The Severe Penalties NC State Could Face for Recruiting Allegations Involving Dennis Smith Jr.

NC State's basketball team could face extreme penalties if found guilty of committing recruiting violations to lure in former point guard Dennis Smith Jr. What type of effect does it have on former head coach Mark Gottfried and the program as a whole?

It was only a matter of time before high-profile criminal trials involving sneaker executives, college basketball coaches and bribes to five-star recruits triggered the wrath of the NCAA.

On Wednesday, North Carolina State University acknowledged that the NCAA has sent the school a Notice of Allegations regarding alleged rule violations. The NCAA charges that NC State’s basketball program committed a series of recruiting violations between 2014 to 2017, including two so-called “Level I” infractions.

A Level I infraction refers to a severe breach of conduct. It is one that, under NCAA rules, “seriously undermines or threatens the integrity of the NCAA collegiate model as set forth in the Constitution and bylaws.” Such an infraction includes “any violation that provides or is intended to provide a substantial or extensive recruiting, competitive or other advantages, or a substantial or extensive impermissible benefit.” If NC State is found to have committed a Level I infraction, it could face severe penalties. Potential penalties include a postseason ban, reduction in scholarships and a substantial fine.

The NCAA’s reliance on FBI Agents, Federal Prosecutors and Government Witnesses

NC State’s alleged violations are based on information and evidence obtained by the NCAA through the FBI’s multi-year investigation into college basketball recruiting corruption. Relying on the investigation’s findings, federal prosecutors from the Southern District of New York brought charges in 2017 against former Oklahoma State assistant Lamont Evans, former Arizona assistant Emanuel "Book" Richardson, former USC assistant Tony Bland and former Auburn University associate head coach (and former NBA rookie of the year) Chuck Person. Other persons charged included Munish Sood, a registered investment advisor, and Rashan Michel, a clothing executive.

Those defendants negotiated plea deals. They admitted to various illicit roles in transactions where money and other items of value were directed to star recruits. The recruits, in turn, agreed to join college basketball programs sponsored by Adidas. The plea deals also required the defendants to provide testimony against remaining defendants and share implicating evidence, including emails and texts.

Three other defendants did not cut deals. In two trials, prosecutors convinced jurors to convict Adidas director of global marketing James Gatto, Adidas consultant and basketball organizer Merl Code and client recruiter (aka runner) Christian Dawkins on wire fraud and conspiracy charges.

The FBI’s investigation was aided by witnesses who testified, under oath, of wrongdoing by significant figures in basketball—including former Wolfpack head coach Mark Gottfried and former star point guard Dennis Smith, Jr.

In the federal trial held last October, NC State compliance director Carrie Doyle testified about her concerns over Gottfried’s relationships with questionable persons. Given her role as the school’s compliance director, Doyle was particularly influential as a witness. Her job is to make sure the Wolfpack don’t violate NCAA rules. Therefore, Doyle’s worries were raised from the vantage point of a highly-informed person. She expressed reservations about links between the basketball program, Smith and Eric Leak, a former Wolfpack wide receiver who had entered the player representation industry. Leak later admitted to bribing college athletes.

Dennis Smith, Jr. at the center of allegations

The FBI thoroughly explored NC State’s recruitment of Smith, a five-star recruit from Trinity Christian in Fayetteville, North Carolina. Smith played only one season at NC State (2016-17). He then entered the 2017 NBA draft and was selected ninth overall by the Dallas Mavericks. Earlier this year, the Mavericks dealt the now 22-year-old to the New York Knicks as part of the Kristaps Porzingis trade. Smith is currently a starting guard for the Knicks. By most accounts, his NBA career is off to a solid start.

