SBJ/Dec. 6-12, 2010/This Week's Issue

Ornstein cooperating with authorities

Marketing agent and NFL insider Mike Ornstein has been cooperating with law enforcement authorities in multiple federal investigations throughout the United States for four years, federal prosecutors revealed at a court hearing last month in which Ornstein was sentenced to eight months in prison.

“Mr. Ornstein’s cooperation has been extensive, it has been ongoing, and it continues today,” John Sammon, an assistant U.S. attorney, told U.S. District Judge Christopher Boyko. Sammon said Ornstein’s assistance to the government warranted a major reduction in the length of his punishment.

The detail was part of a dramatic sentencing hearing Nov. 19 in Cleveland, in which Boyko admitted that he wrestled with determining the proper punishment for Ornstein, whom the judge cited for his many charitable contributions.

But the major news from the sentencing was that Ornstein provided what was described as substantial cooperation with federal law enforcement officials, and that is sure to reverberate in the sports industry and especially around the NFL, where Ornstein enjoyed high-level access until news broke in October of his legal problems. Industry buzz for weeks has been whether Ornstein would name names to avoid prison time.

He pleaded guilty to one count of mail fraud and one count of conspiracy in June, acknowledging in federal court that he conspired with others to scalp Super Bowl tickets and sell NFL jerseys falsely advertised as game-worn.

Ornstein was out on bond last week, awaiting a determination by the Federal Bureau of Prisons as to where he would serve his sentence. His attorney did not return a phone call for comment on this story.

Ornstein, who had faced a maximum of 25 years in connection with the felony convictions, had also pleaded guilty in the mid-1990s to a federal charge that he defrauded former employer NFL Properties of $350,000. But other factors weighed on Boyko during his deliberations, including Ornstein’s work helping disadvantaged children and the people of New Orleans after Hurricane Katrina. “I really wish there were more people doing what you do in this world,” Boyko said during last month’s hearing.

At the same time, Boyko told Ornstein, “You are an intelligent man, Mr. Ornstein, and for you to be here in front of a federal judge for a second time, it's pretty stupid.”

“Very stupid,” Ornstein agreed. “But I am a good person, at the end of the day.”

Ornstein was able to serve his previous sentence under house arrest. His attorney, Angelo Lonardo, asked that Ornstein be able to spend the new eight-month sentence at home, as well, but the judge said no.

“I’m sorry … but it is prison,” Boyko said.

It is not clear exactly what kind of assistance Ornstein provided to the government, and federal law enforcement authorities do not comment on active investigations. But Sammon said, “It is possible that as a result of other investigations ongoing in different parts of the country, that other offices may bring charges against certain people as a result of the cooperation by Mr. Ornstein.”

It is believed that Ornstein bought Super Bowl tickets from NFL employees and players to resell, but the sentencing hearing revealed little about the scalping operation except that Ornstein had players fill out forms regarding their sale of tickets and that Ornstein paid taxes on the profits he made from it.

But the hearing did contain several revelations about the jersey scam, including that NFL officials knew as far back as 2003 that Ornstein had tried to sell jerseys falsely advertised as game-worn.

Lonardo, in asking for leniency for his client, said that Ornstein had already been punished for selling the jerseys by the NFL. “He had to go in front of the NFL and everybody else and make amends for it and also be punished, at least in terms of NFL Properties,” Lonardo said. “That is back in 2003, Judge, and then for the next three years, he really did nothing, or nothing much with NFL Properties.”

Ornstein told a similar story. “What happened eight years ago, it was an opportunity on these jerseys, but I can stand here today and say every penny was paid back and every jersey recovered,” he said. “There was no victim of that crime. The intent was there. I was wrong. When it was brought to my attention by the NFL, I sent my guy. … We bought every one back. … And the NFL, when I met with the NFL, they weren't happy about it, but they let — they passed on it,” he said.

The NFL declined to comment for this story.

Ornstein told the court that none of the jerseys ever hit the market, but that statement surprised prosecutors and contradicted the bill of information to which he pleaded guilty in June. According to the bill of information, Ornstein sold jerseys to multiple outlets, including a memorabilia dealer, and some of the pieces were cut up and affixed to trading cards, netting Ornstein more than $100,000, according to court documents.

“It was the government’s understanding that some of these cards were sold, but apparently that’s not the case?” said Henry DeBaggis, an assistant U.S. attorney.

In an interesting twist, he added that the nephew of IRS agent Brian Sallee “came into possession” of one of the NFL jerseys that had been fraudulently marketed as game-worn. The IRS and the FBI were both involved in investigating the case.

Sallee, according to the transcript, appeared caught off guard by Ornstein’s statement. “This is kind of the first time — we have heard in the past that Mike has — I believe the cards were in commerce,” Sallee said. “That’s what I thought.”

But Ornstein, in court, said that after the NFL called him in, he bought all the jerseys back from Pacific Trading Cards and destroyed the jerseys. “So we never did make any money on the jersey thing and there were no jerseys ever used,” Ornstein said.

Pacific Trading Cards is no longer in business and attempts to reach former officials of that company for comment were unsuccessful.

It was also revealed at the hearing that Ornstein first became aware of the investigation at a Cleveland Browns game in 2006, but the circumstances of that situation were not described.

The colorful Ornstein, a 30-year veteran of the sports business known as “Orny” to his friends, has extensive ties throughout the industry. He has been particularly close to the reigning Super Bowl champion New Orleans Saints.

In fact, Ornstein, a friend of Saints coach Sean Payton, was on the New Orleans sidelines at the Super Bowl this year and later sported a Super Bowl ring that he showed off to others in the industry, multiple sources said. (Saints spokesman Greg Bensel said, “The team did not give him a Super Bowl ring.”)

But virtually no one in the business knew Ornstein had criminal charges hanging over his head. He told the judge that it had cast a shadow over his life for a long time.

“I’m so remorseful, believe me,” Ornstein said. “When you wake up every morning for 10 years and 10 times a day and every time you go to bed at night, that is the only thing on your mind, I’ve been in jail for 10 years. I really have.”

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