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Snyder Ticket Scandal Expands to FTC With U.S. House Claims of Fraud

michael mccann
·6 min read

In a letter sent to Federal Trade Commission chair Lina Khan on Tuesday, the House Committee on Oversight and Reform chairwoman, U.S. Rep. Carolyn Maloney (D-New York), and U.S. Rep. Raja Krishnamoorthi (D-Illinois) claim that “for over a decade, Commanders executives may have withheld millions of dollars in refundable security deposits owed to customers” and that the team may have also “concealed revenues that were owed to the NFL as part of a revenue-sharing agreement that redistributes revenues to 32 teams in the League and helps set salaries for the League’s football players.”

The letter suggests that as much as $5 million in deposits were withheld from around 2,000 customers. It also refers to the team allegedly using “two sets of books.” As described by the committee, one book featured a deceptively smaller dollar figure that was shared with the NFL whereas the other ledger revealed a more accurate—and larger—dollar figure and was shared with owner Daniel Snyder.

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These far-reaching allegations stem from the committee’s ongoing investigation into allegations of a hostile workplace culture at the Commanders. They also follow a recent report that former Commanders sales executive Jason Friedman told the committee that team executives and Snyder had plotted to conceal ticket revenue from the league.

The FTC has substantial authority to investigate businesses and industries for alleged anticompetitive, deceptive, and unfair business practices. The agency can enforce the law by filing lawsuits in federal district courts and, in cases of egregious conduct, refer the matter to the U.S. Department of Justice for possible criminal prosecution. The FTC’s main mission is to protect consumers and ensure legitimate competition in the marketplace.

The NFL, in other words, faces the prospect of the FTC joining Congress in investigating workplace misconduct at the Commanders and possibly extending that probe into league-wide activities.

Only complicating matters for the NFL, last week the attorneys general of six states demanded answers from the NFL on workplace harassment—a move that suggests the league and teams could face allegations of breaking state laws, including consumer protection laws.

The Internal Revenue Service and state treasuries might also have their ear out. If the Commanders failed to report their total revenue, the failure could suggest tax fraud.

Given that a team withholding revenue could lower the figures used to determine the amount of the salary cap, it’s also possible the NFLPA could seek potential remedies. The union could turn to the collectively bargained grievance process or file an unfair labor practice charge with the National Labor Relations Board.

In addition, ticket holders could bring lawsuits or, if required by their ticket contracts, arbitration claims. The risk of litigation brings with it the risk of pretrial discovery, an area of litigation the NFL has long sought to avoid.

Maloney’s letter therefore presents wide-ranging legal worries for the Commanders and the NFL. The letter urges Khan to take any appropriate steps “to ensure that all funds are returned to their rightful owners and that those responsible are held accountable for their conduct.”

The letter identifies five areas of alleged fraud:

1. Failing to return security deposits to customers, particularly those who bought multi-year season tickets for specific seats (seat leases).

2. Converting security deposits into non-sharable revenue, which Friedman told the committee was referred to as “juice.” He defined “juice” as money not “being used on our accounting ledger to match up with a product or service that was actually being provided.” This alleged practice facilitated the “moving around” of ticket revenue to keep the NFL from discovering the true number. Friedman told the committee that a former CFO warned Friedman to stop “juicing” in 2017, which Friedman believed was a sign the team had “gotten a little bit concerned that maybe some people were onto them here.”

3. Documentation of retained security deposits in an electronic ticketing and accounting database. This documentation, shared by Friedman, allegedly helps to corroborate the claim that roughly $5 million was not returned to about 2,000 customers.

4. Intentionally concealing ticket revenue from the NFL by “falsely processing or misassigning a portion of ticket revenues from Commanders games as fees related to special events, such as concerts or college football games, which were not subject to revenue sharing with the NFL.” To illustrate, Friedman provided the committee with email exchanges between executives. The emails imply that money from game tickets was mislabeled as money from FedEx Field tickets for a Kenny Chesney concert in 2013 and for a Navy-Notre Dame game in 2014.

5. Misleading customers to sell higher-priced tickets. Friedman told the committee that he was directed to “trick” customers into believing that general admission tickets were sold out, when in reality he sold those tickets to ticket brokers. The intent of the alleged plan was to urge fans to pay for higher priced tickets or join a 160,000-name waitlist.

There are two sides to every story and expect the Commanders—which have already denied any improprieties—to offer rebuttals.

For starters, the team might supply other emails and evidence that casts Friedman’s offerings in a less damning light.

Second, the Commanders will likely argue there are political considerations at work. The letter is written by Democrats while a spokesperson for the Republicans on the committee recently dismissed Friedman’s claims as “one-sided, unconfirmed, unsupported allegations from a disgruntled ex-employee with an ax to grind.” Khan, moreover, was appointed by President Joe Biden, a Democrat, and the six attorneys general are all Democrats, too.

Third, while the letter refers to interviews with more than 150 witnesses, it consistently refers to one witness, Friedman, as the primary source of the ticket claims. If he left the team on bad terms or was disciplined for wrongdoing during his two dozen years with the team, the Commanders might attack his credibility and motives. It’s also not certain that Friedman spoke with the committee under oath. The letter noticeably refers to an “interview,” rather than testimony. While misleading Congress can itself be a crime, the Commanders might use a lack of testimony to cast doubt on Friedman.

On the other hand, the letter notes that Rachel Engleson, the team’s former director of marketing and client relations, “confirmed” Friedman’s statements regarding a “practice of retaining documents.” Friedman also provided troubling emails with other team officials. If those emails are authenticated, they will speak for themselves.

While the letter portrays Snyder in a terrible light, that doesn’t mean he’s likely to be expelled from the league anytime soon.

As explained in Sportico, the league’s constitution makes it extremely difficult to remove an owner, who could separately sue over the move. In addition, the principle of “people in glass houses shouldn’t throw stones” might apply. If one team is engaged in illegal or unethical ticket practices, it’s possible other teams are doing the same.

Given that there are multiple levels of ongoing legal investigations, the league and other owners might be reluctant to deeply probe the allegations. The findings, which might be classifiable under attorney-client privilege or the work-product doctrine (which exempts materials obtained by attorneys in investigations if in anticipation of litigation or trial), could be sought in legal or government proceedings.

But there again there’s a catch: the NFL has already hired former SEC chairperson Mary Jo White to investigate allegations that Snyder engaged in sexually inappropriate conduct. It’s possible her inquiry might extend into ticket allegations since they arguably fall under workplace misconduct.

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