For the past eight seasons referee Mike Mathis spent time in June officiating the NBA Finals. Not this year. Instead, Mathis may be in federal court in Cincinnati fighting to retain his freedom, his job and his reputation.
Mathis, an NBA official for 21 years, and fellow refs Hank Armstrong and George Toliver, both nine-year veterans, have been indicted by federal grand juries on tax-fraud charges. All three men pleaded not guilty, but the NBA suspended them, with pay, pending resolution of their cases.
The indictments stem from the referees' alleged practice of downgrading airline tickets supplied by the NBA from first class to coach, pocketing the price difference and then using their own frequent-flier miles to upgrade back to first class; or, in some instances, cashing in first-class tickets, keeping the full amount and using their frequent-flier miles for replacement tickets. In either case, failing to report that extra cash as income is a felony.
In the five-count Mathis indictment, a copy of which was obtained by SI, the grand jury charges that from 1989 to '92 Mathis failed to report approximately $69,000 of taxable income. Prosecutors in Roanoke, Va., where Toliver was indicted, say he failed to report $47,000. While no amount had been made public at week's end in Armstrong's case, sources have put that figure at more than $100,000.
Under terms of the 1995 collective bargaining agreement, the referees are allowed by the league to exchange their tickets to supplement their income. League sources say NBA attorneys repeatedly advise officials to declare the extra income. Yet Mathis, Armstrong and Toliver probably aren't the only referees in trouble with the IRS. Attorney Terry Grady, who represents Mathis, says he believes as many as 20 NBA officials are under investigation. Dana Boente, a senior trial attorney for the Justice Department, would not comment on the number of forthcoming indictments.
Although NBA commissioner David Stern has publicly adopted a wait-and-see stance, league sources confirmed that a ref's conviction will result in his automatic termination—the penalty for any felony conviction, as spelled out in the collective bargaining agreement (which Mathis, as union head, argued against ratifying). If the core of high-caliber officials or a large chunk of the overall referee pool is implicated and forced out of the game, the NBA will be facing a crisis.
The investigation has cast a pall over officials who wonder if, or when, they will be indicted. Says another veteran referee, "It's a nightmare. We're not bad people. Maybe we made a mistake, but to lose our jobs—go to jail—I'm scared to death."
The penalty upon conviction for tax fraud is not easily determined before a trial. If an individual pleads guilty to criminal tax violation and admits to "the totality of the criminal conduct," that person is given what is known as "point reductions" for acceptance of responsibility. In the case of the referees, who have no prior felony convictions, a guilty plea could mean a reduced sentence of probation or home detention. However, if a referee pleads not guilty, goes to trial and is convicted, he will almost surely serve time in prison. Grady, who formerly worked for the Justice Department, says Mathis fully understands the risks of going to trial. "The stakes are very high," says Grady, "but my client wants to clear his name and will vigorously defend himself against these charges."
Even if more indictments are handed down soon, the NBA feels it can get through this season. "We have 58 officials," says Rod Thorn, senior vice president of basketball operations and the man who supervises the referees. "Very few of our younger guys are under investigation, and the playoffs are not that far off. We start the postseason [using] 32 referees and are down to 11 by the Finals. We're fine."
Division in Detroit