The Washington Commanders on Monday strongly disputed statements of financial improprieties in a letter to the Federal Trade Fee, laying out the circumstance for why there must be no investigation by the government institution.
The 22-webpage letter — penned by staff lawyer Jordan Siev, addressed to FTC chair Lina M. Khan and acquired by ESPN — rebutted allegations by previous team worker Jason Friedman that the workforce experienced engaged in nefarious fiscal tactics, impacting shoppers and the NFL, to increase its income. In addition to the letter, there had been 83 pages of signed affidavits, e-mails and texts.
Paul Szczenski, the team’s former director of finance for more than eight years, reported in a signed affidavit that, “I can state unequivocally that I hardly ever helped keep, or saw everyone else sustain, a ‘second set’ of textbooks.'” He was just one of a few previous large-ranking workforce officers who submitted signed affidavits.
People details ended up created by the Dwelling Committee on Oversight and Reform in a letter to the FTC previous 7 days, highlighting allegations produced by Friedman, who expended 24 several years in the organization’s ticket section as the vice president of income and client assistance. He was fired in October 2020, two months soon after Jason Wright took more than as crew president.
The FTC acknowledged acquiring the letter but commonly does not point out no matter whether it will examine the matter. It also could be turned over to the lawyers standard in Maryland Washington, D.C. and Virginia. All have been copied on the letter to the FTC.
Washington’s letter termed Friedman’s statements “baseless” as nicely as “false and reckless” and primarily based on “pure speculation,” in accordance to Mitch Gershman, Washington’s previous main working officer, who still left the crew in 2015 but five years later on was accused by previous workers of sexual harassment in a Washington Put up report. Gershman and other people reported Friedman was out of the loop mainly because he did not get the job done in the accounting section and was therefore not privy to all money discussions. Friedman labored at the team’s stadium in Landover, Maryland, which is close to a single hour from the observe services in Ashburn, Virginia, where according to the letter the finance and accounting departments worked.
Also, the letter mentioned the committee never ever gave the workforce a prospect to reply to Friedman’s expenses. It also painted Friedman as a disgruntled previous staff who, till lately, had lobbied numerous individuals in the firm — together with Wright — via e-mail and by textual content to enable him to return, though also sending a letter to operator Dan Snyder immediately after his firing in 2020 praising him.
In January, he instructed Wright via e-mail, “I’ve experienced a year to replicate on my previous shortcomings. I’ve acquired, and I am remorseful for these shortcomings. If you welcomed me, I’d be again there to assist at a moments recognize.”
Friedman claimed the group had knowingly classified revenue from standing-place only tickets to NFL video games as income collected from school online games and live shows, thus letting them to pocket the dollars and not share a part with the league. He also mentioned that it unsuccessful to refund protection deposits on year tickets, alleging that it affected 2,000 shoppers at a price of $5 million.
But Washington’s letter says it has proof that it did not divert profits from NFL game titles to other events. Friedman experienced created a May well 6, 2014, electronic mail with Stephen Choi, then Washington’s chief accounting officer, that requested support on processing additional ticket profits and profits.
The email said that Friedman was charging $55 per ticket but they had been priced at $44 in the procedure. The variance would be written off as bogus licensing costs. According to the electronic mail, Choi directed him to apply the “juice” from that additional $11 for every ticket to the Navy-Notre Dame video game to be held that exact same calendar year. Friedman explained “juice” was a term for concealed profits for the group. Washington’s letter said that “juice” was slang for “an upside in profits.”
Teams are needed to share 40% of their earnings with the other 31 groups. But the college game was regarded non-shareable profits, which intended that Washington would get an added $162,360 without the need of dropping a portion to the profits-sharing pool.
Washington’s letter said that Choi forwarded this email to accountants, dropping Friedman from the chain. In an August e mail, Trey Flythe, then mentioned as a manager in the team’s ticket finance section, informed Choi and Szczenski that the “Navy licensing rate has been switched to a 14RedRev.” That intended it was now deemed 2014 Redskins profits the electronic mail incorporated a screenshot of the accounting for the quantity of $162,360 outlined beneath 14RedRev.
The letter also pointed out that the staff is subjected to annually audits by an outdoors agency, BDO, and each and every several decades by an NFL auditor, Ernst & Youthful. Friedman alleged that revenue from non-NFL functions at FedEx Area were not subjected to all those audits. Washington’s letter claims that is not correct.
