THE GEORGE GIBNEY CHRONICLES: What the Hunt For the Most Notorious At-Large Sex Criminal in the History of Global Sports Has Told Us About the Sports Establishments and Governments on Two Continents is available for $3.49 US at amzn.to/2SmU16c. If you don’t have a Kindle-compatible device, you can get a PDF copy emailed to you by remitting $3.49 through PayPal to [email protected]
by Irvin Muchnick
You can’t tell the story of the hoped-for upcoming climax of the hunt for justice for the many victims of George Gibney on two continents without also discussing the unraveling of the American Olympic movement sports governing bodies’ generations of harboring and covering up for sexually abusive coaches.
The scandal of USA Gymnastics doctor Larry Nassar forced federal investigators to delve in greater depth into a subject that has been on their radar, off and on, for many years. Last year, in a piece for the San Francisco alternative news site Beyond Chron, in direct reference to USA Taekwondo, I talked about the legal pivot toward not just individual civil claims and criminal cases, but also the conceptual lumping together of them under theories of class action or insurance fraud or violation of federal racketeering statutes.
In this environment, the scrutiny of USA Swimming is like none other. This is because the nation’s half-million-strong population of competitive youth swimmers — whose scale is leveraged to serve a money-first Olympic development program rather than healthy degrees of physical education and extracurricular nourishment — provides special numerosity. But it is also because swimming’s insurance practices have been uniquely shady.
Concussion Inc. first exposed some of these practices in 2013, in a series of articles about USA Swimming’s wholly owned subsidiary, the United States Sports Insurance Company (USSIC), a scam entity domiciled — for tax- and regulation-dodging purposes — on the Caribbean island of Barbados. “USA! USA!”, indeed.
In 2014 USA Swimming announced that USSIC was in “run-off” mode and its headquarters was being moved to Washington, D.C. Little reported was the conclusion of the history of this fraud. In 2016 swimming sold USSIC to London’s Randall & Quilter Investment Holdings Ltd. for $2.1 million. According to an article in the trade publication Insurance Journal, the company had a net asset value of $5.3 million and annual comprehensive income of $972,000. See https://www.insurancejournal.com/news/national/2016/09/23/427327.htm.
USSIC was incorporated in 1988, at a time when swimming faced the prospect of skyrocketing insurance costs. The organization’s main carrier, AIG, had complained that premiums were too low in multiple areas of liability, including sexual abuse. Given the exposures, AIG would only discuss premiums in the range of $1 million, up from about $200,000, for the same coverage.
During that period, large corporations of all types, profit and non-profit alike, faced steep premium hikes. What emerged from the creativity of that generation’s lawyers and MBA’s was a new wrinkle called “captive reinsurance.” In a nutshell, parent entities, with smart leveraging of tax breaks and regulatory gimmicks, could save money by insuring themselves, managing the claims themselves, or underwriting the risks of their third-party commercial carriers.
Today many corporations have some type of captive. (The Catholic Church’s is called the National Catholic Risk Retention Group, Inc.) In 1988, the U.S. Olympic Committee already had its own captive covering several sports, called PANOL. But USOC wanted no more part of underwriting swimming’s risks than did AIG at then prevailing premiums. While other national governing bodies, or NGB’s, saw their premiums reduced or their coverage stable, USA Swimming was not allowed to join due to its risks and failure to manage them. Therefore, swimming researched forming its own captive.
In the late 1980s, Caribbean countries competed furiously to be the preferred home of captive reinsurers from the States. For USSIC, USA Swimming chose Barbados, which offered many years of tax abatement, as well as a structure so loose that all the operation really required was a dummy bank account and a set of books stashed on the island, plus the periodic on-site board of directors meeting. (These seaside soirees could easily be justified as perk-laden bacchanals for the sport’s greedy and shameless potentates, led by the late USA Swimming chief executive Chuck Wielgus, and long-time board member and one-term president Dale Neuburger.)
A lot of companies preferred to locate their captives in other Caribbean countries — the Cayman Islands was a popular destination. But for USA Swimming, the clincher was that Barbados had a tax treaty with Canada — but not the U.S. The less exposure to U.S. laws and their pesky inspectors and enforcers, the better.
Recently, offshore captives have fallen out of favor as internal American states — notably Vermont, North Carolina, and Hawaii — rejiggered state laws and regulations to emerge as equally friendly havens. “USA” Swimming, however, did not bring its insurance operations back stateside until five years ago. The main reason, experts believe, is that swimming’s lords of the rings did not want records of their reinsurance machinations open to public inspection here.
After 1988, the next important date in the evolution of USA Swimming’s defenses against abuse and other claims was 1999. That was the year the U.S. Olympic Committee told swimming, in writing, that it could no longer use the Colorado Springs Olympic Training Center facilities. The reason was that USA Swimming was the only NGB without appropriate insurance coverage.
