Washington commanders strongly deny financial misconduct in letter to Federal Trade Commission
Washington commanders strongly disputed the allegations of financial irregularities in a letter to the Federal Trade Commission on Monday, outlining why there should not be an investigation by the government institution.
The 22-page letter — written by team attorney Jordan Siev, addressed to FTC Chairwoman Lina M. Khan, and obtained by ESPN — refuted claims by former team employee Jason Friedman that which the team had engaged in harmful 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 Szczenski, the team’s former chief financial officer for more than eight years, said in a signed affidavit that “I can say unequivocally that I have never helped maintain, or seen anyone else maintain, a “second set” of books. was one of three former high-ranking team officials who submitted signed affidavits.
Those points were raised by the House Committee on Oversight and Reform in a letter to the FTC last week, highlighting allegations made by Friedman, who spent 24 years with the organization’s ticket department as a deputy. -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 acknowledged receipt of the letter, but generally does not say whether it will investigate the matter. It could also be given to the attorneys general of Maryland, Washington, DC and Virginia; all were copied from the letter to the FTC.
Washington’s letter called Friedman’s claims “baseless” as well as “false and reckless” and based on “pure speculation,” according to former Washington chief operating officer Mitch Gershman, who left the company. team in 2015 but five years later was accused by former employees. of sexual harassment in a Washington Post article. Gershman and others said Friedman was unaware because he did not work in the accounting department and was therefore unaware of all financial discussions. Friedman worked at the team’s stadium in Landover, Md., about an hour from the practice facility in Ashburn, Va., where, according to the letter, the finance and accounting departments worked.
Additionally, the letter stated that the committee never gave the team the opportunity to respond to Friedman’s accusations. It also portrays Friedman as a disgruntled former employee who until recently pressured several people in the organization – including Wright – via email and text to allow him to return, while also sending a letter to the owner Dan Snyder after he was fired. in October 2020 renting it.
In January, he told Wright via email, “I’ve had a year to reflect on my past shortcomings. I’ve learned and feel remorse for those shortcomings. If you took me in, I would be of back to help at an instant notice.”
Friedman claimed the organization knowingly categorized standing room ticket revenue for Washington games as revenue collected from college games and concerts, allowing them to pocket the money and not share a portion. with the NFL. He also said they failed to refund security deposits on subscriptions, alleging it affected 2,000 customers at a cost of $5 million.
But Washington’s letter says he has proof he hasn’t diverted revenue from NFL games to other events. Friedman had produced a May 6, 2014 email with Stephen Choi, then Washington’s chief accounting officer, asking for help processing ticket sales and additional revenue.
The email said Friedman was charging $55 per ticket, but they were priced at $44 in the system. The difference would be considered bogus licensing fees. According to the email, Choi asked him to apply the “juice” of that extra $11 per ticket to the Navy-Notre Dame game to be held that same year. Friedman said “juice” was a term for hidden revenue for the team. Washington’s letter said “juice” was slang for “rising revenue.”
Teams are required to share 40% of their revenue with the other 31 teams. But college play was considered non-shareable revenue, which meant Washington would receive an additional $162,360 without losing any part of the revenue-sharing pool.
Washington’s letter said Choi forwarded that email to the accountants, removing Friedman from the chain. In an August email, Trey Flythe, then listed as the team’s finance manager, told Choi and Szczenski that “the Navy license fee has been replaced with a 14RedRev.” This meant he was now considered a Redskins earner in 2014; the email included a screenshot of accounting for the amount of $162,360 listed under 14RedRev.
The letter also pointed out that the team is subject to annual audits by an outside company, BDO, and every several years by an NFL auditor, Ernst & Young. Friedman alleged that revenue from non-NFL events at FedEx Field was not subject to those audits. Washington’s letter says that’s not true.
In his affidavit, Szczenski said “no category of events was ‘excluded’ from external audits; concerts, college football games, and soccer games were all part of the team’s audited financial statements, and all were subject to scrutiny by auditors.” Former General Counsel David Donovan said the same in his affidavit.
The letter also says the Committee should not have relied on Friedman’s testimony regarding when the alleged revenue-sharing scheme occurred. Friedman said this happened “mostly from 2010 to 2015”. Washington’s letter says the team had a $27 million waiver from the NFL that limited revenue sharing because it was paying for projects approved in 2013 and completed two years later. The letter says this waiver was known to the team’s accounting and finance department, but “unbeknownst to Friedman.” Before that, Washington had a 15-year waiver that ended in 2012 because it paid for the stadium itself.
The letter also states that Friedman was wrong about how the team handled security deposits. He claimed after Snyder bought the team in 1999 that the team created artificial barriers to prevent consumers from collecting security deposits. Or they would target repositories of people who forgot they had created one, or those who had inherited seats and didn’t know one existed. He said that with corporate accounts, the name on the agreement could change over time and, again, the new person might not be aware of the original deposit. Friedman said team leaders told employees to make it difficult for customers to receive their deposits by increasing the steps required to receive the money. Some deposits have been returned.
Additionally, Friedman noted to the Committee that the team stopped charging security deposits a year after Snyder became an owner. Donovan, who left the team in 2011, said Friedman never brought the allegations to him. In his affidavit, Szczenski said the only deposits converted into income occurred when a customer breached their contract. He said that over a 10-year period, this resulted in an additional income of $200,000.
The letter also included a copy of a letter the organization sent to customers in 2014, advising them that they may be eligible for a refund based on their remaining balance. It included boxes to check if the name and address on the account were correct. It also contained an address to send the letter to to collect the refund as well as an email address they could send it to instead.
Additionally, the letter states that the team’s unclaimed property, including security deposits, was reviewed in 2014 by the Virginia Department of Treasury’s Unclaimed Property Division, which had full access to information about team security deposits. After the review, the department recommended no further action, but instead demanded that he pay $7,330.15 in unclaimed funds to the state as “abandoned property.”
Finally, the letter stated that the team did not approve of Friedman’s practice of selling general admission tickets to brokers in 2009.
Friedman had alleged to the Committee that he had become the scapegoat for this practice, telling them that Choi and Gershman had told him to misrepresent the situation in their ticket. Friedman said he would inform potential customers that no general admission tickets were available and urge them to purchase seats at the club level. According to the letter, there was no NFL policy against selling tickets to brokers in 2009. It also stated that none of the contracts Friedman made had been approved by the NFL’s finance or legal department. team. The letter alleged that Friedman used a rubber stamp of Gershman’s signature, allowing him to “keep the agreements secret”.
“When [Snyder] was informed, he was not happy,” Gershman said in his affidavit. “He ordered me and other senior executives to cancel the contracts immediately, and we spent months negotiate with brokers to undo deals where possible. It would have made no sense for Mr. Snyder to have ordered these broker sales to roll over and later cancel them, at substantial financial cost to the team.”
Donovan said in his affidavit that he recommended to Snyder that Friedman be fired after this incident. Friedman alleged that instead of being fired, he received a raise.