SMGT 503 CASE ANALYSIS ASSIGNMENT INSTRUCTIONS OVERVIEW

CASE 9-13 United States v. Piggie

303 F.3d 923 (8th Cir. 2002)

In the mid to late 1990’s, Myron Piggie (Piggie) created and pursued a secret scheme to pay talented high school athletes to play basketball for his “amateur” summer team. Because the athletes intended to play college basketball, the scheme produced multiple violations of National Collegiate Athletic Association (NCAA) rules which require college athletes to be amateurs. Piggie pled guilty to one count of conspiracy to commit mail and wire fraud and one count of failure to file an income tax return.

Between 1995 and 1999, Myron Piggie devised a scheme to assemble elite high school basketball players and compensate them for their participation on his traveling Amateur Athletic Union (AAU) basketball team, known first as the Children’s Mercy Hospital 76ers and later as the KC Rebels. The payments were designed to retain top athletes on his team, gain access to sports agents, obtain profitable sponsorship contracts, and forge ongoing relationships with players to his benefit when the athletes joined the National Basketball Association (NBA).

The pre-sentence report shows Piggie realized at least $677,760 in income through his scheme. In the plea agreement, Piggie concedes that, as a result of his fraud, he received a total of $420,401 between 1995 and 1998. Piggie received at least $184,435 from team owner Tom Grant, $159,866 from team sponsor Nike, and $76,100 from sports agents Jerome Stanley and Kevin Poston. He further planned on receiving a portion of his players’ compensation when they became professional athletes.

Piggie received a gross income of approximately $99,100 from these sources during the 1998 calendar year, and he knowingly and willfully failed to file a tax return by April 15, 1999. Piggie also failed to file income tax returns in 1995, 1996, and 1997. In the plea agreement, the parties stipulated to a total tax loss of $67,662.69 for the period of 1995 to 1998.

Piggie took portions of the money he was receiving as the coach of this elite AAU team and made payments to the high school athletes in a clandestine manner, frequently hiding the money in Nike shoe boxes. All of the parties intended to keep the payments a secret from authorities. During the conspiracy, Piggie paid Jaron Rush $17,000, Korleone Young (Young) $14,000, Corey Maggette (Maggette) $2,000, Kareem Rush $2,300, and Andre Williams (Williams) $200.

After accepting Piggie’s payments to play AAU basketball, Jaron Rush, Maggette, Kareem Rush, and Williams submitted false and fraudulent Student-Athlete Statements to the universities where they were to play intercollegiate basketball. These four athletes falsely certified that they had not previously received payments to play basketball. The athletes delivered through the U.S. Postal Service signed letters of intent asserting their eligibility. Based upon the false assertions that these athletes were eligible amateurs, the University of California, Los Angeles (UCLA); Duke University (Duke); the University of Missouri-Columbia (Missouri); and Oklahoma State University (OSU) (collectively Universities) awarded scholarships to these athletes, enrolled them in classes, and allowed them to play on NCAA basketball teams.

NCAA regulations permit universities to award only thirteen basketball scholarships per year. When Piggie’s payments to these players were discovered, the Universities became subject to NCAA penalties. Each school lost the use of one of the thirteen scholarships and lost the value of each player’s participation due to the player’s NCAA-required suspension. The scholarships were forfeited, and the Universities lost the opportunity to award the scholarships to other top amateur athletes, who had actual eligibility to play intercollegiate basketball. In 1999 and 2000, UCLA lost the benefit of playing Jaron Rush, the $44,862.88 scholarship awarded to him, and also forfeited $42,339 in tournament revenue; Missouri lost the benefit of playing Kareem Rush, and the $9,388.92 scholarship awarded to him; and OSU lost the benefit of playing Williams and the $12,180 scholarship awarded to him. Duke provided Maggette with a $32,696 scholarship for the 1998-1999 season based upon the false assertion that he was an eligible amateur. As a result of the ineligible athlete’s participation, the validity of Duke’s entire 1998-1999 season was called into question.

NCAA regulations also required each of the four Universities involved to conduct costly internal investigations after Piggie’s scheme was discovered. UCLA spent $59,225.36 on the NCAA-mandated investigation of Jaron Rush, Duke spent $12,704.39 on the NCAA-mandated investigation of Maggette, Missouri spent $10,609 on the NCAA-mandated investigation of Kareem Rush, and OSU spent $21,877.24 on the NCAA-mandated investigation of Williams. The total monetary loss to the Universities was $245,882.79. The scandal following the disclosure of Piggie’s scheme caused further intangible harms to the Universities including adverse publicity, diminished alumni support, merchandise sales losses, and other revenue losses.

Pembroke Hill High School (Pembroke), where Jaron and Kareem Rush played high school basketball, sustained a loss of $10,733.89 in investigative costs and forfeiture of property as a result of the conspiracy. Pembroke was placed on probation by the State of Missouri after the violations of Jaron and Kareem Rush were discovered and a mandatory investigation of the matter was concluded.

After Piggie’s guilty plea, the district court sentenced him to 37 months imprisonment, three years supervised release, and $324,279.87 in restitution.

Was Piggie’s conduct unethical? Why or why not?

Do you believe the penalty fits the crime? What exactly was the crime?

Did Piggie cause damage to the universities? Or was the damage self-inflicted by the universities as a result of their own voluntary association’s “amateurism” rules? Could Piggie assert that but for the rules they created, they wouldn’t have been damaged?

United State v. Piggie, U.S. Supreme Court.

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