Washington Commanders strongly reject financial misconduct in a letter to Federal Trade Commission

The Washington CommandersMonday's strong dispute of claims of financial irregularities was made in a letter addressed to Federal Trade Commission. It argued that the Federal Trade Commission should not be investigating the matter.

Jordan Siev, team lawyer, wrote the 22-page letter and addressed it to Lina Khan, FTC chair. ESPN obtained the letter. This was to refute claims made by Jason Friedman, an ex-team employee, that the team engaged in nefarious and illegal financial practices to increase their revenues. There were also 83 pages worth of emails, texts, and signed affidavits.

Paul Szczenkski (the team's former finance director for more than 8 years) stated in a signed statement that “I can declare unequivocally, that I never contributed to the maintenance, or saw any other person maintain, a second set of books.” He was one of three ex-team officials who signed affidavits.

These points were made last week by the House Committee on Oversight and Reform in an open letter to FTC. It highlighted allegations against Friedman, who was vice president of customer service and sales for the ticket department. In October 2020, Friedman was fired by the House Committee on Oversight and Reform. This happened two months after Jason Wright became team president.

The FTC acknowledged receiving it, but does not typically state whether it will investigate. It could also be sent to Washington, D.C., Virginia attorney generals; all were copied in the FTC's letter.

Washington called Friedman's claims baseless, false and reckless, and based on speculation in his letter to him. Mitch Gershman was Washington's former chief of operating officer. He left the team in 2015. Five years later, he was accused by former employees in a Washington Post article of sexual harassment. Gershman and others claimed Friedman was not in the loop as he didn't work in the accounting department, and therefore was not privy to all financial discussions. Friedman was at the team's stadium, Landover, Maryland. This is about an hour away from Ashburn, Virginia where the letter indicated that the accounting and finance departments work.

In the letter, Friedman claimed that the committee never gave him an opportunity to answer his charges. It described Friedman, who was a disgruntled ex-employee, as having lobbied various people in the company, including Wright, via text and email to return. After Wright's firing in October 2020, Friedman also wrote a letter to Dan Snyder praising him.

Wright was contacted by Wright in January to inform him that he had taken a year off to reflect on his past mistakes. I have learned and am sorry for my past mistakes. If you would welcome me, I would be there to help at a moment's notice.”

Friedman said that the NFL had incorrectly classified revenue from Washington games standing-room tickets as revenue from college games and concerts. This allowed them to keep the money and not share it with the NFL. Friedman claimed they had failed to refund security deposit on season tickets. It was said that it affected 2,000 customers, at a cost in excess of $5 million.

Washington's letter claims it has evidence that it did indeed divert NFL games revenue to other events. Friedman had shared a May 6, 2014 email to Stephen Choi (then Washington's chief accountant officer), in which he requested assistance with processing additional ticket sales.

Friedman charged $55 per ticket for the email, but they were priced at $44 within the system. This difference would be deemed bogus licensing fees. According to Choi's email, he instructed him to apply the “juice”, an additional $11 per ticket for the Navy-Notre Dame match to be held in the same year. Friedman explained that “juice,” was a term used to refer to hidden revenue generated by the team. Washington wrote that “juice,” was a slang term for “an upside on revenue.”

Each team must share 40% of its revenue with the 31 other teams. The college game was not considered shareable revenue. Washington would be eligible for an additional $162,000.360, without having to lose any revenue-sharing.

Washington stated in a letter that Choi had forwarded the email to accountants and dropped Friedman from their chain. Trey Flythe, who was then listed as a manager at the team's ticket financing department, informed Choi and Szczenski in an August email that the “Navy licensing fees have been switched to a14RedRev.” It was now considered 2014 Redskins revenues. The email also included a screen capture of the accounting for $162,360 that was listed under 14RedRev.

The team's letter also pointed out that they are subjected to yearly audits by an outside firm, BDO, and every several years by an NFL auditor, Ernst & Young. Friedman claimed that nonNFL revenues at FedEx Field weren't subject to such audits. Washington's letter claims that this is not true.

Szczenski stated in his affidavit that there were no events that were excluded from external audits. Concerts, college football games and matches were all included in the TeamAll financial statements could be audited and all can be examined by auditors. David Donovan, former general counsel, stated the same in his affidavit.

In addition, the letter says that Friedman's testimony on the date of the alleged revenue sharing scheme should not be relied upon by Committee members. Friedman stated that it took place “primarily between 2010 and 2015.” Washington wrote that the NFL had granted a waiver of $27 million to the team. This waiver limited revenue sharing as it paid for projects approved in 2013 but completed two years later. This waiver was “unknown to Friedman,” according to the letter. Washington previously had a 15 year waiver, which expired in 2012 due to the fact that it had already paid for the stadium.

Friedman also claimed that Friedman was incorrect about security deposit handling. After Snyder purchased the team in 1999, he claimed that the team had created artificial barriers to make security deposits difficult to collect. Or they could target those who have forgotten to deposit one or those who inherit seats without knowing it existed. With corporate accounts, the name might change and the person who made the initial deposit might not know it again. Friedman stated that team executives advised employees to make it more difficult for customers to get their deposits. This was done by increasing the number of steps required to receive the money. Some deposits did get returned.

Friedman also pointed out to the Committee that security deposits were not charged by the team one year after Snyder became the owner. Donovan, who was fired in 2011, claimed that Friedman never made these claims to him. Szczenski claimed that only deposits were converted into revenue when customers defaulted on their contracts. In a 10-year period, that translated into $200,000 in additional revenue.

A copy of the 2014 letter that the organization sent to customers was also included in this letter. It informed them that they may be eligible for a refund based upon their outstanding balance. It also contained boxes that could be checked to verify the correct name and address of the account. The letter also included an address where the letter could be sent back to receive the refund and an email address that they could use instead.

The letter also states that the unclaimed property of the team, including security deposits was reviewed by the Unclaimed Property Division of Virginia’s Department of the Treasury in 2014. This department had access to all security deposit information. After reviewing the matter, the department decided not to recommend further action and demanded that the team pay $7,330.15 in unclaimed money to the state for “abandoned” property.

Final, the letter stated that Friedman's practice in 2009 of selling general admission tickets directly to brokers was not supported by the team.

Friedman had claimed to the Committee that Choi, Gershman and Friedman made him the fall man for this practice. Friedman stated that he would inform potential customers that there were no general admission tickets available, and encourage them to buy club-level seats. According to the letter, in 2009 there was no NFL policy against ticket brokers. The letter also stated that Friedman's contracts were not approved by the finance or legal departments. According to the letter, Friedman claimed that Gershman signed the rubber stamp and that Friedman kept the agreements secret.

“When [Snyder]Gershman insisted that he was informed of the situation and that he wasn't happy. “He instructed me and other senior executives immediately to cancel the contracts. We spent months negotiating and renegotiating the deals with brokers. It would not have made sense for Mr. Snyder that he directed these broker sales, only to cancel them later. This was a significant financial loss to the Team.

Donovan stated in his affidavit that he suggested to Snyder that Friedman should be fired following this incident. Friedman claimed that instead of being fired, Friedman was offered a raise.

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