Wednesday, July 27, 2011

The Real Scandal Behind the University of Alabama Football Program

Tom Albetar and
 Alabama star Trent Richardson

Practice soon will begin for the 2011 college-football season, and that means its time to start thinking about possible monkey business at Alabama's two powerhouse programs.

Both the University of Alabama and Auburn University have rich histories of NCAA investigations. The spotlight in recent months has been on Auburn and its recruitment of Heisman Trophy-winning quarterback Cam Newton. But the focus might be shifting to Alabama, with recent reports that a Tuscaloosa menswear store has been selling merchandise signed by Crimson Tide players and using players in advertisements.

The Web site, and reporter Clay Travis, broke the Alabama story last Friday. At first glance, the possible transgressions might seem relatively minor. But a major scandal erupted at Ohio State over similar issues--players selling memorabilia in exchange for tattoos. And Tom Albetar, the owner of the store in question (T-Town Menswear), is doing his best to suddenly keep a low profile. That means significant trouble could be brewing on the Crimson horizon.

Regardless of what happens with the menswear story, the real scandal of the Alabama football program has gone largely unreported for almost 14 years. We have written about it extensively here at Legal Schnauzer, but the Alabama mainstream press has chosen to keep it quiet. And it somehow has escaped the attention of national reporters.

Paul Bryant Jr., the son of the late Hall of Fame coach Paul "Bear" Bryant and UA's most powerful football booster, has clear ties to a $15-million insurance-fraud scheme that came to light in the late 1990s. The case resulted in a 15-year prison sentence for a Pennsylvania lawyer and entrepreneur named Allen W. Stewart. Public documents show that one of Bryant's companies, Alabama Reassurance, was implicated in the Stewart case, which was tried in Philadelphia.

Why has the case received so little attention in the South? It's not like the evidence against Bryant's company is hard to find; it's available with a simple Internet search. And it's not hard to understand; the language in a 2001 memorandum opinion from the U.S. District Court for the Eastern District of Pennsylvania lays out the scheme clearly. (See the full memorandum opinion at the end of this post.) The document shows that the scheme involving Stewart and Alabama Re involved counts 24 through 32 of a 135-count indictment. Footnote No. 11, which begins on page 16 of the opinion, addresses Alabama Re's role in the fraud:

11. The relevant portions of the charge read as follows:
Counts 24 through 32 charge a wire fraud scheme to deceive state insurance regulators involving reinsurance. The superseding indictment alleges that in late 1992 or early 1993 the defendant devised a scheme to deceive state regulators and others regarding the true and complete reinsurance arrangements involving Summit National Life Insurance Company, its subsidiary Fidelity General Life Insurance Company, and the Alabama Reassurance Company in order to inflate their financial statements.

Stewart was found guilty on all counts, and it's undisputed that Alabama Reassurance was Paul Bryant Jr.'s company--and it was involved in the scheme. So how did Bryant Jr. manage to escape serious scrutiny while Allen W. Stewart went to prison? We addressed that question in an earlier post:

Sources tell Legal Schnauzer that, during the Stewart case, the U.S. Department of Justice was prepared to launch a heightened investigation of Alabama Reassurance. That determination, our sources say, came from Caryl Privett, then U.S. attorney for the Northern District of Alabama. By the time the Stewart case was over, however, Privett had stepped down and been replaced as U.S. attorney by Doug Jones--and the investigation into Alabama Re was called off.

Jones is a University of Alabama graduate, and our sources say he has done legal work for Paul W. Bryant Jr. Jones now is with the Birmingham firm of Haskell Slaughter.

Sources tell Legal Schnauzer that the Alabama Re investigation was called off after Jones took office. Twice in recent weeks, we have contacted Jones and tried to interview him about the Bryant case and other issues. Both times, we asked Jones point blank if he called off the Alabama Re investigation. Both times, he refused to answer our questions.

Public documents indicate that Bryant, in a curious move, planned to liquidate Alabama Reassurance, even though the company had admitted assets of $238 million in 2006. The company essentially was replaced by a new entity called Alabama Life Reinsurance Company, which like its predecessor, is under Bryant's Greene Group Inc.

Have Bryant's ties to insurance fraud slowed his rise to power at the University of Alabama? Not exactly. He serves on the university's board of trustees and appears to be involved in most major decisions involving the football program, including the hiring of high-profile coach Nick Saban.

Is Paul Bryant Jr. out of the legal woods? Maybe not. We have been hearing for months that Bryant might be among a number of individuals who are the focus of a wide-ranging, multi-state federal investigation. The subject of such an investigation remains unclear, but the latest reports indicate that Bryant could be connected to an IRS case involving former Alabama quarterback Ken Stabler.

Will the public ever learn about the ugly side of Paul Bryant Jr.'s business affairs? We are not holding our breath. A famous name and plenty of cash apparently have helped Bryant dodge the feds so far. That, we suspect, is unlikely to change.

If Bryant does wind up facing serious scrutiny, our guess is that the charges will pale in comparison to those he sidestepped in the 1990s. A somnolent press, and "friends in high places," helped Bryant escape the last time. Will that happen again?

Alabama Re Memorandum Opinion


James Greek said...

I am afraid it might. I won't be surprised if he got away with it again. It will be a miracle if they nail his ass.

Max Shelby said...

Don't hold your breath for anything serious to come about as football crazed as this state is.
The prevalent attitude is hands off anything connected to Tide or Tiger football.
Even if it is as crooked as a aged Live Oak tree.
Good article LS!

Anonymous said...

You know, I'd like to see an article about Bobby Lowder on here. He is a famed micro-manager. So how did he miss the fact that Cathie Kissick, former VP of Colonial's warehouse lending division, managed to essentially destroy his beloved Colonial by sweeping funds between accounts to cover up fictitious loans sold to Colonial by Taylor, Bean & Whitaker CEO, Lee Farkas.

Just askin', LS. Oh, and ROLL TIDE!

Anonymous said...

Someone sure sounds butt-hurt over some football.