IRS Criminal Investigation Helps Bust FIFA Officials
The Internal Revenue Service’s Criminal Investigation unit was among the law enforcement agencies involved in indicting nine officials from FIFA, the international soccer federation that hosts the World Cup, along with five corporate executives involved in a massive bribery scheme.
A 47-count indictment was unsealed early this morning in federal court in Brooklyn charging 14 defendants with racketeering, wire fraud, and money laundering conspiracies, tax evasion and other offenses, in connection with a 24-year scheme to corrupt international soccer. The guilty pleas of four of the individual defendants and two corporate defendants were also unsealed Wednesday.
The defendants charged in the indictment include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, along with leading officials of other soccer governing bodies that operate under FIFA. The defendants Jeffrey Webb and Jack Warner—the current and former presidents CONCACAF, the continental confederation under FIFA headquartered in the U.S.—are among the soccer officials charged with racketeering and bribery offenses. The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.
The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International, Inc. and Traffic Sports USA, Inc., which is based in Florida.
“The indictment alleges corruption that is rampant, systemic and deep-rooted both abroad and here in the United States,” said Attorney General Loretta Lynch in a statement. “It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks. And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable. Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice—and we look forward to continuing to work with other countries in this effort.”
Lynch thanked government authorities in Switzerland, along with several other international partners, for their assistance in the investigation, which also involved the FBI and the IRS.
“When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable,” said IRS Criminal Investigation chief Richard Weber. “Corruption, tax evasion, and money laundering are certainly not the cornerstones of any successful business. Whether you call it soccer or football, the fans, players, and sponsors around the world who love this game should not have to worry about officials corrupting their sport. This case isn’t about soccer, it is about fairness and following the law. IRS CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”
FIFA includes 209 member associations, each of which represents organized soccer in a particular nation or territory, including the U.S. and four of its overseas territories. FIFA also recognizes six continental confederations that help govern soccer in different regions of the world. The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF, which has been headquartered in the U.S. throughout the period charged in the indictment. The South American confederation, known as CONMEBOL, is also a focus of the indictment.
One key way the enterprise derives revenue is to commercialize the media and marketing rights associated with soccer events and tournaments. The organizing entity that owns those rights—as FIFA and CONCACAF do with respect to the World Cup and the Gold Cup, their respective flagship tournaments—sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments. The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors, and other sub-licensees who want to broadcast the matches or promote their brands. The revenue generated from these contracts is substantial: according to FIFA, 70 percent of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.
The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery, and money laundering. Two generations of soccer officials allegedly abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.
Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organized CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores, and the Copa do Brasil, which is organized by the Brazilian national soccer federation, CBF. Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup, and the 2011 FIFA presidential election. Questions have also been raised over the selection of Qatar to host the 2022 World Cup, and whether bribery was part of the process.