navy vs. ND game, “Choi wrote, according to the committee’s letter.

Friedman told the committee that the commanders avoided being detected in such a case by charging $ 55 for a ticket listed in their manifesto to cost $ 44.

“So these are the two sets of books,” Friedman told the committee. “So in this particular case, there’s a set of books submitted to the NFL that do not include the $ 162,000, but then there’s a set of books that have been kept internally shown to Mr. Snyder and Mr. Snyder’s – I just think Mr. Snyder, in fact, and perhaps the people in his inner circle who show what we actually did, which would include the $ 162,000 juice. “

Friedman told the committee that the books were maintained by Choi and another person whose name had been removed from the letter that The Post had received. According to the committee’s letter, team leaders appear in an email on April 1, 2013 “to deliberately discuss $ 88,000 in shareable revenue from Commanders’ game tickets as fake, non-shareable license fees for an independent Kenny Chesney concert on May 25, 2013 at FedEx Field. “

Rachel Engleson, the team’s former director of marketing and customer relations, wrote to the committee that “it was known and / or rumored in the office that there was ‘moving around’ of money regarding tickets,” according to the letter. Engleson informed the committee that she told attorney Beth Wilkinson during an interview in 2020 that was part of Wilkinson’s investigation of the team’s workplace.

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