Scott Blackmun

U.S. Department of Justice and Internal Revenue Service investigators have crisscrossed the country in recent months interviewing more than a dozen witnesses and subpoenaing thousands of pages of documents in a wide-ranging criminal investigation into the U.S. Olympic and Paralympic Committee, USA Gymnastics, USA Swimming, USA Taekwondo and other national sports governing bodies and the Federal Bureau of Investigation’s handling of sexual abuse cases, according six people familiar with the investigation.

Justice Department and IRS officials are also looking into financial practices of officials at USA Gymnastics, USA Swimming and other national governing bodies, according to four people familiar with the probe.

A Washington, D.C., based-team of approximately 10 federal investigators and prosecutors have interviewed at least 16 people, including Olympic and world champion medalists, about the USOPC and at least five national governing bodies as part of a probe into potential money laundering, sex trafficking and child sex labor, the Southern California News Group has learned.

Federal prosecutors have also obtained records related to USA Gymnastics, USA Swimming and USA Taekwondo sex abuse cases and the accounting practices of NGBs, according to four people familiar with the investigation.

Investigators have also questioned witnesses about USA Track and Field and the Orange County-based USA Badminton.

A former USA Swimming official has also testified in front of a federal grand jury as part of a Southern District of New York U.S. Attorney’s office investigation into the handling of sexual abuse cases by the NGB and an insurance company created and owned by USA Swimming, a person familiar with the testimony told SCNG.

A Justice Department spokesman declined comment.

“Every instance related to potential or actual abuse of athletes warrants thorough investigation,” USOPC vice president Mark Jones said. “We have cooperated with all government inquiries and will continue to do so.”

Started with Nassar

The federal probe was prompted in part by questions surrounding USA Gymnastics and the FBI’s handling of allegations of sexual abuse against former U.S. Olympic and USA Gymnastics women’s national team physician Larry Nassar in the summer of 2015. Investigators are also looking into former USOPC chief executive officer Scott Blackmun’s potential role in the initial Nassar cover-up and whether he misled members of Congress about the case and other matters.

Justice Department officials have also questioned witnesses about USA Swimming’s investigations of the Everett Uchiyama and Sean Hutchison sex abuse cases.

“The only way you’re going to change this culture of abuse is to start putting behind bars the people who enabled and covered up that abuse,” said Robert Allard, an attorney who has represented a number of sexual abuse victims in several Olympic sports.

Uchiyama, USA Swimming’s national team director, was forced to resign and was banned for life from the sport in 2006 after being confronted with allegations he had sexually abused a female swimmer. But the ban and the reason for the resignation were kept from the public by USA Swimming and its executive director Chuck Wielgus.

Uchiyama, whose wife continued to work at USA Swimming’s national office, however, remained in the sport despite the ban, working as director of aquatics at the Country Club of Colorado in Colorado Springs, just five miles from USA Swimming’s headquarters. Uchiyama was hired by the club after receiving a recommendation from a top USA Swimming official. USA Swimming did not publicly disclose the Uchiyama ban and reveal list the names of other banned coaches until 2010.

SCNG reported earlier this year that a former FBI agent hired by USA Swimming in 2011 to investigate sexual misconduct allegations against Hutchison, a U.S. Olympic and national team coach, said top officials and attorneys for the organization falsely characterized the findings and extent of the investigation, and shut down the probe before she could interview several key witnesses.

The U.S. Center for SafeSport banned Hutchison from the sport for life in October, more than seven years after he was cleared by USA Swimming, finding Hutchison had engaged in sexual misconduct against world champion swimmer Ariana Kukors Smith when she was a minor. The SafeSport investigation found Hutchison molested Kukors Smith, had her perform oral sex on him and took nude photos of her when she was still a minor.

Hutchison has denied any wrongdoing.

A spokesperson for USA Swimming referred questions to the Justice Department.

USA Gymnastics said in a statement that is “striving to become an athlete-centric organization that keeps athlete safety and well-being at the forefront of everything it does. USA Gymnastics has cooperated fully with any governmental investigation and will continue to do so in the future.”

USA Track and Field did not respond to a request for comment. USA Badminton and USA Taekwondo officials also did not respond to requests for comment.

Congress gets involved

Bipartisan legislation was introduced in the U.S. Senate in July that would give Congress the power to terminate the U.S. Olympic and Paralympic Committee board of directors and decertify the national governing bodies for Olympic sports.

The Empowering Olympic and Amateur Athletes Act of 2019, co-authored by Sen. Jerry Moran (R-Kan.) and Sen. Richard Blumenthal (D-Conn.), would not only dramatically increase Congressional oversight over the USOPC and the 50 NGBs under its umbrella, but would also require the USOPC to contribute $20 million annually to the U.S. Center for SafeSport and mandate that the Center publicly list all individuals barred from USOPC-sanctioned sport for sexual and physical abuse.

The legislation follows an 18-month investigation, led by Moran and Blumenthal, into the USOPC, USA Gymnastics, USA Swimming and other NGBs in the wake of the Larry Nassar and USA Swimming sex abuse scandals.

Moran and Blumenthal referred Blackmun, the former USOPC CEO, to the Justice Department and FBI in December for criminal investigation for making false statements and misleading Congress.

“The U.S. Olympic Committee and its affiliated national governing bodies enabled Larry Nassar by turning a blind eye to criminal conduct and then trying to sweep it under the rug,” Moran and Blumenthal said in a joint statement Friday. “Everyone who allowed abuse to continue must be held responsible for any and all violations of the law. It is clear there is an urgent need to establish better protections for athletes, strengthen Congressional oversight over the USOPC along with the national governing bodies, and amplify the voice of athletes. Survivors deserve justice and the systematic change our bipartisan bill would deliver.”

