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'FIFA is imploding': 14 charged in corruption probe; at least 8 arrested

U.S. Justice Department brings federal corruption charges against top FIFA soccer officials

Fourteen people, including high-ranking officials of the soccer governing body FIFA, were charged Wednesday in a more than $150-million racketeering and fraud scheme that prosecutors said had corrupted the world’s most popular sport while lining defendants’ pockets with millions of dollars.

The charges, which coincided with raids in Zurich, Switzerland, and Miami, followed a three-year FBI investigation into alleged crimes that U.S. Atty. Gen. Loretta Lynch and other law enforcement officials said dated back more than 20 years. FIFA’s president, Sepp Blatter, was not named in the indictments, but the charges could cripple his bid Friday to win a fifth term at the organization’s helm.

In addition, law enforcement officials made clear that more people could face charges in what Lynch called a “rampant, systemic and deep-rooted” cycle of corruption.

“I want to be very clear: This is the beginning,” acting U.S. Atty. Kelly T. Currie said during a news conference in Brooklyn, where the indictment was handed up early Wednesday. Charges include racketeering, wire fraud and money laundering. They portray an organization riddled with greedy officials who demanded payment in exchange for ensuring that highly sought contracts were awarded to sports marketing companies seeking media and marketing rights to FIFA-run tournaments.

FIFA officials named in the 47-count indictment include Vice President Jeffrey Webb; Julio Rocha, the organization's development officer; Eduardo Li, an executive committee member-elect; Eugenia Figueredo, a vice president and executive committee member; and Jose Maria Marin, a member of the organizing committee for the Olympic soccer tournaments. They were arrested by Swiss authorities in Zurich and expected to face extradition to the United States.

Other defendants include two sports marketing companies, sports marketing executives, and soccer officials from FIFA-controlled entities in the Caribbean, South America and Central America.

In Europe, many fans and members of the soccer community enthusiastically welcomed the indictment.

“I’m delighted this happened. ... But I can’t say I’m surprised,” said John Jennings, a London-based fan of the Tottenham Hotspur club who was in Athens on a business trip. “I’ve believed there has been corruption under Sepp Blatter for a long time.”

“This is extraordinary! FIFA is imploding. The best thing that could possibly happen to the beautiful game,” Gary Lineker, an outspoken commentator and retired England soccer star, said on Twitter.

Others took a more measured approach. Arsene Wenger, who manages Britain’s Arsenal club, called the events embarrassing but cautioned against snap judgments, saying: “Sometimes I think now we are too quick to convict people who have not been proven guilty.”

At the news conference in Brooklyn, Justice Department officials handed out a 3-inch-thick binder containing hundreds of pages of documents outlining the allegations.

The documents describe how FIFA officials allegedly received envelopes packed with tens of thousands of dollars in cash and demanded bribes in exchange for issuing contracts and other favors. Some of the defendants arranged multimillion-dollar wire transfers from accounts of the accused sports executives' corporations to soccer groups in exchange for programming contracts, according to the documents.

The documents portray former FIFA Vice President Jack Warner, one of the accused, as a key figure in the case. It said Warner set up and controlled numerous bank accounts in Trinidad and Tobago and elsewhere, and mingled his personal funds with those of FIFA-controlled bodies.

“Among other things, Warner began to solicit and accept bribes in connection with his official duties, including the election of the host nation for the World Cups held in 1998 and 2010, which he participated in as a member of the FIFA executive committee,” the indictment said.

France hosted the event in 1998 and South Africa in 2010.

Warner has surrendered to authorities, and his bail has been set at approximately $400,000, Trinidad and Tobago Atty. Gen. Garvin Nicholas told the Los Angeles Times. Warner was ordered to surrender his passport and is scheduled to appear July 9 before a magistrate in the Caribbean nation, officials said.

According to a statement from Nicholas, officials in Trinidad and Tobago have received an extradition request for Warner from U.S. authorities.

Earlier on Wednesday, in a statement reported by the Daily Mail in London, Warner said he was not guilty and suggested that the probes were politically and economically motivated.

“I cannot help but note, however, that these cross-border coordinated actions come at a time when FIFA is assembled for elections to select a president who is universally disliked by the international community,” he said in the statement. “At times such as this, it is my experience that the large world powers typically take actions to affect world football. World football is an enormous international business.”

Officials said one sports marketing company had won the rights to the lucrative Copa America tournament starting in 1993 and continuing through 2023 by paying bribes to soccer officials.

“As the value of the marketing rights increased, we also saw the bribes increase,” Currie said in explaining how the accused marketing companies held onto their allegedly crooked deals through the years.

Revenue generated from such contracts accounted for 70% of FIFA’s $5.7 billion in revenue between 2011 and 2014, justice officials said.

The charges followed a predawn raid by Swiss police in Zurich, acting on behalf of U.S. law enforcement, at the resort where FIFA is holding its annual meeting. Seven people were arrested in the raid; the whereabouts of some other defendants were not immediately clear.

All those charged are from the two groups overseeing soccer in the Americas -- CONCACAF, which manages the sports in North America, Central America and the Caribbean, and CONMEBOL, which administers the 10 South American soccer federations. FIFA is the umbrella body.

Officials in Paraguay confirmed they have received an extradition request for Nicolas Leoz, a former FIFA executive committee member and CONMEBOL president. Leoz, 86, has not yet been arrested because he has been hospitalized, according to Paraguay’s Ministry of Foreign Affairs.

