Cayman corporations were set up as “vehicles of fraud” in a scheme to cheat international football organizations out of millions of dollars between the early 1990s and 2011, according to claims made in U.S. federal court by one of those organizations.
CONCACAF, world football’s governing organization for the Caribbean, North American and Central American region, made the allegations in an April 18 lawsuit filed against former FIFA officials Jack Warner and Chuck Blazer. The lawsuit seeks repayment of at least US$20 million from the two men, as well as their New York, Delaware and Cayman Islands companies that CONCACAF alleges were used in the schemes.
“Blazer used the … entities, and possibly other front companies, as vehicles of fraud and not for legitimate business purposes,” the lawsuit claims. “None of them had business operations but were used as vehicles for laundering the proceeds of illegal and fraudulent activities.”
Blazer, CONCACAF’s former general secretary, pleaded guilty in a sealed indictment during 2013 to racketeering and other criminal offenses in the U.S. arising from his actions with the football governing organization. Warner, the former CONCACAF president, was charged with similar offenses and is still being sought by U.S. courts in connection with the racketeering investigation that ensnared more than 40 FIFA officials worldwide, including Cayman’s Jeffrey Webb and the U.K.’s Costas Takkas.
Webb has since pleaded guilty to seven of the charges against him and faces sentencing in U.S. court next month. Both Warner and Takkas have denied the charges. Takkas has been extradited to the U.S., but Warner has not.
The general scheme used by Warner and Blazer to funnel CONCACAF funds to their own personal bank accounts is set out in both U.S. federal court indictments and the CONCACAF lawsuit that was filed last week. According to the court records, Warner and Blazer “worked closely” to negotiate for bribes and kickbacks in exchange for the award of lucrative broadcasting rights for CONCACAF football tournaments, including the Gold Cup and the World Cup.
The lawsuit and the indictment allege Warner and Blazer used two Cayman entities – Sportsvertising (Cayman) and En Passant Inc. – to “cover up their schemes.”
For instance, in one such arrangement, CONCACAF alleges Warner, its former president, signed a deal with Blazer, the general secretary, who owned Sportsvertising, to offer Blazer 10 percent commission on all broadcasting agreements signed by CONCACAF with various sports marketing companies. Over the course of two decades, Blazer put funds from some of the agreements into the entities he controlled, including Sportsvertising (Cayman).
In March 1999, one sports marketing company wired US$200,000 to Sportsvertising Inc., court records state. This payment, CONCACAF alleges, was a bribe. Half of that cash ended up in a separate bank account controlled by Warner, the lawsuit states.
In February 2003, another US$600,000 payment was credited to Blazer’s Cayman account held in the name of Sportsvertising, the lawsuit alleges. In this case, the bank managing the account requested evidence of a source of funds. It is alleged that Blazer and the sports marketing company involved in paying the bribe drew up a bogus contract to conceal the nature of the payments.
2010 World Cup
According to court records, Blazer received US$750,000 in bribe payments through the Sportsvertising entities following the payment of a much larger bribe to Warner in exchange for FIFA’s decision to award the 2010 World Cup to South Africa.
The US$10 million bribe for the South African World Cup was well documented in U.S. federal court indictments, with federal prosecutors alleging the amount was sent to Warner veiled as a payment “to the legacy program for the diaspora and specifically for the Caribbean countries.”
Blazer, who was promised $1 million of that payment, received US$750,000 in three separate payments, all deposited in Sportsvertising accounts.
The CONCACAF lawsuit also alleges other payments Blazer arranged in the form of commissions that were paid between 1990 and 2011. These payments were initially approved by Warner, who was CONCACAF president at the time, but the contract Warner signed was allowed to expire in 1998.
For another 13 years between 1998 and 2011, CONCACAF alleges Blazer paid himself commissions through the Sportsvertising entities without a contract in place.
“Blazer accrued millions of dollars in commissions and fees which were not authorized under either of the Sportsvertising contracts,” CONCACAF alleges. “These entities simply existed to receive payments on behalf of Blazer. CONCACAF’s former controller who executed these payments described [the entities] as shell companies to act as fronts for Blazer’s payment of monies.”
The millions siphoned from CONCACAF funds went to a number of personal purchases, including rent for 15 years on three separate Trump Tower apartments in Manhattan, the football organization claims.
“Blazer caused CONCACAF to pay his landlords a collective amount of over US$1.5 million in rent,” the lawsuit alleges.
One of the apartments at Trump Tower was used to house Blazer’s girlfriend and her children, written off as a business expense, according to lawsuit claims. Another apartment was allegedly used to house Blazer’s cats, CONCACAF stated.
Other purchases made with allegedly ill-gotten funds included two Miami condos, a Bahamas apartment and a Hummer H2, the lawsuit claims.