November 11, 10

NEWS / Former Chicago White Sox Executive and Two Former Scouts for Sox in Latin America Indicted for Alleg

CHICAGO—A former professional baseball player scouting executive for the Chicago White Sox and two former scouts for the team in Latin America were indicted today on federal fraud charges for allegedly accepting kickbacks totaling approximately $400,000 from signing bonuses and contract buyouts paid to secure 23 prospective players between December 2004 and February 2008. A seven-count indictment returned by a federal grand jury alleges that the White Sox baseball team was defrauded of money, as well as the honest services of the defendants, who allegedly concealed the kickbacks from the team and its more senior officials.

Charged with seven counts of mail fraud were David S. Wilder, the White Sox farm system director from late 2003 to 2006, when he became the team’s senior director of player personnel until May 2008, and Jorge L. Oquendo Rivera, the White Sox Latin American scout between November 2004 and October 2007. Victor Mateo, a White Sox scout in the Dominican Republic between November 2006 and May 2008, was charged with three counts of mail fraud. The indictment also seeks forfeiture of unspecified illegal proceeds from the alleged fraud scheme.

Wilder, 50, of San Francisco, and Oquendo, 49, of Aguadilla, Puerto Rico, are expected to voluntarily appear for arraignment at a later date to be determined in U.S. District Court in Chicago. A domestic arrest warrant was issued for Mateo, 39, of Arroyo Hondo, Dominican Republic.

“The defendants were supposed to recruit players by paying amounts of money that matched their skills and were no greater than the amount needed to sign the players. Instead, the indictment alleges that the defendants secretly inflated those signing amounts to fund kickbacks for themselves,” said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

“These defendants allegedly defrauded their employer and enriched themselves by taking advantage of vulnerable ballplayers, who were anxious to pursue their dreams of stardom in the major leagues” said Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

The investigation began after the Chicago White Sox reported internal findings to Major League Baseball and baseball officials referred the matter to federal authorities. Both the White Sox and Major League Baseball cooperated with the investigation.

To provide for kickbacks, Wilder, Oquendo and Mateo allegedly misrepresented to the White Sox the amount of money necessary to sign certain players and omitted information about the payments, causing the Sox to pay artificially and fraudulently inflated signing bonuses to players and causing the Sox to purchase the contracts of and rights to players from other teams at artificially and fraudulently inflated prices. The indictment does not specify the amounts of kickbacks allegedly obtained from signing certain players, nor does it name specific players.

According to the indictment, the White Sox maintained a Latin American scouting program to identify and recruit prospective players in such countries as Brazil, Colombia, the Dominican Republic, Mexico, Panama, and Venezuela, and to sign them to written contracts. The Sox either paid a signing bonus, a one-time, up-front payment made to new players to induce them to sign a contract, or they purchased the contract rights to a player who was already affiliated with a Mexican baseball team by paying that team or its representative an amount necessary to induce the team to release the player to the White Sox.

Wilder was responsible for supervising the team’s scouts in Latin America, and he either authorized payments himself, or obtained authorization from additional Sox personnel, to sign new players based on recommendations made by the scouts. Wilder was authorized to approve recommended signing amounts less than $100,000, but he was required to obtain approval from the team’s general manager to pay signing amounts of $100,000 or more. After Wilder or the team approved a player’s signing amount and a written contract was secured, and Major League Baseball conducted a background check and approved the signing, the White Sox issued a check drawn on a bank account in Chicago, which was made payable either to the player or the Mexican team with which a player was affiliated or the Mexican team’s representative.

If the player was located in the Dominican Republic, the Sox sent the signing bonus check to the Major League Baseball office in Santo Domingo directly, or through its offices in New York, and baseball personnel would then provide the check to the player. If the player was located in another Latin American country, the Sox sent the signing bonus check to the scout who recruited the player and the scout was responsible for providing the check to the player.

As part of the scheme, Oquendo and Mateo allegedly scouted for and identified prospective Sox players in Latin America from whom they could obtain a portion of the players’ signing bonuses. They also allegedly engaged in discussions with these players or their representatives about the amount of signing bonuses, as well as the amount the players were willing or expected to pay in kickbacks to them and Wilder. Oquendo allegedly engaged in these same practices in his negotiations with Mexican teams and their representatives.

After this initial phase, Oquendo and Mateo, directly and indirectly, allegedly informed Wilder of the prospective players’ skill levels, the preliminarily negotiated signing bonus and contract purchase amounts, and whether kickbacks could be obtained from the players’ signings. Wilder then allegedly approved signings under $100,000, knowing that the amounts were inflated to include undisclosed kickbacks for himself and his co schemers, and misrepresented to other team officials the amount that was necessary to sign the players. Similarly, in instances when Wilder obtained authorization from the team’s general manager to sign players for more than $100,000, he allegedly deceived the general manager, knowing that the amounts were fraudulently inflated to obtain undisclosed kickbacks for himself and his co-schemers and were greater than necessary.

The seven mail fraud counts allege the mailing of various checks from the White Sox, in amounts ranging from $30,000 to $525,000, to unnamed players, or teams for the contract rights to players, in various Latin American countries.

The government is being represented by Assistant U.S. Attorneys Christopher K. Veatch and Michelle Nasser.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

http://chicago.fbi.gov/dojpressrel/pressrel10/cg111010.htm

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