Financial Fraud in Sports

Normally, financial fraud in sports happens with gambling, politics, peddling, sponsors, trading players and more. Here, we'll tell you all about this issue.

Gambling, sponsorships, and peddling are some of the main drivers of financial fraud in sports. Sports need to show morals, but their institutions are fragile. However, some sports generate a huge and, in turn, an uncontrollable flow of money.

The lack of financial controls within the sports world has gained more media attention lately. In fact, the most popular case was the FIFAGate of 2015. Even today, investigations, lawsuits and the repercussions of the biggest professional soccer scandal continue.

Financial fraud: a definition

Financial fraud involves lots of financial crimes, both nationally and internationally. For example, this includes tax evasion, handling dubious money and illegally selling products.

In fact, obtaining economic benefits through illegal acts also fall into this category. Identity theft, forgery, money laundering and all kinds of scams are also financial fraud. Unfortunately, weak sports structures make this type of crime easy.

Therefore, the press used the term “financial fraud” a lot during FIFAGate. In reality, this concept has lots of crimes and scams. In fact, they’re all based on moving funds.

Bribes and money laundering: crime at all levels

This problem goes beyond fraudulently obtaining money. For example, peddling and bribery fuel other financial crimes.

Remember, there are a series of international standards to regulate the movement of world funds. Therefore, companies, institutions, and individuals justify the money that goes in and out.

In order to receive benefits, there needs to be a series of illegal acts. For example, there are companies that cover up illegal business. Another problem is money laundering.

Scammers have found excellent ways to launder money in sports such as soccer. Money laundering makes it possible to legalize the monetary resources that illegal activities generate. Therefore, even criminals can become shareholders of a team by finding loopholes.

What happened at FIFAGate?

On May 27, 2015, 14 people were arrested at the Hotel Baur au lac in Zurich. All of them were preparing to participate in the 65th FIFA Congress. In fact, this happened in the election for the president, where Joseph Blatter was set to run again. They arrested seven employees of world soccer.

These arrests happened as a result of the FBI’s investigations since 2011. The first thing they found was bribes involving FIFA officials. In fact, the goal was to get TV time, sportswear and sponsorships.

Then, a second investigation showed corruption. There were cases such as buying votes for the World Cup venue election.

In turn, they found evidence of bribes for the Copa América Centenario in the United States. In addition, they also investigated fixed games linked to illegal gambling.

Financial fraud in sports: more than just soccer

In September 2019, a Spanish finance official was convicted of helping defraud international athletes. In this case, the victims were soccer and basketball athletes. The criminal network managed to capture 6.3 million euros in income tax returns.

The problem with financial fraud in sports is the lack of control. However, both national and international law govern these institutions. In fact, very few organizations have structures to combat internal corruption.

Also, financial fraud is a crime that the judicial system needs to deal with. Internal agreements such as the United Nations Convention against Transnational Organized Crime work on this type of problem.

Financial fraud in sports is a difficult problem. It’s very complicated for managers and federations. Generally, they originate from a sports lifestyle. However, committing this type of crime has criminal charges.