Funny Business Gets Serious: Judge Moreno Orders Ethical Inquiry Into Attorney Who Assisted NCAA With UM Investigation

BY CHRISTINA HIMMEL — Recently, news broke that Chief U.S. District Judge Federico Moreno in the Southern District of Florida began asking questions about the propriety of the relationship between the NCAA and Nevin Shapiro’s bankruptcy attorney, Maria Elena Perez. Specifically, Judge Moreno wants to determine whether the relationship between the NCAA and Perez was ethical. Judge Moreno issued an Order asking the Ad Hoc Committee for Attorney Admissions, Peer Review, and Attorney Grievance to review Perez’s activities in connection with the NCAA and to submit a recommendation by May 8, 2013.

To understand how Perez landed in this messy situation, the on-going soap-opera between the University of Miami and the NCAA must be explained.

The tale’s sordid roots stretch back to 2001. Athletic booster Shapiro reportedly started providing improper benefits to, according to his allegations, 114 UM athletes, ranging from cars to strip-club visits to upscale dinners. Such booster activity is prohibited by the NCAA, and, if true, would presumably place UM in violation of NCAA regulations. The diminutive Shapiro remained a fixture around the Miami Athletic Department until early 2009, when the details of his alternate-reality began to spill over into the persona he had so carefully crafted for UM administrators and athletes alike.

In a perverse tale of fraud and opulence, Shapiro orchestrated a lucrative Ponzi scheme through his purported wholesale-grocery-distribution company, Capitol Investments USA. Between January 2005 and November 2009, Shapiro constructed a $900 million financial house of cards, living the life of a well-heeled Miami social climber. An investor suit spurred the scheme’s collapse, prompting both FBI and SEC investigations. Ultimately, Shapiro pleaded guilty to money laundering and securities fraud and was sentenced to 20 years in prison.

Stemming directly from Shapiro’s allegations about improper gifts to athletes, the NCAA launched an investigation in 2011 to determine the scope of any impropriety visited upon UM’s Coral Gables campus by the now-convicted Ponzi schemer.

Then came the bombshell. On January 23, 2013, NCAA President Mark Emmert unexpectedly revealed that the Miami investigation had been temporarily suspended pending an inquiry into “a very severe issue of improper conduct.” Emmert admitted that his organization had committed “grossly inappropriate” violations during its investigation of UM’s alleged misconduct involving Nevin Shapiro.

Specifically, Emmert admitted that the NCAA had utilized Shapiro’s attorney–Ms. Perez–to improperly obtain information through a bankruptcy proceeding wholly unrelated to the NCAA’s investigation. Because it has no subpoena power, the NCAA used Perez to accomplish what it could not do on its own. Perez used her subpoena power to compel deposition testimony from former UM assistant equipment manager Sean Allen, asking dozens of questions related to NCAA rule infractions.  This deposition—along with another of former sports agent Michael Huyghue—may have revealed damaging information about the activities surrounding UM Athletics and Shapiro. Allen has stated that he only revealed this information because he was under oath.

Perez’s seeming ethical transgressions have prompted the Florida Bar to inquire further into the exact nature of her convoluted dealings with Shapiro and the NCAA. As the body charged with regulating attorney conduct in Florida, the Florida Bar announced that it has opened an investigation into ethical violations involving Perez’s receipt of payments from the NCAA while representing Shapiro.

Under the Florida Rules of Professional Conduct, attorneys must not accept money from third parties unless the client gives informed consent or there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship. Additionally, questions exist as to whether Perez’s actions during the Allen and Huyghue depositions amount to prohibited dishonest or misrepresentative conduct, given that the deponents likely believed they were being questioned for purposes of a bankruptcy proceeding, not to assist with an NCAA investigation.

Perez maintains that any payments received from the NCAA did not amount to the establishment of an attorney-client relationship, and that the payments were not in exchange for her acquisition of testimony. The NCAA’s Emmert has since disavowed the use of any testimony Perez turned over to the NCAA’s enforcement arm.

It remains too early to know what the Ad Hoc Committee will recommend to Judge Moreno and whether and to what extent the Florida Bar will sanction Perez for her actions in connection with the Shapiro investigatory debacle. Equally unknown is what impact the ethical funny-business will have on any penalties that may have been slated for the University of Miami, which are scheduled to come down at a hearing in June. However, it appears that while two wrongs still may not make a right, the NCAA’s ownership of its malfeasance may pardon the University of Miami’s past sins, while at the same time forcing one Miami attorney to face the consequences of a higher regulatory authority.

And unfortunately for Perez, the Florida Bar Professional Ethics Committee does not permit attorneys to peremptorily self-impose a post-season bowl ban.

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