Dan Snyder reportedly used Commanders like 'personal piggy bank,' accused of fraud over $55M secret loan
If you can believe it, Washington Commanders owner Dan Snyder has been accused of doing more illegal things, like taking out secret loans and using the team as his "personal piggy bank."
ESPN's Don Van Natta Jr. reported Tuesday that three (now former) Commanders minority owners accused Snyder of fraud and misusing company funds after he took out a $55 million loan in 2020 without telling them about it. Commissioner Roger Goodell then allegedly refused to investigate the fraud and misuse of funds when the partners pointed them out in an arbitration petition.
This questionable loan is now at the center of federal prosecutors' probe into the Commanders' financials, according to Van Natta. A grand jury has issued subpoenas for Commanders financial records, including anything related to the loan, and they've already obtained other documents like emails and letters. And this is all happening while Snyder is attempting to sell the team for a record-breaking $7 billion.
Snyder allegedly used team to fund his lifestyle
This story begins with the Commanders' three minority partners, Robert Rothman, Dwight Schar and Frederick W. Smith, reportedly discovering the $55 million Bank of America loan in the fine print of an audit in April 2020. Later that same month, Snyder allegedly missed paying the partners their quarterly profits for the first time.
The partners went on to examine the team's financials and they say they discovered that Snyder had been using the team as his "personal piggy bank." They alleged in their arbitration petition to the NFL (which was obtained by ESPN) that Snyder had been paying himself a salary of $10 million a year and was using the team to pay for "personal yachts, multiple residences, the services of more than 60 members of his personal staff, multiple vehicles in the U.S. and Europe and countless meals, wine/beverages [and] entertainment." Additionally, Snyder had been allegedly leasing his jets back to the team and reportedly charged them $4.5 million for "advertising" after he had the Commanders' logo emblazoned on his personal jet.
These suspicions were further confirmed by a letter Snyder's lawyers sent to the partners in June (obtained by ESPN) explaining that the team would be reimbursing Snyder over $7 million for "unreimbursed business expenses" covering 2017-2020. Those "business expenses" allegedly included a lavish yacht party Snyder threw that included Dallas Cowboys owner Jerry Jones, Buffalo Bills owner Terry Pegula and New England Patriots owner Robert Kraft. Snyder also reportedly told them he'd used $20 million of that $55 million loan.
Snyder's partners shut down
What really spurred the three partners to action was Snyder reportedly removing and replacing them from the Commanders' board in mid-June. According to ESPN, the partners believed that was a violation of their stockholder agreement, and in conjunction with their discovery of Snyder's other alleged activities, they believed they had enough to alert the NFL and send them an arbitration petition.
According to Van Natta, the arbitration petition also included the partners' allegation that Snyder had fraudulently obtained the $55 million loan. Bank of America required a sign-off from the Commanders' board of directors before the loan could close, but according to one of the partners, the board hadn't met in years. Yet Snyder got the loan, which Goodell approved while the Commanders' minority partners had no idea.
After submitting the petition to the NFL, the partners "reluctantly" agreed to a Jan. 2021 mediation overseen by Goodell to settle buyout conditions. According to ESPN, Goodell and NFL general counsel Jeff Pash (who is reportedly a close friend of Snyder's) both refused to investigate the secret loan.
The partners' only option was to sell their 40 percent stake in the team back to Snyder, which they did for $875 million. That was two years ago. With Snyder now trying to sell the team for $7 billion, that 40 percent would have been worth $2.8 billion.
NFL, Commanders respond
In response to ESPN's story, the Commanders released this statement through team counsel John Brownlee:
"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 NFL released a statement to ESPN through spokesman Brian McCarthy.
"The parties had a series of disputes, which were certified to the Commissioner for arbitration as required by league rules. The Commissioner appointed a highly-respected attorney as the arbitrator and none of the parties objected to that appointment."
"After several months, the parties were asked if they would be interested in participating in a confidential mediation with the Commissioner, which they agreed to do," McCarthy continued in the statement. "The mediation lasted for two days and the parties subsequently reached an agreement whereby the three limited partners sold all of their interests in the team to Mr. Snyder at an agreed-upon price and other terms. Everyone was represented by very sophisticated legal and financial advisors. The agreement included full releases of all claims that were or could have been asserted by any party in the arbitration proceeding."
Brownlee and McCarthy refused to directly address the $55 million loan or any legal action surrounding it. Bank of America declined to comment. All three former Commanders co-owners and their lawyers never responded to multiple interview requests from ESPN.