Jackson Jambalaya

Did USA Swimming spike investigations into sexual abuse claims against swim coaches?  It is a question asked by federal prosecutors.  The Wall Street Journal reported last week:

Federal prosecutors in New York are investigating USA Swimming, including allegations that the organization stifled athlete sexual-abuse claims, concealed its assets and improperly reaped hundreds of thousands of dollars in rebates from its in-house insurance company, people familiar with the matter said.

Over the past year, a federal grand jury in Manhattan has heard evidence in the investigation, which is being led by the Manhattan U.S. Attorney’s Office and the Federal Bureau of Investigation...

The Manhattan investigation is one of several to arise from sexual-abuse scandals that have erupted across the U.S. Olympic system in the past three years...

The U.S. Justice Department and the Internal Revenue Service are pursuing a multipronged investigation into alleged sexual abuse, business misconduct and possible tax violations in Olympic sports organizations, The Wall Street Journal reported in September, citing people familiar with the matter.

USA Swimming is also under scrutiny in that investigation, which involves prosecutors from the Justice Department’s money-laundering and child-exploitation units, as well as the U.S. attorney’s office in Washington, D.C., said people familiar with both investigations.

Prosecutors have asked whether swimmers and other athletes felt pressured to perform sex acts on coaches in exchange for favorable spots in competition, in the U.S. and overseas.

USA Swimming is an Olympics juggernaut, hauling in dozens of medals and attracting millions in sponsorships. The Manhattan investigation is focused on two separate alleged business practices within the Colorado-based nonprofit organization, which recorded net assets of $36.3 million at the end of 2017, the latest period for which tax filings are available.

Witnesses have described to federal investigators an extrajudicial system within USA Swimming that for years stifled the reporting of abuse allegations, while protecting the organization’s bottom line and reputation, people familiar with the investigation said.

Here’s how the system worked, according to civil-court filings, disciplinary records and people familiar with the investigation: Accusers were required to submit formal complaints—including the victim’s name—to the organization, after which a USA Swimming executive would determine whether there was sufficient evidence to consider official disciplinary action. The organization would hire an outside investigator to conduct interviews, according to the people and records. (KF note: "Here's how the system worked", Really? This is the Wall Street Journal, not the Clarion-Ledger.). 

The matter might be referred to USA Swimming’s National Board of Review, a body appointed by USA Swimming executives that determined disciplinary actions against coaches.

Before the board held a hearing, these people said, a lawyer would reach out to the accuser to discuss the allegations. The lawyer was held out as being impartial, but the lawyer in fact represented USA Swimming, and during the hearing might use knowledge of the accuser’s case against the person.

“The system is designed to stop you from wanting to report,” a person briefed on the investigation said.

The system is no longer in place: In response to the sexual-abuse scandals that emerged in 2016 and 2017, federal law now requires all allegations of child abuse to be immediately reported to law enforcement and, in the case of Olympic organizations, to the U.S. Center for SafeSport.

For USA Swimming, fewer reported assaults also meant fewer financial settlements and insurance claims. And here, people familiar with the investigation say, is where the organization’s handling of sexual-abuse allegations connects with possible financial wrongdoing.

In 1988, USA Swimming set up a so-called single-parent captive insurance company in Barbados. The company, the United States Sports Insurance Co., was fully owned by USA Swimming, and provided reinsurance for carriers that sold policies on behalf of USA Swimming to local swim clubs throughout the U.S. Its board was composed almost entirely of current and former USA Swimming executives, court filings show...

As USA Swimming sought to minimize its legal and financial liabilities, accusers and their lawyers have alleged, the organization’s own insurance company took pains to avoid paying claims. In the event of litigation, lawyers for accusers say, USA Swimming’s legal bills likely would exhaust the insurance policies.... Rest of article.