September 10, 2007
Tim Donaghy, a referee for the NBA, entered a guilty plea to two federal felony charges in connection with his bets and tips on NBA games. The charges are conspiracy to engage in wire fraud and transmitting betting information via interstate commerce. Mr. Donaghy picked teams to win in games he was scheduled to referee. Experts have said that Donaghy committed the equivalent of insider trading on Wall Street by providing outsiders with information about games, players, and referees. He got $5,000 from his tippees for correct picks.
According to the indictments, Donaghy began betting on games in 2003, but in December 2006 began passing along inside information to others who have also been charged in the conspiracy. The communication was in code via cell phone. The two men who alleged to have worked with Donaghy on the gambling scheme and inside information are James Battista and Thomas Martin. The three men were friends during high school. Through his lawyer, Donaghy has indicated that he has a gambling addiction problem and is currently on medication and under the treatment of a psychiatrist.
The NBA Commissioner, David Stern, has referred to Donaghy has a “rogue referee,” but the gambling charges were a wake-up call for the NBA, which Stern says must not be “complacent.”[1] Commissioner Stern says that the NBA will be looking at the checks and balances that the NFL has built into its system including prohibitions on referees of traveling to Las Vegas and other gambling resorts without prior approval. The NFL also has significant background checks and ongoing monitoring of its referees. However, because Mr. Donaghy’s bets were through illegal gambling channels, any monitors the NBA has at Las Vegas sports books were not triggered. In fact, Mr. Donaghy’s missteps were discovered as the federal government was conducting an investigation into the Gambino crime family, based in Brooklyn.
Donaghy lives in Bradenton, Florida with his wife and four children. He ran a basketball clinic for developmentally disabled boys in Springfield, PA (Mr. Donaghy’s home town) for almost a decade. He was a graduate of Villanova and had worked his way up to being one of the NBA’s top referees, coming through the ranks of refereeing in both high school and the Continental Basketball Association. His salary with the NBA during 2006 was $260,000. The potential sentence for the two crimes is up to 25 years in prison.
Why do you think Mr. Donaghy was engaged in the gambling? Doesn’t his civic activity paint a different picture of his character?
FOR MORE INFORMATION
Kelly Whiteside, “Donaghy’s Bets Began in 2003,” USA Today, August 16, 2006, pp. 1C and 2C.
David DuPree, “Donaghy Associates Draw Conflicting Portraits,” USA Today, August 16, 2006, p. 2C.
Howard Beck and Michael S. Schmidt, “Former N.B.A. Referee Pleads Guilty,” New York Times, August 16, 2007, pp. C15 and C19.
[1] Roscoe Nance, “Scandal is a ‘wakeup call,’ Stern Says,” USA Today, August 16, 2007, p. 2C.