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Washington Commanders strongly deny fiscal misconduct in letter to Federal Trade Fee

The Washington Commanders on Monday strongly disputed statements of economical improprieties in a letter to the Federal Trade Commission, laying out the case for why there really should be no investigation by the govt institution.

The 22-webpage letter — prepared by group lawyer Jordan Siev, dealt with to FTC chair Lina M. Khan and attained by ESPN — rebutted allegations by previous group worker Jason Friedman that the team experienced engaged in nefarious money practices, impacting individuals and the NFL, to boost its income. In addition to the letter, there had been 83 internet pages of signed affidavits, email messages and texts.

Paul Szczenski, the team’s former director of finance for additional than eight years, stated in a signed affidavit that, “I can state unequivocally that I under no circumstances assisted preserve, or noticed any one else manage, a ‘second set’ of guides.'” He was a single of 3 former significant-ranking staff officers who submitted signed affidavits.

These points were being designed by the Property Committee on Oversight and Reform in a letter to the FTC final 7 days, highlighting allegations made by Friedman, who spent 24 a long time in the organization’s ticket office as the vice president of income and customer service. He was fired in Oct 2020, two months soon after Jason Wright took about as crew president.

The FTC acknowledged acquiring the letter but typically does not condition whether it will investigate the issue. It also could be turned more than to the lawyers standard in Maryland Washington, D.C. and Virginia. All ended up copied on the letter to the FTC.

Washington’s letter referred to as Friedman’s promises “baseless” as nicely as “untrue and reckless” and dependent on “pure speculation,” in accordance to Mitch Gershman, Washington’s former chief working officer, who left the team in 2015 but 5 yrs later was accused by previous staff members of sexual harassment in a Washington Article article. Gershman and other folks stated Friedman was out of the loop because he did not perform in the accounting office and was as a result not privy to all financial conversations. Friedman labored at the team’s stadium in Landover, Maryland, which is roughly just one hour from the apply amenities in Ashburn, Virginia, in which in accordance to the letter the finance and accounting departments labored.

Also, the letter said the committee never ever gave the team a chance to answer to Friedman’s prices. It also painted Friedman as a disgruntled previous personnel who, until finally recently, had lobbied numerous people in the group — including Wright — via electronic mail and by text to allow for him to return, when also sending a letter to proprietor Dan Snyder immediately after his firing in 2020 praising him.

In January, he informed Wright through email, “I have experienced a 12 months to reflect on my past shortcomings. I have figured out, and I am remorseful for these shortcomings. If you welcomed me, I would be back again there to aid at a moments discover.”

Friedman claimed the organization experienced knowingly classified revenue from standing-area only tickets to NFL online games as profits collected from faculty games and concerts, therefore allowing for them to pocket the cash and not share a part with the league. He also said that it failed to refund security deposits on season tickets, alleging that it affected 2,000 customers at a price of $5 million.

But Washington’s letter claims it has evidence that it did not divert income from NFL video games to other gatherings. Friedman had developed a May 6, 2014, electronic mail with Stephen Choi, then Washington’s main accounting officer, that asked for enable on processing extra ticket income and earnings.

The email mentioned that Friedman was charging $55 for each ticket but they were being priced at $44 in the technique. The difference would be created off as bogus licensing fees. In accordance to the e-mail, Choi directed him to use the “juice” from that extra $11 for each ticket to the Navy-Notre Dame sport to be held that similar yr. Friedman mentioned “juice” was a time period for hidden profits for the team. Washington’s letter stated that “juice” was slang for “an upside in income.”

Groups are required to share 40% of their profits with the other 31 groups. But the university match was deemed non-shareable revenue, which meant that Washington would acquire an supplemental $162,360 devoid of losing a portion to the income-sharing pool.

Washington’s letter stated that Choi forwarded this email to accountants, dropping Friedman from the chain. In an August e mail, Trey Flythe, then outlined as a supervisor in the team’s ticket finance section, instructed Choi and Szczenski that the “Navy licensing payment has been switched to a 14RedRev.” That meant it was now thought of 2014 Redskins profits the e-mail incorporated a screenshot of the accounting for the amount of money of $162,360 listed below 14RedRev.

The letter also pointed out that the workforce is subjected to yearly audits by an outdoors business, BDO, and each individual various several years by an NFL auditor, Ernst & Young. Friedman alleged that earnings from non-NFL events at FedEx Discipline had been not subjected to individuals audits. Washington’s letter says that’s not real.