Concerns about Nassar were brought to the attention of Alan Ashley, then the USOPC chief of sport performance, as early as 2013, the USOPC-commissioned investigation by the Ropes & Gray law firm found. In a January 2013 email to Ashley regarding USA Gymnastics sports medicine program, Penny wrote “if Larry Nassar is the gatekeeper then we have a real issue.”

Penny received allegations in June 2015 that Nassar had sexually assaulted Team USA gymnast Maggie Nichols during a national team training camp at the Karolyi Ranch in Texas. Shortly thereafter, Penny began consulting with W. “Jay” Abbott , the special agent in charge of the FBI’s Indianapolis office on how to handle the Nassar allegations. The FBI did not launch a formal investigation of Nassar for another nine months. Penny repeatedly turned to Abbott as he tried to keep the Nassar allegations from going public and later consulted with Abbott about USA Gymnastics’ “timeline,” and how the organization dealt with the Nassar allegations, according to USA Gymnastics emails.

In a July 30, 2015, email to Abbott previously reported by SCNG and other media, Penny said: “Our biggest concern” is “how we contain [Nassar] from sending shockwaves through the community.”

The Justice Department’s inspector general began an investigation into the FBI’s handling of the Nassar case last year.

“The US Olympic Committee, USA Gymnastics, the FBI, their senior executives and others who enabled Larry Nassar’s abuse of our Olympic athletes and hundreds of other young girls must be brought to justice,” said John Manly, an attorney who represents dozens of Nassar survivors. “I am convinced that this investigation only happened because of the courage of survivors, publicly revealing the pain and suffering caused by their abuse to Congress, in court and in the media. The Office of Inspector General has been investigating the FBI’s handing of the Nassar scandal for more than a year and the results of that investigation should be made public immediately. The results of this new investigation should also be made public so that action can be taken by Congress and the courts to end the culture of exploitation and abuse of child athletes in the United States.”

As part of the USA Gymnastics cover-up, Nassar was allowed to retire in September 2015 without USA Gymnastics revealing the real reason for the move. USA Gymnastics also did not inform Michigan State of the reason for Nassar’s stepping down and Nassar continued to sexually abuse patients at the university’s sports medicine clinic for another year.

“This period is also marked by unexplained delays on the part of the FBI,” the Ropes & Gray investigator wrote.

In addition to seeking advice and help from Abbott, Penny also floated the idea that he could help the soon-to-be retiring agent land the USOC security chief position after Larry Buendorf retired a few months later.

Penny was arrested in October after a Texas grand jury indicted him on felony evidence tampering charges. The indictment alleges Penny ordered the removal of documents from the Karolyi Ranch related to Nassar’s activities. Penny has pleaded not guilty. He was forced to resign his USA Gymnastics position under pressure from the USOC in March 2017.

Nassar is currently serving a 60-year sentence in federal prison for possession of child pornography. He was sentenced in 2018 to between 40 and 175 years and 40 and 125 years after pleading guilty to a total 10 charges of sexual assault in two Michigan state cases.

Millions of dollars changing hands

The USOPC gave Blackmun a $2.4 million buyout after he was forced to resign in 2018 amid allegations he was involved in the cover-up of sexual abuse by Nassar, according to financial documents released by the organization earlier this month.

The payout to Blackmun, who resigned in February 2018 citing health reasons, was more than what nearly 50 national governing bodies individually received in funding from the USOC last year. Only U.S. Skiing and Snowboard ($6 million), USA Track & Field ($3.99 million), and USA Swimming ($3.4 million) received more funding than Blackmun’s buyout. USA Gymnastics received $2.2 million from the USOC last year.

Local swim clubs that were members of USA Swimming were for several years insured by U.S. Sports Insurance Company Inc, a company with $31.3 million in assets originally based in Barbados created and solely owned by USA Swimming and governed by former and current USA Swimming officials.

While USSIC provided USA Swimming $2 million worth of liability insurance for sexual abuse civil cases, until recently the company provided local clubs only $100,000 worth of coverage for similar cases. This policy of reducing the financial exposure of USSIC at the local level was a factor in generating millions of dollars in “safety rebates” from USSIC back to USA Swimming. In some years, the governing body has received back as much as $750,000 in “safety rebates,” according to USA Swimming documents obtained by SCNG.

Scott M. Reid is a sports enterprise/investigative reporter for the Orange County Register. He also covers Olympic and international sports as well as the Los Angeles’ bid to host the 2024 Olympic Games. His work for the Register has led to investigations by the International Olympic Committee, the U.S. Department of Education, the California Legislature, and the national governing bodies for gymnastics and swimming. Reid’s 2011 reporting on wide spread sexual abuse within USA Gymnastics and the governing body’s failure to effectively address it led to Don Peters, coach of the 1984 record-setting Olympic team, being banned from the sport for life. His reporting also prompted USA Gymnastics to adopt new guidelines and policies dealing with sexual abuse. Reid’s 2012 and 2013 reporting on sexual abuse within USA Swimming led to the banishment of two top level coaches. Reid has won 11 Associated Press Sports Editors awards for investigative reporting since 1999. He has also been honored by APSE for game writing, and enterprise, news, and beat reporting. He was an Investigative Reporters and Editors award finalist in 2002 and 2003. Prior to joining the Register in 1996, Reid worked for the Atlanta Journal-Constitution and the Dallas Times Herald. He has a B.A. in the History of the Americas from the University of Washington.