Guarding Against a "Varsity Blues" Situation

March 13, 2019

With the shocking news about "Operation Varsity Blues" this week and the allegations against certain college coaches who have been implicated in the scandal, it's a time when many college athletic directors and administrators are analyzing their operations to safeguard against a similar situation occurring on their campaus.

Two litigators from the law firm Lightfoot, Franklin & White, which has a prominent NCAA compliance practice and a white-collar defense group that has helped well-known academic institutions lead internal investigations of this nature, offer the following suggestions.

“Each school should verify that its athletics department is working with the institution’s admissions and financial aid offices concerning the admission of prospective student-athletes, andthis coordination should be reflected at the highest levels of the organization," said Clint Speegle, a member of the Lightfoot, Franklin & White's NCAA Compliance practice group. Speegle emphasizes that institutions should verify that proper interoffice communications are occurring, and that a system of checks and balances between the departments exists to ensure that NCAA rules and institutional policies and procedures are followed.  

“In a more narrow response to this week’s unsealed indictment, institutions should consider evaluating transcripts and standardized test scores of student-athletes who attended IMG Academy or whose test scores are from Houston, Texas or Hollywood, California when the student-athlete otherwise has no geographic connection to those locales,” he said.

Jack Sharman, who chairs the firm’s White Collar Criminal Defense and Internal Corporate Investigations practice, says the academic world has to approach this like the corporate world would in dealing with a white-collar criminal matter.

“Universities need to apply to these two processes – undergraduate admissions and athlete recruitment – the same level of attention that a global corporation applies to its Foreign Corrupt Practices Act, Sarbanes-Oxley, and anti-money-laundering systems,”  Sharman says.

The website of RSM, an auditing and consulting company, suggest you ask yourself the following questions in an article entitled "10 questions every board should ask of its athletics department."

• Have you performed a risk assessment of your operations during the past year to determine internal control weaknesses and risk exposure areas?  

• What policies and procedures are in place to prevent and detect fraud and corruption?

• Have you provided your staff with sufficient code-of-ethics training to navigate gray areas (including recruiting and retention efforts)?

• What types of controls (financial and nonfinancial) have been established to reduce risks associated with interactions with athletic sponsors and vendors?

• What procedures do you have in place to assess potential risks associated with doing business with a new third party—and who is responsible for gathering this third-party business intelligence?

• How do you monitor third-party activities? Are your contracts written with the necessary safeguards, including “right to audit” provisions?

• Have you created an a code of ethics and anti-corruption policy and require the third parties that you work with to affirm their compliance with this policy?

• Have you had an independent third party assess your internal controls and overall compliance program to make sure it's up to speed? 

These are questions that every athletic director should ask him or herself.  For every athletic department, the potential exists for major problems that would be far-reaching—as evidenced by the news of this week. 

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