In his affidavit, Szczenski reported, “there ended up no types of gatherings that were ‘excluded’ from exterior audits live shows, higher education soccer video games, and soccer matches had been all aspect of the Team’s audited financial statements, and all could be subjected to scrutiny by the auditors.” Previous typical counsel David Donovan claimed the very same in his affidavit.

The letter also claims the Dwelling committee ought to not have relied on Friedman’s testimony with regards to when the alleged earnings-sharing scheme occurred. Friedman mentioned it occurred “mostly from 2010 to 2015.” Washington’s letter states the group had a $27 million waiver from the NFL that restricted earnings sharing because it was having to pay for jobs authorised in 2013 and completed two a long time afterwards. The letter claims this waiver was known in the team’s accounting and finance office but “unbeknownst to Friedman.” Ahead of that, Washington had a 15-calendar year waiver that finished in 2012 since it experienced paid out for the stadium by itself.

The letter also states Friedman was completely wrong about how the staff handled stability deposits. He claimed that following Snyder bought the crew in 1999 the team made artificial limitations to make it tough for individuals to gather security deposits. Or they would goal deposits from folks who experienced overlooked they designed 1 or these who inherited seats and failed to know 1 existed. He mentioned with company accounts, the name on the arrangement may well alter around time and, the moment all over again, the new individual may not know about the first deposit. Friedman explained workforce executives explained to personnel to make it difficult for shoppers to receive their deposits by raising the techniques necessary to acquire the income. Some deposits did get returned.

Also, Friedman pointed out to the House committee that the workforce stopped charging safety deposits a 12 months after Snyder grew to become operator. Donovan, who left the crew in 2011, stated Friedman never introduced these allegations to him. In his affidavit, Szczenski stated the only deposits transformed to revenue occurred when a buyer defaulted on their contract. He explained in a 10-year span that resulted in an excess $200,000 of profits.

The letter also integrated a duplicate of a letter the business sent to prospects in 2014, informing them that they might be entitled to a refund primarily based on their remaining balance. It integrated containers to test as to irrespective of whether the title and deal with on the account have been suitable. It also contained an deal with to ship the letter back again to gather the refund as nicely as an e-mail deal with consumers could mail to as an alternative.

Furthermore, the letter states that the team’s unclaimed residence, which include security deposits, was reviewed in 2014 by the Unclaimed Property Division of Virginia’s Department of the Treasury, which had complete access to the team’s security deposit facts. Soon after the evaluate, the office did not recommend additional action but alternatively demanded the staff pay back $7,330.15 in unclaimed funds to the point out as “deserted residence.”

Last but not least, the letter explained the crew did not approve of Friedman’s follow of selling typical admission tickets to brokers in 2009.

Friedman had alleged to the Residence committee that he was manufactured the drop male for this exercise, telling the committee that Choi and Gershman explained to him to misrepresent their ticket scenario. Friedman stated he would convey to possible clients that no typical admission tickets were available and press them towards acquiring club-amount seats. According to the letter, there was no NFL coverage versus selling to ticket brokers in 2009. It also stated that none of the contracts entered into by Friedman ended up accredited by the team’s finance or legal section. The letter alleged that Friedman applied a rubber stamp of Gershman’s signature, allowing for him to “retain the agreements secret.”

“When [Snyder] was informed, he was not happy,” Gershman mentioned in his affidavit. “He directed me and other senior executives to cancel the contracts right away, and we used months negotiating with brokers to undo the discounts insofar as we could. It would have produced no sense for Mr. Snyder to have directed these broker revenue only to switch all over and cancel them later, with considerable fiscal charge to the Group.”

Donovan mentioned in his affidavit that he advised to Snyder that Friedman be fired right after this incident. Friedman alleged that in its place of currently being fired, he gained a raise.

Lisa Banks and Debra Katz, Friedman’s lawyers, explained Monday that their client “stands by his testimony, which was truthful and primarily based on his experiences with the team. He is happy to respond to abide by-up concerns from Congress, the FTC, or any government agency” and is “well prepared to protect himself publicly against these allegations if Mr. Snyder permits him to do so. In the meantime, we will talk straight with the team about these demonstratively bogus allegations.”

A Property Committee on Oversight and Reform spokesman reported in a assertion that the Commanders have “failed to absolutely deal with the concerns raised in the Committee’s letter. If the crew maintains that it has practically nothing to conceal, it ought to welcome an unbiased critique by the FTC, or the NFL, which is reportedly examining these concerns as well.”