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Thursday, June 12, 2008
NBA's pursuit of restitution from Donaghy a blunder

By Lester Munson
ESPN.com

As the NBA and disgraced former referee Tim Donaghy continue their duel over his allegations of six referees rigging four games, various claims and arguments are being made. Discussion, speculation and conjecture abound. The allegations and the discussions of them raise some legal questions. Here are some of the questions and their answers:

Donaghy made his allegations after the NBA demanded $1 million in "restitution" from him. What is "restitution," and is the NBA entitled to any?

The NBA's demand for restitution came as part of the process that assists U.S. District Judge Carol Bagley Amon in determining Donaghy's sentence. The NBA's demand includes two forms of restitution. The first is for $30,000 in salary that Donaghy received for games he admittedly manipulated to pay gambling debts. It's the kind of thing that routinely qualifies as restitution. His work was dishonest, and he should not be paid for it. There is little doubt that Donaghy, as part of his effort to reduce his sentence, will repay the $30,000 to the NBA.

But the second part of the NBA's demand is highly dubious. The league wants to be reimbursed for $1 million it spent on an internal investigation of its referees. "It is hard for me to believe that this is the kind of restitution that is typically paid to a victim of a crime," said Michael Monico, a highly regarded former federal prosecutor and defense lawyer who is the president of the American Board of Criminal Lawyers. "The investigation was an investment in their product and not a loss caused by Mr. Donaghy." It is unlikely Amon will require Donaghy to pay for the NBA's internal investigation, and many legal experts wonder why the NBA would even consider making the demand.

Is the FBI investigating Donaghy's allegations? Will others be charged with crimes?

The FBI already has investigated the allegations. Donaghy first met with FBI agents in July 2007. A team of agents has been probing his stories ever since. As the result of their investigations, federal prosecutors have filed what is known as a 5(k) letter. The 5(k) letter means the agents have checked on the stories and have concluded Donaghy was truthful. The 5(k) letter does not apply to the 2002 Western Conference finals Game 6 because the statute of limitations had expired. More than five years went by before Donaghy described that game to any agents. There was no reason to look into that game because no one could be charged with a crime. The 5(k) letter does apply to statements Donaghy made to agents regarding the three games in 2005. The information could result in a reduction of Donaghy's prison sentence when Amon sentences him July 14. He faces a maximum of 33 months in prison under federal guidelines.

Although the FBI has concluded Donaghy was truthful, it does not mean others will be charged with crimes. Agents and prosecutors easily could have concluded that the rigging of the four games was reprehensible but did not qualify as a federal crime. There was no indication of gambling or money laundering or racketeering on the part of the NBA in Donaghy's allegations. If the NBA wants to extend a series to a seventh game, it might be fraud upon the fans, but it is not a federal crime.

It appears the NBA's demand for restitution prompted Donaghy to go public with his allegations of game rigging. Was the demand for restitution a mistake?

Yes. It was a blunder. Not only did the demand prompt Donaghy's public allegations of four rigged games, it also gave Donaghy and his lawyer, John Lauro, a chance to go through the NBA's internal investigation. It opened a door the NBA would have preferred to keep closed.

Donaghy and Lauro have asked Amon to authorize a subpoena that would permit them to rummage through every report, every interview transcript and every piece of documentary evidence produced by NBA independent investigator Lawrence Pedowitz. It is likely Amon will sign the subpoena because, if the NBA is claiming $1 million in investigation expenses, Donaghy should be permitted to check the league's claim. The subpoena will push the NBA into a difficult position. The league can either try to quash the subpoena -- explain in court why the materials must be kept secret -- or withdraw its request for restitution.

Either way, the NBA will find itself in the position of covering up its own investigation of its own referees. What is the league hiding? Commissioner David Stern can say Donaghy is a "rogue" referee, but he would be stonewalling the most significant effort to check his assertion.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.