The risk manager for the USOC explained all this bluntly to USA Swimming’s consultant, Risk Management Services. On May 3, 1999, RMS senior vice president Sandy Blumit forwarded these notes to the USSIC board:
“[USOC] mandates innocents should be protected by their NGB. Therefore, can’t delete abuse and molestation [coverage]. [As a consequence, USOC] would not allow any local members clubs, volunteers or members on premises (training center).”
Two days later USOC was advised that swimming was deleting the exclusion for abuse/molest coverage, and they were allowed back at the training center.
All this was taking place in the context of decades of cover-ups of rapes of mid-teen swimmers by some of the most prominent coaches in the sport. By 2013, a coach named Rick Curl was being sentenced to seven years in Maryland prison for his abuse of his Olympic hopeful, now named Kelley Davies Currin, in the 1980s. After Curl’s sentencing hearing, Currin and others exhorted Congress to get involved.
Over the years, experts warned the USA Swimming board that the number of potential abuse claims was large and growing, and that they could bankrupt the organization. One of the first advisers to do so was Jack Swarbrick, an Indiana lawyer who is now the athletic director at the University of Notre Dame (which, of course, today has its own laundry list of abuse headaches — most especially the prominent sexual assault cases involving football players).
The existence of Swarbrick’s advice emerged in the deposition of John Leonard, the executive director of USA Swimming’s coach-credential gatekeeper, the American Swimming Coaches Association.
USA Swimming’s response to doomsday warnings was a combination of public relations maneuvers and legalistic defenses.
The national group itself did not have specific abuse liability coverage — only a general liability policy that excluded abuse coverage to its 2,000 member clubs. The clubs were given USSIC-underwritten coverage for coach abuse and molest claims. And even that coverage was capped at $100,000.
Further, the team’s coverage was saddled with what is known as a “wasting” provision. This meant that every dollar spent on defending a claim would be correspondingly reduced from the coverage. So if investigators and lawyers for USA Swimming ran up a tab of $100,000 in a particular case, a victim stood to collect a maximum of $100,000 minus $100,000: zero dollars.
The club, too, had zero dollars to defend itself and its innocent coaches and club boards. This happened more often than not. In addition, the coverage was limited to two claims a year for all member clubs.
The idea was that a club could easily be sacrificed — its coaches tossed to bankruptcy and any parent board left holding the bag. The two larger goals were, first, to protect USA Swimming from claims made against member clubs, and second, to frustrate victims in trying to isolate deep enough pockets to provide settlements to cover their injuries and needed treatment.
The tale of George Gibney — a fugitive former Irish Olympic swimming head coach who briefly coached for a USA Swimming club in Arvada, Colorado — is but one example of the transnational character of the group’s exposure. Concussion Inc. also has written extensively about the Venezuelan national Simon “Danny” Chocron, a coach at the famed Bowles club in Jacksonville, Florida, who raped both girls and boys before jumping bail and returned to his native country. (The first of our many reports on the Chocron case is at https://concussioninc.net/?p=5993; for others, use the search tool at this site.)
According to USA Swimming’s public accountings, it was on the watch of board president Neuburger that USSIC attained its peak of an annual $750,000 in “safety rebates” to USA Swimming. In recent years, as more and more victims more aggressively pursued civil action to recover from their abuse, the safety rebate was slashed by two-thirds.
As USA Swimming president, Neuburger had one important achievement for the now-defunct USSIC, besides maxing out on the safety rebate. He was also astute enough to realize that 100 percent overlap of the boards of USA Swimming and USSIC was a bad idea. The parent, USA Swimming, would need more of an arm’s-length relationship with its subsidiary should anyone start attacking USSIC’s assets (which during Neuburger’s term peaked at $27 million). On the advice of President Neuburger, USSIC began recruiting outsiders for the USSIC board. Of course, with the promise of little work and lavish Caribbean junkets for board meetings, this wasn’t hard.
There was one area where plaintiffs would locate deeper pockets and higher damage awards to get just recompense to pay for life-repairing treatment. That was by getting past the member clubs’ coverage for abuse-molest claims and all the way to USA Swimming’s general liability coverage.
Today’s mix of federal investigations of amateur sports abuse and cover-ups takes USA Swimming’s and George Gibney’s shared vulnerability to a new level. For good reason.
“Taekwondo Sexual Abuse Takes Olympic Sports Bodies Into Human Trafficking and Class Action,” May 8, 2018, http://beyondchron.org/taekwondo-sexual-abuse-takes-olympic-sports-bodies-human-trafficking-class-action/
“USA Swimming’s International Sex Abuse Insurance Scam,” September 19, 2013, https://concussioninc.net/?p=8178