In his affidavit, Szczenski explained, “there had been no types of functions that ended up ‘excluded’ from external audits concert events, faculty soccer video games, and soccer matches were all part of the Team’s audited economic statements, and all could be subjected to scrutiny by the auditors.” Former standard counsel David Donovan stated the identical in his affidavit.
The letter also says the Dwelling committee must not have relied on Friedman’s testimony relating to when the alleged profits-sharing plan occurred. Friedman reported it occurred “mainly from 2010 to 2015.” Washington’s letter claims the staff had a $27 million waiver from the NFL that minimal profits sharing mainly because it was shelling out for tasks authorised in 2013 and finished two yrs later on. The letter claims this waiver was acknowledged in the team’s accounting and finance department but “unbeknownst to Friedman.” Prior to that, Washington experienced a 15-12 months waiver that finished in 2012 since it experienced paid for the stadium by itself.
The letter also claims Friedman was mistaken about how the team dealt with stability deposits. He claimed that immediately after Snyder purchased the group in 1999 the staff designed artificial boundaries to make it challenging for customers to accumulate protection deposits. Or they would focus on deposits from persons who had overlooked they manufactured one or these who inherited seats and didn’t know one particular existed. He stated with corporate accounts, the identify on the settlement might alter around time and, at the time yet again, the new particular person might not know about the first deposit. Friedman mentioned workforce executives informed workforce to make it tough for buyers to acquire their deposits by increasing the techniques necessary to get the income. Some deposits did get returned.
Also, Friedman noted to the House committee that the workforce stopped charging stability deposits a year after Snyder grew to become owner. Donovan, who left the crew in 2011, stated Friedman never introduced these allegations to him. In his affidavit, Szczenski explained the only deposits transformed to profits transpired when a client defaulted on their agreement. He said in a 10-12 months span that resulted in an additional $200,000 of profits.
The letter also included a copy of a letter the corporation sent to customers in 2014, informing them that they may possibly be entitled to a refund centered on their remaining stability. It incorporated packing containers to test as to whether or not the identify and address on the account ended up correct. It also contained an deal with to deliver the letter back to accumulate the refund as effectively as an e mail deal with buyers could mail to instead.
Moreover, the letter states that the team’s unclaimed property, together with stability deposits, was reviewed in 2014 by the Unclaimed Home Division of Virginia’s Office of the Treasury, which had whole entry to the team’s security deposit data. After the overview, the department did not advise even more action but alternatively demanded the workforce shell out $7,330.15 in unclaimed money to the condition as “abandoned assets.”
Lastly, the letter said the staff did not approve of Friedman’s practice of providing typical admission tickets to brokers in 2009.
Friedman experienced alleged to the Residence committee that he was created the slide man for this follow, telling the committee that Choi and Gershman advised him to misrepresent their ticket situation. Friedman mentioned he would explain to likely prospects that no typical admission tickets were being obtainable and thrust them towards obtaining club-stage seats. In accordance to the letter, there was no NFL policy from selling to ticket brokers in 2009. It also mentioned that none of the contracts entered into by Friedman ended up permitted by the team’s finance or authorized department. The letter alleged that Friedman used a rubber stamp of Gershman’s signature, allowing him to “maintain the agreements key.”
“When [Snyder] was informed, he was not happy,” Gershman reported in his affidavit. “He directed me and other senior executives to terminate the contracts instantly, and we expended months negotiating with brokers to undo the offers insofar as we could. It would have made no perception for Mr. Snyder to have directed these broker product sales only to turn about and cancel them afterwards, with substantial monetary cost to the Team.”
Donovan claimed in his affidavit that he proposed to Snyder that Friedman be fired soon after this incident. Friedman alleged that as a substitute of currently being fired, he been given a increase.
Lisa Banking companies and Debra Katz, Friedman’s attorneys, stated Monday that their consumer “stands by his testimony, which was truthful and primarily based on his experiences with the group. He is pleased to reply adhere to-up thoughts from Congress, the FTC, or any govt agency” and is “prepared to defend himself publicly against these allegations if Mr. Snyder permits him to do so. In the meantime, we will connect specifically with the crew about these demonstratively untrue allegations.”
A Home Committee on Oversight and Reform spokesman stated in a statement that the Commanders have “failed to totally tackle the issues raised in the Committee’s letter. If the team maintains that it has practically nothing to disguise, it need to welcome an impartial overview by the FTC, or the NFL, which is reportedly analyzing these problems as effectively.”