Louisville's Hoops Clean-Up Work Runs Up Big Bill

LOUISVILLE — It won't come as a surprise that the University of Louisville rang up a big bill for two major basketball scandals in the past three years.

Yet the sticker may still shock.

Louisville and its foundation have already paid at least $1.76 million to compliance consultants and attorneys since October 2015, when Katina Powell's book alleging former basketball staff member Andre McGee provided women with thousands of dollars and game tickets in exchange for dances for and sex with players and recruits.

The price tag is almost certainly larger — documents related to some legal fees don't specify what work they included — and will grow in the coming months and years, as the possibility of another NCAA infractions case looms with the FBI's ongoing investigation into college basketball and allegations of rules violations in former Louisville player Brian Bowen's recruitment to the school.

Meanwhile, the university is reshaping its finances after a scathing internal audit and facing several potentially expensive lawsuits involving former employees.

"Matters of litigation are always cost- and time-intensive," University of Louisville spokesman John Karman said in a statement. "In the case of the NCAA investigation, a great deal of time and money was expended to determine what had happened on our campus. We ultimately appealed the misguided NCAA ruling, at significant expense, because we felt we owed our best effort to our players and fans.

"The university also has responded, as it is obligated to do, to legal requests made during the ongoing FBI investigation and incurred expenses associated with those responses."

A Courier Journal review of invoices related to NCAA infractions matters obtained through a records request provides a breakdown of Louisville's expenses:

The foundation paid more than $880,000 for services from two law firms — Stites and Harbison and Nixon Peabody — between October 2015 and January 2017.

The school paid more than $570,000 for consultant Chuck Smrt and his staff from The Compliance Group.

The school paid roughly $46,000 to Title IX compliance consultant Dan Beebe and his BMT Risk Management group.

The school paid more than $268,000 to the law firm Hogan Lovells, which helped with Louisville's NCAA infractions appeal in the escort case.

The estimated bill doesn't include the final amount of shared conference revenue from the 2012-15 NCAA tournaments that Louisville must repay as punishment in the McGee case.

The school believes that cost to be around $600,000, but university and NCAA officials are still working through the calculations. A Courier Journal estimate of the potential fine left open the possibility of a much larger sum, though the complexities involved make it tough to project.

The estimate is also missing what the university's foundation paid for basketball investigation-related legal work after parting ways with Stites and Harbison. That cost, if similar to the first 15 months of investigations, could also approach seven figures.

Louisville extended its contract with Smrt and The Compliance Group in the fall to help with the school's internal investigation into the FBI's allegations that ensnared Louisville, among several other programs.

Smrt charges $235 per hour for his services, according to his original contract with the school, and his employees receive $200 per hour. The group also receives another $95 per hour for interview transcription. The group accounted for 831 billable hours in the first nine months working with Louisville, plus another 300-plus transcription hours.

Smrt and his team are also working with the university on non-scandal-related issues, though the Atlantic Coast Conference is paying them, according to a source with knowledge of the league's practices who was not permitted to speak publicly about them. The ACC has a contract with Smrt to conduct annual athletic department reviews at each member institution on a rotating basis, which is why his team has conducted interviews at Louisville with sports teams other than men's basketball in recent months.

With the FBI advising the NCAA to hold off on its own inquiry for now, the cost of more investigative fees in the future is likely if not unpredictable.

Those costs prompted some belt-tightening measures this past school year, athletic director Vince Tyra said in a December interview.

"There's one bucket of money, depending on how you parcel it out," Tyra said. "... There are some short-term expenses that are related to litigation that's going on and the (NCAA infractions appeal) that are uncomfortable, for sure. No one would like to have them."

How does Louisville's bill compare to several other high-profile NCAA infractions cases in recent years?

It's higher than the nearly $1.5 million the University of Mississippi estimated it spent on legal fees related to its recent football infractions case, according to the USA TODAY Network's Jackson Clarion Ledger.

It's much larger than the $480,000 the University of Kansas paid compliance consultant firm Bond, Schoeneck and King to guide its men's and women's basketball programs through a 2006 infractions case, according to a New York Times report.

But Louisville's expenditures so far have paled in comparison to those of the University of North Carolina, which spent $3.8 million on legal consultants for just one 15-month segment of its internal investigation, according to the News & Observerin Raleigh, North Carolina. The school's academic fraud case lasted six years, but the inquiry stemmed from even earlier NCAA infractions issues.

UNC's expenses paid off when the NCAA's Committee on Infractions announced in October that it would not penalize the school.

Louisville and Mississippi weren't as fortunate. In addition to its financial penalties, Louisville vacated 123 wins from its records, including the 2013 national title. And in Mississippi's case, the NCAA's discipline included a bowl ban, scholarship reductions and show-cause penalties to coaches.

"It is getting more and more expensive in the NCAA infractions machine," said David Ridpath, a professor at Ohio University who for years worked in athletics compliance and has written extensively about the NCAA. "Institutions will go to most any length to protect themselves and the brand."

Invoices related to Smrt's work on the case and obtained through a public records request were almost entirely redacted. The school cited privacy laws protecting students and ongoing investigations when the original documents were supplied to Courier Journal. The office of the state's attorney general ruled the school could redact the information despite an appeal from Courier Journal.

Smrt and The Compliance Group's travel costs accounted for 10 percent of its bill during the past few years. The rest was related to billable and transcription hours.

Beebe's group was hired in the days after Powell's book came out to help the university conduct a Title IX compliance review of its programs. The report furnished by BMT Risk Management found no glaring issues within Louisville's athletic department.

Stites and Harbison rang up a huge portion of its bill in October 2015 preparing a legal strategy in the days after Powell's book came out.

The October invoice to the university's foundation includes hours of calls and meetings involving Stites and Harbison attorneys Mike Cronan and David Saffer and Louisville officials, including the school's general counsel, Leslie Chambers Strohm, who recently announced her retirement.

Much of the Stites and Harbison bill includes legal work outsourced to a third party, Nixon Peabody. Stites and Harbison first planned a meeting with Nixon Peabody partner Steve Thompson, who specializes in NCAA infractions issues, in late October 2015.

Thompson played a key role in the following years. He and Smrt led Louisville's representation at the April 2017 hearing in front of the NCAA's Committee on Infractions.

Stites and Harbison did not charge Louisville's foundation for a Feb. 4, 2016, meeting between Jurich, Smrt, then-President James Ramsey, his former chief of staff Kathleen Smith, and at least one other person whose name was redacted by the university.

The school announced a self-imposed postseason ban the next day.

The Cost of NCAA Investigations

Louisville men's basketball: At least $1.76 million in compliance consulting and legal fees (2015-present)

Kansas men's and women's basketball: $480,000 in compliance consulting fees (2006)

Mississippi football: Nearly $1.5 million in legal fees (2016)

North Carolina athletics: $5.6 million (mid-2015 through March 2017); more than $17 million for full investigation through March 2017

Oregon football: More than $150,000 in compliance consulting fees (2012-13)

Sources: Public records requests (University of Louisville, University of Louisville Foundation, University of North Carolina and University of Oregon); the New York Times; the Raleigh (N.C.) News & Observer; the Jackson (Miss.) Clarion Ledger.

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