Archive for Friday, February 11, 2011

IRS could end up with forfeited funds from those convicted in KU ticket scandal

Seat backs await fans at Allen Fieldhouse before the Kansas Jayhawks' home opener against the Longwood Lancers Nov. 12, 2010.

Seat backs await fans at Allen Fieldhouse before the Kansas Jayhawks' home opener against the Longwood Lancers Nov. 12, 2010.

February 11, 2011, 11:51 a.m. Updated February 11, 2011, 9:09 p.m.

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Three former employees of Kansas Athletics Inc. must pay up to $2 million for scamming to steal, sell and profit from the diversion of tickets to Kansas University football and basketball games, a federal judge has ruled.

And the IRS could end up with some or all of the money.

U.S. District Judge Wesley Brown ordered Thursday that the three — Charlette Blubaugh, former head of the KU ticket office; her husband, Tom Blubaugh, a former consultant to Kansas Athletics Inc.; and Rodney Jones, former assistant athletic director for the Williams Fund — each must pay the “monetary judgment” they’d already agreed not to contest as part of pleading guilty to conspiracy to commit wire fraud.

The pleas had come in connection with a tickets scam that prosecutors say ran from 2005 to 2010, involving the channeling of tickets through ticket brokers and others. A separate investigation conducted for Kansas University determined that more than 19,000 regular-season tickets had been diverted for personal gain.

Brown’s orders mean that the Blubaughs and Jones are responsible for up to $2 million, a total calculated to cover all or a portion of illegal gains. The orders also permit the government to use property to satisfy all or part of the monetary judgments.

Brown’s orders do not include any mention of restitution, considered a separate issue and one typically addressed at sentencing.

“Forfeiture puts money in the hands of the government,” said Jim Cross, a spokesman for the U.S. Attorney’s Office. “Restitution deals with putting money in the hands of the victim.”

Kansas Athletics is a victim, one that would be eligible for any restitution and, potentially, forfeited assets.

“There is one other victim,” Cross said. “The IRS.”

As part of their pleas, the Blubaughs and Jones admitted defrauding the IRS in two ways: first, by failing to report the scam’s revenue as income; and second, by not paying taxes on the money.

Kansas Athletics already has filed a claim seeking payment on a $250,000 insurance policy against employee theft, and plans to weigh its options for seeking money through forfeiture or restitution once the judicial process is complete.

The Blubaughs and Jones await sentencing in the coming weeks, along with Kassie Liebsch, a former systems analyst and tickets administrator who also has pleaded guilty to conspiracy.

Prosecutors filed a motion Friday, requesting that Brown require Liebsch join the others in paying up to $2 million through forfeiture. Liebsch already has forfeited a 2008 Toyota Camry purchased with illegal proceeds from the scam,

Ben Kirtland, former associate athletics director for development, is scheduled to plead guilty to conspiracy Feb. 24.

In the end, Brown will be the one determining where the money goes — or at least who might be able to gain access to it.

“If a judge so orders, money taken in forfeiture can be used as reimbursement for victims,” Cross said, explaining the process in general terms. “It would not be unexpected for the IRS to get money.”

Comments

Bob Forer 4 years, 3 months ago

Williams Fund contributors are fools for continuing to support the athletic department after being flicked off after requesting more transparency in seat locations, which aided the thieves in stealing tickets right under Lew Perkins. A fool and their money are soon parted.

password 4 years, 3 months ago

hopefully the new AD will fix that seating thing.

kujayhawk 4 years, 3 months ago

Isn't lew getting a $2MM retention bonus in June. Hmmm..........

formerfarmer 4 years, 3 months ago

So, if I embezzle $200,000 from the bank, the IRS gets a share of the money before restitution is made to the bank?

password 4 years, 3 months ago

well of course the IRS (federal government) always get their share. although it just doesn't seem right since it wasn't legally gained revenue that the scammers didn't report as income.

storm 4 years, 3 months ago

Gives a whole new meaning to, "You'll like Perkins."

happyrock 4 years, 3 months ago

What about the other missing $8 million?

Scott Tichenor 4 years, 3 months ago

Maybe the IRS would donate the funds back to the state of Kansas so we could hire a real Secretary of State.

martyks 4 years, 3 months ago

I've never pictured the IRS as a victim before. First time for everything, I guess. Too bad KU can't recoup the money and use it for another parking garage to replace a few acres of parking lots. The park and ride program, however, is a tremendous success. I just wish they could expand on it and get more cars off the campus.

thesloss 4 years, 3 months ago

Um, did Perkins have a Diplomatic Immunity clause in his contract?

thesloss 4 years, 3 months ago

How much Teflon did it take to cover "him"?

tdiddy 4 years, 3 months ago

It seems that the Ticket Brokers involved in this scandal had some knowledge that the tickets were falsely obtained. Shouldn't they get the same "JUSTICE as Carrie of Yellowhouse!! Where are those same diligent law enforcers now! Wrong is wrong and they should stick it to those brokers too...

thesloss 4 years, 3 months ago

Why are there so many obvious aspects to this crime, while Justice turns a blind eye?

pace 4 years, 3 months ago

My guess is there won't be that much to fight over.

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