Wednesday, November 16, 2011

Penn State Isn't the Only University That's Been Harboring a Football-Related Scandal

Paul Bryant Jr.

A chorus of outrage has been spreading across the country in the wake of news reports about the attempted cover-up of child sexual abuse at Penn State. But Penn State is not the only university that has been providing cover for a football-related scandal.

In fact, I have reported extensively on a scandal right here in our backyard, at the University of Alabama, and it has drawn mostly a collective shrug of the shoulders from the public. Where is the outrage about that? Does a scandal have to involve children and sex to get the public's attention?

Paul Bryant Jr., the son of Hall of Fame coach Paul "Bear" Bryant and UA's best-known football booster, has clear ties to a federal insurance-fraud case that netted a 15-year prison sentence for a Philadelphia lawyer/entrepreneur named Allen W. Stewart. One of Bryant's companies, Alabama Reassurance, was implicated in at least nine counts of the Stewart indictment.

Has Bryant been shunned or kept at a distance by the U of A? Not exactly. In fact, he pretty much runs the place, from his perch as president pro tempore of the University of Alabama Board of Trustees. ESPN calls Bryant one of the most powerful boosters in college athletics.

How can we put this in perspective? A man who was linked to an insurance-fraud scheme that was estimated at $15 million now rules over a board that makes decisions about millions of taxpayer dollars. I would use the old "fox guarding the hen house" analogy here, but that would be an insult to foxes. After all, we can assume that not all foxes have caused mayhem in hen houses. But there can be no doubt about Bryant's ties to insurance fraud; they are spelled out in documents that we have published multiple times here at Legal Schnauzer. (You can view the primary document, from U.S. District Court in Pennsylvania, at the end of this post.)

Is the public really outraged about the notion of wrongdoing and cover-ups on university campuses or is it just entranced by the sordid nature of the grand-jury report from Penn State?

The Alabama scandal, ironically, dates to the 1990s, about the time that signs of improper conduct from assistant football coach Jerry Sandusky were first seen--and mostly ignored--at Penn State.

Financial crimes are at the heart of the Alabama story, and that clearly is not as titillating as the stories of child rape in an on-campus shower facility at Penn State. But in some respects, the Alabama scandal is even more shocking than the one at Penn State--and that's because it involves an individual who wields way more power at UA than Jerry Sandusky ever dreamed of at PSU.

Here's another difference about the two scandals: Sandusky has already been tried and convicted in the court of public opinion, but under U.S. law, he must be presumed innocent. In fact, Sandusky and his lawyer stated in an interview with NBC's Bob Costas that the coach, in fact, is innocent. Many Americans probably are not buying that story, but the possibility remains that Sandusky could be found not guilty of the charges against him.

That won't happen in the Alabama scandal. A federal jury in Pennsylvania already has voted guilty on all 135 counts in the Allen W. Stewart case, and the verdict has been upheld by appellate courts. Paul Bryant Jr. was not named as an individual in the case. But Alabama Reassurance, one of his companies under Greene Group Inc., was front and center.

You might say that Alabama Re was a "tightly held" company. It had a five-person board, headed by Bryant, and two of those board members served as the company's only full-time employees. It's hard to believe that any of those five people could have been unaware of the company's involvement in an insurance-fraud scheme.

In a previous post, here is how we described Alabama Re's role in the Stewart case:

It's not as if serious doubt exists about Bryant's connections to fraud. . . . A ruling from the U.S. District Court for the Eastern District of Pennsylvania . . . upholds Allen W. Stewart's convictions--and proves Alabama Re's role in the case. And we quote from a pertinent section of that ruling, encompassed in footnote 11:

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.

What did Bryant and his cohorts do? They "devised a scheme to deceive state regulators" in order to disguise "the true and complete reinsurance arragements" involving three companies--one of which was Alabama Re. What was the purpose of this arrangement? To make the companies look stronger than they really were--in other words, to "inflate their financial statements."