But Smith’s past now casts a shadow on his collegiate alma mater. The NCAA alleges that Orlando Early, an assistant coach under Gottfried and the program’s lead recruiter, arranged for Smith and individuals associated with Smith—one of whom is thought to be his father, Dennis Smith, Sr.—to receive $46,700 in inducements and impermissible benefits. Stated differently, the NCAA contends that Early, on behalf of the Wolfpack program, used bribes to convince Smith to attend NC State over other schools that had recruited him.

The NCAA offers specific details to corroborate this claim. One such detail is a reference to November 2015, when Early allegedly arranged for former Adidas consultant and AAU coach T.J. Gassnola to funnel $40,000 in cash to Early. The NCAA also charges that Early told Gassnola that he “intended to provide the money to Shawn Farmer.” Farmer was a trainer and friend of Smith. The NCAA’s narrative indicates that Early assured Gassnola that Farmer would then get the money over to Smith’s family.

T.J. Gassnola being caught on a wiretap ended up hurting NC State

How would the NCAA know about the contents of private conversations between Early and Gassnola? Because those conversations became public last fall when Gassnola recalled them while on the witness stand.

Gassnola was a cooperating witness, meaning he had cut a deal with prosecutors. He did so after being caught on government wiretaps speaking with Dawkins about payments to players. Gassnola agreed to plead guilty to conspiracy to commit wire fraud in exchange for a lighter punishment. This exchange also required Gassnola to testify against his former colleagues, some of whom were friends. Further, he was obligated to share any and all pertinent emails, texts, social media messages and other correspondences to help the government’s case. If Gassnola failed to live up to his end of the bargain, either by failing to be truthful or by failing to provide all evidence, the government had the ability to pull the plea deal. This was real leverage over him.

As a witness, Gassnola detailed how he organized and assisted in the paying of recruits and their families. He also explained the steps he took to ensure that transactions with recruits and their family members were conducted in secret. Gassnola discussed payments to specific recruits, including former Louisville recruit Brian Bowen II and Smith. Gassnola admitted that he funneled $40,000 to Early for the purpose of paying Smith.

Mark Gottfried is in serious trouble with the NCAA for failing to monitor his coaching staff and program

Gottfried, who was fired by the Wolfpack in 2017 and is currently the head coach of Cal State Northridge, is also accused of engaging in a Level I infraction while at NC State. The Notice of Allegations claims that Gottfried failed in his capacity as a head coach to monitor those who directly reported to him.

More specifically, Gottfried is “presumed responsible” for failing to monitor Early, particularly with respect to Early’s involvement with Gassnola, Farmer and Smith. Gottfried is also accused of failing to monitor benefits provided by the men’s basketball team to recruits. The NCAA justifies a Level I violation on account of the continuousness of Gottfried’s alleged errors and the degree to which those errors advantaged the Wolfpack program and, consequently, his collegiate coaching career.

Aggravating and Mitigating Factors for NC State

In detailing NC State’s alleged infractions, the NCAA specifies numerous aggravating factors. They include that the NCAA enforcement staff, rather than NC State’s compliance department, identified many of the violations. If a school identifies and reports a violation to the NCAA, the NCAA is usually more forgiving than if the NCAA discovers it first.

Here, the NCAA claims that while NC State reported Level III violations (which are mere “breaches of conduct” and provided NC State only minimal advantages over other schools), the university failed to report Level I and II violations.

At the same time, the NCAA acknowledged there were mitigating factors in NC State’s favor. They include that NC State lacks a history of Level I or Level II violations, meaning it is not a repeat offender that failed to learn its lesson the first time.

NC State’s challenges in investigating the claims and getting cooperation from Gottfried and Smith

As a public response to the Notice of Allegations, NC State chancellor Randy Woodson asserts that his university will “carefully review” the allegations and “thoroughly evaluate the evidence” before responding. Generally, if a school admits fault to the NCAA, it receives a lighter punishment.

But the calculation is not that simple for Woodson. An admission of wrongdoing without trying to first wage a defense could be unpopular with different constituencies at NC State. They include the university’s Board of Trustees and alumni community.

