A federal grand jury is investigating possible criminal financial misconduct of the Dodgers and related entities during the ownership of Frank and Jamie McCourt, according to two people familiar with the matter.
Authorities have requested documents from representatives of each of the McCourts and from Major League Baseball, the people said, speaking on condition of anonymity because of the confidential nature of grand jury investigations.
The investigation started early last year and appears to be focused on tax issues and possible improprieties in the spending of team funds, one of the people said.
David Shapiro, the attorney representing Jamie McCourt in the matter, did not return a call. Neither did David Scheper, the attorney representing Frank McCourt.
The Justice Department does not confirm or deny the existence of pending investigations, said Bruce Riordan, special counsel to the U.S. attorney.
An MLB-appointed trustee oversaw the Dodgers’ financial affairs for more than two months last year. In a subsequent Bankruptcy Court filing, the league alleged Frank McCourt had “looted” $189 million from the Dodgers for personal use, a claim his attorneys called unsupportable.
The grand jury could subpoena the supporting documents from MLB, in addition to the documents requested from the McCourt representatives, said Laurie Levenson, a Loyola Law School professor and former federal prosecutor.
The McCourt divorce proceedings and the Dodgers’ bankruptcy filing also could provide documents for investigators to examine what Levenson called “a myriad of possible wrongdoing -- from tax violations, to loan fraud, to bankruptcy fraud, to private fraud.”
Frank McCourt sold the Dodgers for $2.15 billion in a transaction that closed May 1 and enabled him to retain half-ownership of the Dodger Stadium parking lots with an affiliate of Guggenheim Baseball, the team’s new owner.
Guggenheim spokesman Tripp Kyle did not respond to messages asking whether McCourt had disclosed the investigation to the new owners and whether an indictment or conviction would enable them to void or renegotiate the agreement for joint ownership of lots.
The Los Angeles Daily Journal first reported the investigation. Ryan Kirkpatrick, another attorney for Frank McCourt, did not return several messages from The Times but told the Daily Journal and Associated Press that his client was not a target of the probe.
The divorce and bankruptcy cases led to revelations about how team money had been diverted for the personal use of the McCourts.
The California attorney general last year ordered the repayment of $361,432 to a Dodgers charity, citing the improper expenditure of a $239,080 bonus to team executive Howard Sunkin and a $122,352 consulting contract in violation of state rules governing charitable foundations.
The Dodgers paid two of the McCourts’ adult sons a combined $600,000 in annual salary though one was working at Goldman Sachs and the other was attending Stanford University, according to divorce court filings.
Under Frank McCourt, the Dodgers also established a separate company to own the Dodger Stadium parking lots, to which the team paid $14 million per year in rent. Peter Wilhelm, who resigned this month as the Dodgers’ chief financial officer, said in court papers in 2010 that about $5 million of that year’s fee would go to McCourt, about $4.5 million to debt service and about $4 million to construction managers.
The money for construction was intended primarily for another McCourt entity, the John McCourt Co. That company had two employees -- Geoff Wharton, then the Dodgers’ chief operating officer, and his assistant. The Dodgers had halted major stadium construction by then.
In a letter to Frank McCourt last year, MLB Commissioner Bud Selig said the Internal Revenue Service was investigating the McCourts’ tax returns from 2006, 2007 and 2008. The McCourt divorce settlement also refers to possible penalties for tax returns in 2008 and 2009.
In a divorce court filing, Jamie McCourt said the couple paid no federal or state income tax from 2004 to 2009.
Linda Lowery, spokesperson for IRS criminal investigation division in Los Angeles, said federal law prohibited her from confirming or denying the existence of an investigation.
The divorce settlement stipulates that Frank McCourt “shall be treated, for tax purposes” as the sole owner of the Dodgers and related entities” and obligates him to repay Jamie McCourt for any related “taxes, interest and penalties” regarding her 2008 and 2009 returns -- but not for any penalties that might be assessed for her “fraud or willful violation of law.”
Times staff writer Victoria Kim contributed to this report.