House panel alleges possible ‘unlawful’ financial conduct by the Washington Commanders

cigaretteman

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The Washington Commanders and owner Daniel Snyder “may have engaged in a troubling, long-running, and potentially unlawful pattern of financial conduct” that allegedly involved withholding as much as $5 million in refundable deposits from season ticket holders and also hiding money that was 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 obtained by The Washington Post, freshly details 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 the team maintained “two sets of books,” including one set of financial records used to underreport certain ticket revenue to the NFL. The letter cites documentation that the team’s financial improprieties may have extended to tickets registered in Commissioner Roger Goodell’s name. It references evidence that it says indicates the revenue gained by the team through these practices was known internally as “juice,” and it details allegations that the Commanders improperly attributed such revenue to being derived through a Navy-Notre Dame college football game at FedEx Field or a Kenny Chesney concert, so that it wouldn’t be part of the NFL’s revenue-sharing pool.
The allegations of financial improprieties came to light as the committee reviewed documents and interviewed witnesses in its inquiry of the team’s workplace and the NFL’s handling of the matter. The team has broadly denied such allegations, and the oversight committee has not verified them beyond the evidence presented in the letter.



“Given the Federal Trade Commission’s (FTC) authority to investigate unfair or deceptive business practices, we are providing the information and documents uncovered by the Committee for your review, to determine if the Commanders violated any provision of law enforced by FTC and whether further action is warranted,” the committee’s letter says. “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 conduct.”
The Commanders did not respond immediately to a request for response to news of Tuesday’s letter. Earlier this month, the team said it had committed no financial improprieties.
“The team categorically denies any suggestion of financial impropriety of any kind at any time,” the Commanders said in a statement then. “We adhere to strict internal processes that are consistent with industry and accounting standards, are audited annually by a globally respected independent auditing firm, and are also subject to regular audits by the NFL. We continue to cooperate fully with the Committee’s work.”




The letter was signed by Rep. Carolyn B. Maloney (D-N.Y.), the committee’s chairwoman, and Rep. Raja Krishnamoorthi (D-Ill.), the chairman of the Subcommittee on Economic and Consumer Policy, and addressed to FTC chair Lina M. Khan. It was copied to Republican leaders of the committee, Goodell and attorneys general Jason S. Miyares (R) of Virginia, Brian E. Frosh (D) of Maryland and Karl A. Racine (D) of D.C.
“We are writing to share evidence of concerning business practices by the Washington Commanders uncovered during the Committee’s ongoing investigation into workplace misconduct at the team,” the letter says. “Evidence obtained by the Committee, including emails, documents, and statements from former employees, indicate senior executives and the team’s owner, Daniel Snyder, may have engaged in a troubling, long-running, and potentially unlawful pattern of financial conduct that victimized thousands of team fans and the National Football League (NFL).”
The NFL did not immediately respond to a request to comment about the letter.



A spokesperson for the oversight committee’s Republicans said the Democrats “are attacking a private company using the claims of a disgruntled ex-employee who had limited access to the team’s finances, was fired for violating team policies, and has his own history of creating a toxic workplace environment.” The Republicans will provide the FTC “with additional context to ensure that they have the full story when evaluating the Democrats’ latest letter and not just one-sided, cherry-picked information,” the spokesperson said.
Eight days ago, the Commanders said in a statement there “has been absolutely no withholding of ticket revenue at any time by the Commanders,” adding that any person “who offered testimony suggesting a withholding of revenue has committed perjury, plain and simple.”
That led attorney Lisa Banks to say that the team had “defamed” Friedman, one of her clients. Banks and fellow attorney Debra Katz called Tuesday’s letter “damning” and said in a statement: “It’s clear that the team’s misconduct goes well beyond the sexual harassment and abuse of employees already documented and has also impacted the bottom line of the NFL, other 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 Commanders’ toxic work environment, culture of impunity, and lack of accountability by Commanders executives” and “also described a pattern of deeply concerning business practices that were directed by senior leadership, including Mr. Snyder,” the letter says.
Friedman “provided the Committee with information and documents indicating that the Commanders routinely withheld security deposits that should have been returned to customers who had purchased multiyear season tickets for specific seats, referred to as seat leases,” according to the letter. Friedman told the committee that “team executives directed employees to establish roadblocks to prevent customers from obtaining the security deposits they were due — effectively allowing the team to retain that money,” the letter says.
Commanders deny withholding revenue. Lawyer claims evidence presented.
According to the letter, Friedman told the committee that the team would not accept refund requests by email and failed to inform all leaseholders of a change made after 2000 no longer requiring security deposits for new club seat lease agreements. Friedman told the committee that some customers forgot about the deposits or, in the case of corporate accounts, might have taken over the account without knowing to ask for the refund.