Executives from HealthSouth, Enron, WorldCom, Tyco and other rogue companies have gone to federal prison for their roles in such schemes. So how did Paul Bryant Jr. manage to escape scrutiny? We have addressed that question in a previous post:

Public documents show that Alabama Reassurance was implicated in a $15-million scheme that netted a 15-year prison sentence for a Pennsylvania man named Allen W. Stewart in the late 1990s. An investigation of Alabama Re was called off, apparently because Bryant had friends in the U.S. attorney's office for the Northern District of Alabama.

G. Douglas Jones, now a lawyer at the Birmingham firm of Haskell Slaughter, had just become U.S. attorney for the Northern District of Alabama when the Alabama Re investigation was called off. Multiple sources tell Legal Schnauzer that Jones has ties to Bryant and has done legal work for him. I twice have asked Jones if he called off the Alabama Re investigation, and he has refused to answer the question. In fact, Jones has refused to answer any questions from me--including questions about his work with Rob Riley, son of former Governor Bob Riley, on a federal HealthSouth lawsuit that netted millions of dollars for plaintiffs' lawyers. Jones' refusal to answer questions from me is odd, given that he regularly is quoted in various media outlets. He becomes mute when the subjects of Paul Bryant Jr. and Rob Riley are raised.

How ugly could all of this get? If Doug Jones or someone else in the DOJ deliberately took steps to protect Paul Bryant and his company, they might have committed a crime under 18 U.S.C. 4 ("Misprision of Felony"). A companion statute can be found at 28 U.S.C. 1361 ("Action to Compel an Officer of the United States to Perform his Duty").

The Alabama scandal does not involve horrifying accounts of child rape. But it does involve an apparently systematic effort to cover up one man's ties to financial crimes--and then place that man in a preeminent position within the university power structure. If the cover-up involved deliberate acts of U.S. Justice Department officials . . . well, we are talking about crimes that go to the very heart of our legal system.

Outrage over the Penn State case certainly is understandable. Meanwhile, closer to home, a man with documented ties to massive insurance fraud is making decisions about millions of taxpayer dollars. Why is outrage missing in the story of Paul Bryant Jr. and the Board of Trustees of the University of Alabama?

Alabama Re Memorandum Opinion


Matt Osborne said...

But but but he has the right last naaaaaaaaame


legalschnauzer said...

Last names do matter, don't they?

jeffrey spruill said...

It's in your face corruption-- like this BROAD DAYLIGHT bank heist!

(We're suppose to be their slaves)

Robby Scott Hill said...

Bryant has his public relations machine in overdrive. I was in the East Gadsden Walmart yesterday & the little video box on the end cap of the gondola was playing an infomercial about the Bryant Museum. I'm not kidding. He intends to drown out all other messages. It's an old OSS/CIA tactic to drown out the truth with fluff.

Robby Scott Hill said...

I like the way this blog takes it home to the University of Alabama, whose alumni hold the reins of power at the Alabama State Bar which has become the lap dog of the corruption on Goat Hill. Disbar the Black lady in Jefferson County who thinks she's going to become a judge? No problem. Do something about an entire firm that's over billing the state or members of a hunting club who engage in home cooking? No way!

legalschnauzer said...

Rob: You bring up three key cases--Kenya Lavender, hunting club/domestic relations, Bradley Arant. And I would add the Angela Drees fiasco to that. Alabama State Bar knows about all of that, and they turn a blind eye--same way that officials at Penn State did.

The state bar is an "enabling organization" for Alabama corruption. And to think that lawyers have a duty, under the ethical rules, to report misconduct in their own profession. What a joke.

Robby Scott Hill said...

It's bad, no terrible, comedy. In fact it's amateur night at the Goat Hill Comedy Club. Emory "The Dope Man" has gone to be with Uncle Chester. I wonder who the new Boss of Montgomery will be?