Washington leaders vehemently deny financial misconduct in letter to Federal Trade Commission

Washington’s leaders vehemently opposed the allegations of financial wrongdoing in a letter to the Federal Trade Commission, explaining why the government institution had not launched an investigation.

The 22-page letter — written by team attorney Jordan Seif, addressed to FTC Chair Lina M Khan and obtained by ESPN — refuted allegations by former team employee Jason Friedman that the team had engaged in nefarious financial practices, affecting consumers and the FA. America to increase its revenue. In addition to the letter, there were 83 pages of signed acknowledgments, emails, and texts.

“I can state unequivocally that I have never helped maintain a ‘second set’ of books or have seen anyone else keep it,” Paul Szczynski, the team’s former CFO of more than eight years, said in a signed affidavit. He was one of three former senior team officials who provided signed affidavits.

Those points were made clear by the House Committee on Oversight and Reform in a letter to the Federal Trade Commission last week, and they highlight allegations made by Friedman, who spent 24 years in the organization’s ticket division as vice president of sales and customer service. He was fired in October 2020, two months after Jason Wright took over as team boss.

The FTC acknowledged receipt of the letter but does not usually say whether it will investigate. It can also be delivered to Maryland prosecutors; Washington, DC; and Virginia. Everything on the letter was copied to the FTC.

Washington’s letter called Friedman’s allegations “baseless” as well as “false and reckless” and based on “pure speculation,” according to Mitch Gershman, a former Washington chief operating officer, who left the team in 2015 but five years later accused him of former employees . About sexual harassment in an article in the Washington Post. Gershman and others said that Friedman was out of the loop because he did not work in the accounting department and therefore was not privy to all the financial discussions. Friedman worked on the team’s stadium in Landover, Maryland, about an hour from the training facilities in Ashburn, Virginia, where the finance and accounting department operates, according to the letter.

Also, the letter said the commission never gave the team an opportunity to respond to Friedman’s accusations. It also portrayed Friedman as a disgruntled former employee who, until recently, lobbied several people in the organization – including Wright – via email and text to allow him to return, while also sending a letter to owner Dan Snyder after his dismissal. 2020 praised him.

In January, he told Wright via email, “I’ve had a year to reflect on the shortcomings of the past. I’ve learned, and I regret those shortcomings. If you welcome me, I’ll be back there to help at a moment’s notice.”

Friedman claimed that the organization knowingly classified revenue from standing room tickets only to NFL games as revenue collected from college games and concerts, allowing them to make money and not share a portion of it with the league. He also stated that it failed to refund the season ticket insurance deposits, claiming it affected 2,000 customers at a cost of $5 million.

But Washington’s letter says it has evidence that it has not diverted revenue from NFL games to other events. Friedman had released an email on May 6, 2014, with Stephen Choi, then Washington’s chief accounting officer, asking for help in processing additional ticket sales and revenue.

The email stated that Friedman was charging $55 per ticket but was priced at $44 per system. The difference will be written off as a bogus license fee. According to the email, Choi directed the “juice” app of an additional $11 per ticket to the Navy-Notre Dame game that will take place that same year. “Juice” is a term referring to the team’s hidden revenue, Friedman said. Washington’s letter stated that “juice” was slang for “increased revenue.”

Teams have to share 40% of their revenue with 31 other teams. But the college game was deemed non-shareable revenue, meaning Washington would receive an additional $162,360 without losing a portion of the revenue-sharing total.

Washington’s letter stated that Choi sent this email to the accountants, dropping Friedman from the chain. In an August email, Trey Flythe, who is listed as a manager in the team’s ticket financing division, told Choi and Szczenski that “the Navy’s license fee has been transferred to 14RedRev.” This means that it is now considered Redskins revenue for 2014; The email included a screenshot of accounting for $162,360 listed under 14RedRev.

The letter also noted that the team is subject to annual audits by an outside company, BDO, and every several years by an NFL auditor, Ernst & Young. Friedman claimed that revenue from non-NFL events at FedEx Field was not subject to those audits. The Washington letter says this is not true.

“No categories of events were ‘excluded’ from external audits; concerts, college football games and football matches were part of the team’s audited financial statements, and all of which may be subject to audit by the auditors,” Szczenski said in an affidavit. Former General Counsel David Donovan said the same in his affidavit.

The letter also says that the House committee should not have relied on Friedman’s testimony regarding when the alleged revenue-sharing scheme occurred. That happened “primarily from 2010 to 2015,” Friedman said. Washington’s letter says the team received a $27 million waiver from the NFL that limited revenue sharing because it was paying for approved projects in 2013 that expired two years later. The letter says this waiver was known to the team’s accounting and finance department but “unbeknownst to Friedman.” Prior to that, Washington had a 15-year exemption that expired in 2012 because it paid for the stadium itself.

The letter also says that Friedman was wrong about how the team handled the security deposits. He claimed that after Snyder bought the team in 1999, the team created artificial barriers to make it difficult for consumers to collect security deposits. Or they might target deposits from people who forgot they made a bench or those who inherited benches and didn’t know they existed. He said that with corporate accounts, the name on the agreement might change over time, and again, the new person might not know the initial deposit. Friedman said the team’s executives have asked employees to make it more difficult for customers to receive their deposits by increasing the steps needed to receive funds. Some deposits are not returned.

Also, Friedman indicated to the House committee that the team stopped charging security deposits a year after Snyder became an owner. Donovan, who left the team in 2011, said Friedman never made the allegations to him. In an affidavit, Szczenski said the only deposits that were converted to revenue occurred when a customer defaulted on their contract. In a 10-year period, he said, it resulted in an additional $200,000 in revenue.

The letter also included a copy of a letter the organization sent to clients in 2014, informing them that they may be entitled to a refund based on their remaining balance. Included boxes to check if the name and address on the account are correct. It also has an address to send the message back to collect the refund as well as an email address that customers can send instead.

Additionally, the letter states that the team’s unclaimed property, including security deposits, was reviewed in 2014 by the Virginia Department of Treasury’s Unclaimed Property Division, which had full access to security deposit information of the team. After the review, the department did not recommend further action, but instead asked the team to pay $7330.15 in unclaimed funds to the state as “abandoned property.”

Finally, the letter said that the team did not approve of Friedman’s practice of selling general admission tickets to intermediaries in 2009.

Friedman claimed before the House committee that he was the man who caught the practice, telling the committee that Choi and Gershman told him to misrepresent their position. Friedman said he would tell potential customers that there are no general admission tickets available and push them to buy club-wide seats. According to the letter, there was no NFL policy against selling to ticket brokers in 2009. It also stated that none of the contracts Friedman entered into were approved by the team’s legal or financial department. The letter claimed that Friedman used a rubber stamp for Gershman’s signature, allowing him to “keep the agreements confidential.”

“when [Snyder] He was told, Gershman said in an affidavit, he was not happy. “He directed me and other senior executives to cancel contracts immediately, and we spent months negotiating with brokers to back off deals as often as we could. It made no sense for Mr. Snyder to direct these broker sales only to come back and cancel them later, with a significant financial cost to the team.”

Donovan said in his affidavit that he had recommended Snyder to fire Friedman after this incident. Friedman claimed that instead of being fired, he got a bonus.

Friedman’s attorneys, Lisa Banks and Debra Katz, said Monday that their client “stands by his testimony that was honest and based on his experiences with the team. He is happy to respond to follow-up questions from Congress, the Federal Trade Commission, or any agency government” and “is willing to defend himself publicly” ​​Against these allegations if Mr. Synder allows him to do so. In the meantime, we will communicate directly with the team regarding these apparently false allegations.”