A secret $55 million loan has become the primary focus of federal prosecutors in Virginia who are investigating alleged financial misconduct by Dan Snyder and the Washington Commanders, according to a report published Monday by ESPN.
A federal grand jury has issued subpoenas for documents and prosecutors have obtained numerous documents, including emails and exchanges between team executives. And, "the criminal inquiry is being led by a team of FBI and IRS agents," sources told ESPN's Don Van Natta.
At the center of the issue is a line of credit that was taken out by the team around Dec. 2018 without the knowledge and approval of the team's three minority partners – Robert Rothman, Dwight Schar and Frederick W. Smith – who owned 40 percent of the team at the time. The partners discovered the loan in April 2020 and demanded answers from Snyder.
The issue is that any loan or line of credit that was obtained without approval from Washington's board of directors would be a violation of the team's shareholder agreement.
The minority partners asked the NFL to investigate how the loan was obtained, but the league nor a league arbitrator investigated it, Van Natta reported. Days later, after the partners pressed the arbitrator to find out if the loan was obtained legally, "the NFL moved to shut down" the arbitration and the minority partners agreed to mediation led by NFL commissioner Roger Goodell. ESPN reported the league pushed the three minority partners to sell their stake to Snyder, did not conduct the requested investigation into the loan and did not punish Snyder.
"This is jail time type of fraud," a source with firsthand knowledge of the proceedings told ESPN.
"Three billionaires -- not a few whistleblowers -- alleged to the NFL arbitrator that their partner had possibly committed bank fraud," the source told ESPN. "...the league had no interest in finding out what happened. They buried it and didn't investigate it and covered it up."
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John Brownlee, a team spokesman, responded with this statement to ESPN denying the allegations: "The team has been fully cooperating with the Eastern District of Virginia since it received a request for records last year. The requested records only relate to customer security deposits and the team's ticket sales and revenue. The team will continue to cooperate with this investigation."
The same month the partners discovered the $55 million loan, Snyder did not pay his quarterly share of team profits, according to the 61-page confidential arbitration petition filled to the NFL and obtained by ESPN.
The suspicion of the three minority owners came when examining the team's financial report's fine print. And discovered Snyder was using the franchise as his "personal piggy bank."
The minority stakeholders confronted Snyder in May and asked about other "self-dealing transactions" in May 2020. They argued Snyder was using cash from the team "to support his lavish lifestyle" and called him of packing the organization's six-person board with loyalists one of several "brazen actions [that] have the obvious purpose of protecting Snyder's self-dealing and other unauthorized conduct from being further exposed."
The three minority owners alleged Snyder was charging the team $4.5 million to put the logo on his private jet in what he called "an advertising fee," according to ESPN. The partners accuse Snyder of using team funds to pay for his two personal yachts and several residences, more than 60 members of his personal staff. They also discovered Snyder leased his personal jets back to the team and paid himself a $10 million a year salary.
Snyder bought out his partner's 40 percent stake for nearly $900 million in the spring of 2021. With Snyder asking for nearly $7 billion for the team now, those shares would be worth over $2.5 billion today.
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