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


 

cigaretteman

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According to the letter, Friedman told the committee that at one point, the team had a “scramble to reach out as passively as possible to everybody that had a security deposit on file that was refundable in one of the three local jurisdictions” of Maryland, Virginia or D.C., based on applicable laws in that jurisdiction. But even then, the team “intentionally created additional obstacles to reduce the likelihood that the leaseholders would follow through” by requiring a letter for a refund request, the letter says Friedman told the committee.
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The committee’s letter says that as of July 2016, based on Friedman’s interview and documents he provided to the committee, “the team had unreturned security deposits for ‘around 2,000 accounts’ belonging to customers and fans totaling ‘approximately $5 million.’ ”



Some team executives used the term “juice” to refer to revenue that was intentionally misallocated in the franchise’s accounting system and attributed to unrelated events, the letter says 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 on dormant accounts where, in my estimation, the likelihood of the customer coming forward and asking for their deposit back is as close to zero as possible, and then return the security deposit in the system and convert the credit that would then be on 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 the practice “occurred over the course of several years” and “was done at the direction and for the benefit of Mr. Snyder,” the letter says. It ended around 2017, Friedman told the committee, after Snyder ordered it to stop through Stephen Choi, the team’s former chief financial officer.
Gershman and Choi did not immediately respond to requests to comment.
Congress investigating allegations of financial impropriety by Commanders
According to the letter, Friedman told the committee that he was instructed by Choi: “Dan doesn’t want us to mess with it anymore. Just leave it alone. Don’t touch any of the money. Don’t try and get it back to the customers, don’t try and convert it into juice, just leave it alone.”



According to a spreadsheet Friedman provided to the committee, two season tickets that appeared to be registered under Goodell’s name as of July 2016 had an unreturned 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 says 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 security deposits for 28 seats held at various times by the NFL, with unreturned security deposits of approximately $13,000 as of 2016. The committee offered to provide Friedman’s spreadsheets to the FTC.
According to the letter, Friedman told the committee that team executives “began intentionally underreporting ticket revenue in the team’s electronic database that should have been shared with the League” after a 15-year waiver by the NFL capping the amount that the team had to share from its club-seating revenue expired in 2012.



“The executives apparently accomplished this by falsely processing or misassigning a portion of ticket revenue from Commanders games as fees related to special events, such as concerts or college football games, which were not subject to revenue sharing with the NFL,” the committee’s letter says.
Daniel Snyder pledged support for the NFL’s investigation. His actions tell a different story.
Friedman told the committee that he “falsely processed” $162,360 of revenue from Commanders game tickets as being derived from a Navy-Notre Dame game at FedEx Field, based on guidance from Choi in a May 6, 2014 email. “The juice goes to Navy vs ND game,” Choi wrote, according to the committee’s letter.
Friedman told the committee the Commanders avoided detection in such a case by charging $55 for a ticket listed in their manifest as costing $44.
“So this is the two sets of books,” Friedman told the committee. “So in this particular case, there’s a set of books that’s submitted to the NFL that doesn’t include the $162,000, but then there’s a set of books that’s kept internally shown to Mr. Snyder and Mr. Snyder’s — I believe just Mr. Snyder, actually, and the people in his inner circle maybe, that shows what we actually did, which would include the $162,000 of juice.”
Friedman told the committee that the books were maintained by Choi and another person whose name was redacted from the letter obtained by The Post. According to the committee’s letter, team executives appear in an April 1, 2013 email “to discuss intentionally processing $88,000 in shareable revenue from Commanders’ game tickets as bogus, non-shareable licensing fees for an unrelated May 25, 2013, Kenny Chesney concert at FedEx Field.”
Rachel Engleson, the team’s former director of marketing and client 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 of that during a 2020 interview that was part of Wilkinson’s investigation into the team’s workplace
 

bagdropper

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Oct 17, 2002
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There is something incredibly rotten with the running of that franchise. The "news" that the franchise generates seemingly is always bad - it's like Snyder learned from the James Dolan School of How To Run a Once Great Franchise Into The Ground.
 
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lucas80

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NFL ownership is filled with douche bags. It's hard to stand out in that group, but Snyder somehow manages to keep generating negative publicity. HIs team sucks, too.