Brazil’s Ministry of Justice confirmed that U.S. officials have requested “international legal cooperation” regarding Jose Margulies, who is also named in the indictment. According to the U.S. Justice Department, Marguiles, 75, is the controlling owner of Valente Corp. and “served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials.” The Brazilian Ministry of Justice declined to say whether Margulies has been arrested or provide any other details.

Four of the individuals charged and two corporate defendants previously pleaded guilty.

Daryll Warner, son of Jack Warner and a former FIFA development officer, pleaded guilty in July 2013 to a two-count information charging him with wire fraud and the structuring of financial transactions. On Oct. 25, 2013, Daryan Warner, another son of Jack Warner, pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy and the structuring of financial transactions.

In November 2013, Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts.

According to two knowledgeable federal law enforcement sources, “the pivot” for expanding the U.S. investigation into FIFA came when Blazer entered his plea deal. One of the sources said that Blazer also agreed to provide “insider” information about other alleged violations within FIFA's top tier, and at one time, the source said, he agreed to wear a wire to record some conversations.

Last December, Jose Hawilla, the owner and founder of the Traffic Group, a Brazilian sports marketing conglomerate, pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice.

On May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.

Swiss authorities also seized electronic data and documents at FIFA’s headquarters in Zurich and said they had opened up their own probe into votes that awarded the 2018 World Cup to Russia and the 2022 tournament to Qatar.

Numerous investigations have suggested both votes were ripe with bribery and corruption, but Lynch would not say if she thought either of those awards should be voided.

“I think FIFA has a lot of soul-searching to do,” said Lynch.

FIFA spokesman Walter de Gregorio said there would be no re-vote regarding the sites for the 2018 and 2022 World Cups.

The indictment says conspirators used “sophisticated money laundering techniques,” including currency dealers, a Swiss bank account, and trusted intermediaries” to move money around the globe.

Other allegations involved the resale of World Cup tickets “at a substantial mark-up.” Court documents describe how FIFA officials received envelopes filled with cash and solicited increasingly large bribes in exchange for ensuring contracts and other favors.

“The corruption of the enterprise became endemic,” the indictment said.

FBI Director James B. Comey said the conspirators had taken what should be a level playing field and tilted it in favor of whomever was willing to pay. The result, officials said, was that poor countries or those unwilling to pay bribes were denied the chance to host soccer tournaments.

“The game,” Comey said, “was hijacked.”

In a statement released Wednesday, FIFA characterized itself as the “injured party” in the Swiss inquiry and said it would fully cooperate with authorities.

“FIFA welcomes actions that can help contribute to rooting out any wrongdoing in football,” the organization said.

U.S. Soccer declined to comment on the investigation and issued a statement Wednesday saying “there is no higher priority, and nothing more important, than protecting the integrity of our game. ... We will continue to encourage CONCACAF and FIFA to promote the same values.”

The indictments come at a particularly bad time for the embattled Blatter, whose 17-year reign as FIFA's leader has been plagued by allegations of corruption, bribery and a lack of transparency. The presidency of the 79-year-old Blatter is being challenged by Jordanian Prince Ali bin al-Hussein, a reformist candidate.

Lynch was asked if Blatter could be involved, but she refused to comment beyond saying, “I can say this investigation is ongoing. It is continuing.”

Blatter said Wednesday that he welcomed the U.S. and Swiss authorities’ moves.

“Such misconduct has no place in football and we will ensure that those who engage in it are put out of the game,” he said in a statement. “Following the events of today, the independent Ethics Committee ... took swift action to provisionally ban those individuals named by the authorities from any football-related activities at the national and international level.”

The Justice Department has sweeping authority under federal law to file charges against foreign nationals whose only connection to the country might be a U.S. bank account. U.S. officials could also claim jurisdiction because American companies have paid billions to FIFA for broadcast fees.

FIFA's size and global reach may also work in U.S. prosecutors' favor. The organization, which stages major soccer events in addition to the World Cup, is richer than many multinational companies, holding more than $1.5 billion in reserve.

Susman reported from New York and Baxter from Los Angeles.

Staff writers Tim Phelps in Washington, Christine Mai-Duc in Los Angeles and Steven Zeitchik in Athens contributed to this report.

Copyright © 2016, Los Angeles Times

UPDATES

6:26 p.m.: This article has been updated with information about Jose Margulies.

5:17 p.m.: This article has been updated with reactions by John Jennings, Gary Lineker and Arsene Wenger.

2:59 p.m.: This article has been updated with Jack Warner's bail amount.

2:48 p.m.: This article has been updated with details about Jack Warner's situation and with federal law enforcement sources' comments about Charles Blazer.

1:29 p.m.: This article has been updated with the extradition request for Nicolas Leoz.

1:20 p.m.: This article has been updated with Jack Warner's surrender and with comments from FIFA President Sepp Blatter.

12:28 p.m.: This article has been updated with new details from court documents and a news conference and other background information.

10:45 a.m.: This article has been updated with additional quotes.

7:58 a.m.: This article has been updated with additional details from court documents.

7:34 a.m.: This article has been updated with details from court documents unsealed Wednesday morning.

6:10 a.m.: This article has been updated with a statement from Jack Warner.

5:34 a.m.: This article has been updated with more details and background about the indictment.

5:19 a.m.: This article has been updated with FIFA announcing there will not be a re-vote on the sites of the 2018 and 2022 World Cups.

4:24 a.m.: This article has been updated with details from the Justice Department indictment.

2:17 a.m.: This article has been updated throughout with additional details and background.

May 27, 12:04 a.m. This article has been updated with the names of the officials charged and other details.

This article was originally published May 26 at 11:28 p.m.

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