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Federal Government Investigating USA Swimming Over Sexual Abuse Claims And Alleged Shady Business Practices

Photo: Lachlan Cunningham (Getty)

The Wall Street Journal reported today that several federal government agencies are in the process of investigating USA Swimming, the sport’s national governing body, over a variety of alleged misdeeds, following a report last month that the U.S. Department of Justice was investigating several U.S. Olympic organizations. Prosecutors will look into “allegations that the organization stifled athlete sexual-abuse claims, concealed its assets, and improperly reaped hundreds of thousands of dollars” in an insurance scheme.

The Justice Department’s money-laundering and child-exploitation units, as well as the Washington, D.C. U.S. Attorney’s office, will be investigating USA Swimming. One aspect under scrutiny is a system for reporting sexual abuse allegations that witnesses told the Journal “stifled the reporting of abuse allegations, while protecting the organization’s bottom line and reputation.” As part of that system, accusers had to include the victim’s name in formal complaints and speak to a lawyer who was presented as impartial, but actually represented USA Swimming. This system was phased out amid the widespread sexual abuse scandals of the past few years.

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Prosecutors will also look into the link between mishandled sexual abuse claims and possible financial wrongdoing. USA Swimming allegedly did all it could to not pay settlements, and was able to avoid doing so because it set up an insurance company of its own that prosecutors identified as a “potential avenue for self-dealing.”

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.

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Any money not spent by the insurance company was returned to USA Swimming in the form of “safety rebates,” dividends that amounted to as much as $750,000, twice a year, according to sworn declarations in federal lawsuits.

USA Swimming started buying insurance from the open market in 2014, when United States Sports Insurance Co. was reincorporated as an LLC in Washington, D.C.

The USA Swimming Foundation, the governing body’s philanthropic arm, has an endowment that more than tripled in the past 10 years; prosecutors think that could potentially have been a way to hide assets and shield USA Swimming from possible litigation.

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[Wall Street Journal]

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