Washington commanders on Monday strongly challenged allegations of financial irregularities in a letter to the Federal Trade Commission, citing why there should be no investigation by the government.
The 22-page letter – written by team lawyer Yordan Siev to FTC President Lina M. Khan and received by ESPN – refuted allegations by former team member Jason Friedman that the team was involved in malicious financial practices affecting consumers and the NFL. to increase their revenue. In addition to the letter, there were 83 pages of signed affidavits, emails and texts.
Paul Schensky, the team’s former CFO for more than eight years, said in a signed affidavit that “I can state unequivocally that I have never helped maintain or seen anyone else maintain a ‘second set’ of books.” “He is. was one of three former senior team officials to submit signed affidavits.
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These points were made by the House of Representatives’ oversight and reform committee in a letter to the FTC last week, highlighting allegations by Friedman, who spent 24 years in the organization’s ticket department as vice president of sales and customer service. He was fired in October 2020, two months after Jason Wright took over as team president.
The FTC has confirmed that it has received the letter, but does not usually say whether it will investigate. It could also be handed over to attorneys general in Maryland, Washington, D.C., and Virginia; all were copied in the letter to the FTC.
Washington’s letter called Friedman’s allegations “baseless” as well as “false and reckless” and based on “pure speculation”, according to Mitch Gershman, a former Washington chief operating officer who left the team in 2015 but five years later. he was later accused by former officials of sexual harassment in a Washington Post article. Gershman and others said Friedman was expelled because he did not work in the accounting department and was therefore unfamiliar with all financial discussions. Friedman worked at the team’s stadium in Landover, Maryland, which is about an hour from the training facilities in Ashburn, Virginia, where, according to the letter, the finance and accounting departments worked.
The letter also said the commission never gave the team a chance to respond to Friedman’s allegations. He also portrayed Friedman as a disgruntled former employee who until recently lobbied several people in the organization – including Wright – by email and text message to allow him to return, while sending a letter to owner Dan Snyder after his dismissal in October 2020. praising him.
In January, he told Wright by email: “I had a year to reflect on my past shortcomings. I have learned and regret these shortcomings. If you meet me, I would go back there to help with a note for a moment. “
Friedman claims that the organization deliberately categorized ticket earnings only for standing matches in Washington as revenue collected from games and college concerts, thus allowing them to put the money in their pockets and not share part with the NFL. He also said they had failed to return the guarantee deposits for the subscription tickets, claiming that it had affected 2,000 customers at a cost of $ 5 million.
But the letter from Washington says there is evidence that it did not redirect NFL revenue to other events. Friedman created an email on May 6, 2014, with Stephen Choi, then Washington’s chief accountant, asking for help in processing additional ticket sales and revenue.
The email states that Friedman charges $ 55 per ticket, but they are priced at $ 44 in the system. The difference will be written off as fake license fees. According to the email, Choi ordered him to apply the “juice” of that extra $ 11 to a ticket for the Navy-Notre Dame game, which will take place the same year. Friedman said “juice” is a term for hidden income for the team. Washington’s letter said the “juice” was slang for “rising revenue.”
Teams are required to share 40% of their revenue with the other 31 teams. But the college game was considered unshared revenue, which meant Washington would receive an additional $ 162,360 without losing part of the revenue sharing pool.
The letter from Washington states that Choi forwarded this email to the accountants, expelling Friedman from the chain. In an August email, Trey Flight, then named manager of the team’s ticket finance department, told Choi and Shchensky that “the Navy licensing fee has been transferred to 14RedRev.” This meant that it was now considered Redskins revenue for 2014; the email includes an accounting screenshot for the $ 162,360 amount listed under 14RedRev.
The letter also states that the team is subject to annual audits by an outside firm, BDO, and every few years by an NFL auditor, Ernst & Young. Friedman claims that revenue from events outside the NFL at FedEx Field has not been subject to these audits. Washington’s letter says this is not true.
In his swearing-in statement, Schensky said there were no categories of events that were “excluded” from external audits; concerts, college football matches and football matches are part of the audited financial statements of the team and all can be audited. ‘ Former Chief Counsel David Donovan said the same in his swearing-in statements.
The letter also said that the Committee should not have relied on Friedman’s testimony as to when the alleged revenue-sharing scheme arose. Friedman said it happened “mostly from 2010 to 2015.” The letter from Washington said the team had waived $ 27 million from the NFL, which limited revenue sharing because it paid for projects approved in 2013 and completed two years later. The letter said the refusal was known to the team’s accounting and finance department, but “without Friedman’s knowledge”. Before that, Washington had a 15-year refusal, which ended in 2012 because it had paid for the stadium itself.
The letter also said that Friedman was wrong about the way the team handled the guarantee deposits. He claims that after Snyder bought the team in 1999, the team created artificial barriers to make it harder for consumers to collect guarantee deposits. Either they would target deposits from people who forgot they made one, or those who inherited places and didn’t know they existed. He said that in corporate accounts the name of the agreement may change over time and again the new person may not know about the initial deposit. Friedman said team leaders have told employees they are making it harder for customers to get their deposits by increasing the steps needed to get the money. Some deposits have been returned.
Friedman also told the commission that the team stopped charging guarantee deposits a year after Snyder became the owner. Donovan, who left the team in 2011, said Friedman never brought him these accusations. In his swearing-in statement, Schensky said the only income deposits were when a client failed to fulfill his contract. He said that for a 10-year period that led to an additional $ 200,000 in revenue.
The letter also included a copy of a letter the organization sent to customers in 2014, informing them that they may be entitled to a refund based on their remaining balance. It included fields to verify that the account name and address were correct. It also contained an address to send the letter back to collect the refund, as well as an email address to which customers can send instead.
In addition, the letter states that the team’s unclaimed property, including guarantee deposits, was inspected in 2014 by the Virginia Department of Treasury’s Unclaimed Property Department, which had full access to the team’s deposit information. After the review, the department did not recommend further action, but instead asked the team to pay $ 7,330.15 in unsolicited funds to the state as “abandoned property.”
Finally, the letter said the team disapproved of Friedman’s practice of selling brochure tickets to brokers in 2009.
Friedman claimed to the Committee that the bad man had been made for this practice, telling them that Choi and Gershman had told him to misrepresent their ticket situation. Friedman said he would tell potential customers that there were no tickets to share and would encourage them to buy club-level seats. According to the letter, there was no NFL policy against selling ticket brokers in 2009. It also states that none of Friedman’s contracts were approved by the team’s finance or legal department. The letter alleges that Friedman used a rubber seal with Gershman’s signature, which allows him to “keep the agreements secret.”
“When [Snyder] he was informed, he was not satisfied, “Gershman said in his swearing-in statements. It would not make sense for Mr Snyder to direct these sales to brokers just to reverse them and cancel them later, at a significant financial cost to the Team. “
Donovan said in his sworn statement that he recommended Snyder Friedman to be fired after the incident. Friedman claims that instead of being fired, he received a promotion.
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