Woodson, who has been chancellor of NC State since 2010, also knows that if he admits the NCAA has all the facts right, then he would also be admitting that the university, while under his watch, made numerous mistakes. Such an admission could damage his standing at the school.

NC State also faces practical limitations in how it reviews evidence from several years ago. Some of the university employees involved are no longer employed by the school. Some were fired. This is particularly relevant with respect to Gottfried and Early, who are key witnesses and who the school fired two years ago. Unless the school is still paying them as part of buyout agreements, neither may be particularly interested in cooperating with a university that fired them.

Gottfried and Early (who does not appear to be coaching at this time) know that NC State’s motivations do not necessarily align with their own. Early and Gottfried may believe NC State wants the NCAA to place the blame on them and away from current university officials—including those in the athletic department. Both could be concerned about the risk of a show-cause penalty, which would obligate any school that seeks to employ them to persuade the NCAA why it ought to hire them in spite of their past transgressions. The school would also risk facing penalties if any transgressions re-occurred. Both know that former UConn men’s basketball coach Kevin Ollie recently received a three-year show-cause order for recruiting violations.

In March, Joe Giglio of The News & Observerreported that the university still owes Gottfried $520,000 from his buyout. The school, however, was no longer paying down the remaining amount. It’s possible NC State officials could hold that remaining amount as leverage over Gottfried as a way of persuading him to cooperate.

Smith, for his part, has little reason to get involved. He’s entering his third NBA season and is years removed from NC State, a school he attended for less than an academic year. NC State also lacks the legal capacity to compel Smith, a former student, to cooperate.

Smith and his representatives likely review the NC State/NCAA situation as radioactive. He has an endorsement deal with Under Armour, a company that probably prefers that Smith dissociate himself from the controversy as much as possible. Companies that Smith endorses likely have leverage over him through “morals clauses” in endorsement deals. They permit the company to exit a deal if an athlete becomes involved in a scandal that tarnishes his or her brand and, by extension, the brand of the endorsed company.

NC State is a warning to other schools implicated in FBI corruption probe and their head coaches

There’s a long list of schools connected to the college basketball corruption scandal. Officials at these schools know that NC State is likely the first of many dominoes to fall. Other schools and their head coaches (for failing to monitor) will probably be next.

The NCAA is also in a position of strength. Evidence obtained through comprehensive FBI investigations and federal trials is of a higher and more reliable quality than the type of evidence the NCAA can obtain on its own.

While the NCAA is powerful in terms of influence over member schools and conferences, it’s still a private entity whose power is limited to terms of membership. To that point, the NCAA lacks subpoena power, meaning it can’t compel witnesses to speak or share emails and texts under penalty of law. This can lead to incomplete and inaccurate investigations. Further, persons who agree to speak with NCAA investigators do not do so under oath. This means they can knowingly lie, exaggerate, obfuscate or omit without worry about facing criminal perjury charges.

FBI agents and federal prosecutors—who win roughly nine out of every 10 trials—are in a completely different position than NCAA investigators. They are the most threatening kind of investigators around. They are armed with the power of federal criminal charges and the accompanying threat of prison. They have the authority of the criminal justice system at their disposal, which is one reason why so many of the college hoops defendants named above cut deals instead of taking their chances in a trial. The FBI and Justice Department’s investigation into NCAA corruption, and the subsequent federal trials, provide a treasure trove of substantiated evidence for the NCAA to apply.

The NCAA also waited patiently to act. It could have raised allegations against schools implicated in the federal investigation while the trials were going on. Instead, the NCAA waited for the completion of the trials. It did so most likely at the request or urging of federal prosecutors. They relied on informants who might have clammed up if they sensed the NCAA was also involved.

Stay tuned for more schools and coaches to be accused by an NCAA that is now empowered by the findings of the federal government.

Michael McCann is SI’s Legal Analyst. He is also an attorney and Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.