USA Gymnastics and a survivors’ committee representing women who were sexually assaulted by former U.S. Olympic and national team physician Larry Nassar and Olympic and national team coaches have filed a proposed $400 settlement agreement with the U.S. Bankruptcy Court Southern District of Indiana.
In what both sides view as a major breakthrough in the nearly three-year bankruptcy case, USA Gymnastics and the survivors’ agreement on the proposed $400,659,129 settlement as part of a reorganization plan follows a week of increasingly acrimonious discussions between USA Gymnastics and the U.S. Olympic and Paralympic Committee over the USOPC’s financial responsibilities in the case.
Recent discussions in the case have revealed an unlikely alliance between USA Gymnastics, the sport’s Indianapolis-based national governing body, and the survivors’ committee on one side, and the USOPC on the other.
Attorneys for the USOPC proposed a $340 million settlement last week and then upped that to $360 million over the weekend
“This is a last ditch effort by the survivor’s committee to and reach a fair and just settlement,” said John Manley, an attorney for more than 100 survivors. “USA Gymnastics supports this and has acknowledged its responsibility.
“But if the USOPC can’t see its way clear to agree to a fair and just settlement than all this has been a waste of time. And I don’t expect them to. The USOPC under its leadership and its board has enabled people like Larry Nassar. The USOPC has repeatedly said it has no duty to protect athletes from predators like Larry Nassar. To put a fine point on it they maintain they had no duty to protect Simone Biles from Larry Nassar.
“That’s something I would expect from Catholic bishops not the premier athletic organization in the United States.”
Under the terms of the proposed agreement former USA Gymnastics CEO Steve Penny, former U.S. Olympic and national team directors Bela and Martha Karolyi, former USA Gymnastics vice president Rhonda Faehn and the organization’s former board chairman Paul Parilla, an Orange County attorney, would be released from further litigation related to the Nassar case.
The agreement does not release for U.S. Olympic head coach Don Peters, SCATS, the Huntington Beach gymnastics club Peters helped make world famous, or former Olympic and national team coaches Steve and Beth Rybacki, or their Southern California club Charter Oaks.
The settlement has yet to be fully funded according to court documents. Insurance carriers for USA Gymnastics, the USOPC and the Karolyis have so far committed to fund $292,332,331.
“This report mischaracterizes the status of the mediation and violates the mediation process by disclosing information the court has ordered be kept confidential,” the USOPC said in a statement to the Southern California News Group Thursday night. “Since March of 2019, the USOPC has participated actively and consistently in the efforts to reach a resolution that compensates the survivors of Nassar’s abuse. Contrary to this report, we have offered to contribute substantial funds to such a resolution. This breach of the court order will not deter our efforts to reach fair settlement for all survivors.”
The USOPC reported $63.2 million in revenue in 2020 with $245.3 million in assets, according to filings with the Internal Revenue Service and other financial documents.
USOPC CEO Sarah Hirshland received $882,434 in compensation in 2020 plus an additional $36,419 from related organizations. The USOPC paid $4.02 million last year in salaries to officers, executives and other key employees, according to IRS filings and financial records. Three USOPC employees were paid more than $500,000 in 2020, ten more than $300,000. The organization also paid $40.2 million in employee salaries plus $6.3 million in pension contributions and other benefits.
The USOPC also spent $6.3 million on legal fees in 2020, according to the documents.
The filing also comes as the U.S. Senate considers a request by Olympic and World champion gymnasts Simone Biles, Maggie Nichols, McKayla Maroney and Aly Raisman that Congress dissolve the USOPC board of directors under the provisions of a new federal oversight law.
Congress as early as November 1 could dissolve the USOPC board under the landmark Empowering Olympians and Paralympians and Amateur Athlete Act of 2020. The act places greater legal liability on the USOPC and the national governing bodies under its umbrella for sexual abuses by coaches, officials and employees in addition to providing Congress with mechanisms to dissolve the USOPC’s board of directors and decertify NGBs.
USA Gymnastics, facing hundreds of civil lawsuits from survivors who were sexually abused by Nassar as well as women who allege they were sexually abused by former Olympic team head coaches Peters and John Geddert, and being stripped of its national governing body status by the USOPC, filed for Chapter 11 proceedings in U.S. Bankruptcy Court in December 2018.
The case, because of federal bankruptcy guidelines, placed a stay on legal proceedings against USA Gymnastics and steps by the U.S. Olympic and Paralympic Committee to decertify the national governing body.
USA Gymnastics proposed a $217 million settlement with survivors as part of a reorganization plan filed with the bankruptcy court in early 2020. A disclosure statement filed with the court outlined a tiered pay-out plan where USA Gymnastics would pay $1.25 million to former Olympic and World Championships team members who were abused by Nassar but $82,550 to others.
Attorneys for 512 of the 546 survivors who said they were sexually abused by Nassar and other USOPC and USA Gymnastics national team coaches and officials told SCNG in March 2020 that none of their clients would vote to accept the proposed settlement. The rejection was not just about the proposed financial settlement. Survivors, like Congress, are demanding USA Gymnastics and the USOPC turn over documents that will provide a fuller, if not complete, picture of who was aware, who enabled and who ignored and covered up abuse by Nassar and others such as former Olympic team coaches Peters and Geddert.
USA Gymnastics and the survivors committee filed a reorganization plan with the bankruptcy court in August that proposed a $425 million settlement with the more than 500 survivors who allege they were sexually abused by Nassar, Peters, Geddert and others.
While that plan had been approved by a survivors’ committee, only four of eight insurance providers have agreed to the proposal leaving at least half of the settlement unfunded as currently presented, according to the filing.
The 133-page proposal appeared to be designed to apply pressure on the USOPC to fund at least part of the settlement. SCNG has previously reported that the USOPC has maintained in a series of court filings that it has no legal obligation to protect Olympic athletes from sexual or physical abuse.
USA Gymnastics had a longstanding policy prior to the Nassar scandal of not warning member gyms or parents of athletes of sexual misconduct allegations against coaches or other individuals, a longtime top aide to the organization’s former CEO acknowledged in a previously undisclosed sworn deposition revealed by the SCNG in June.
Renee Jamison, the administrative assistant to former USA Gymnastics CEO Penny from 2005 to 2011 and later the organization’s director of administration and Olympic relations, also revealed in the deposition that employees were instructed by USA Gymnastics not to report sexual misconduct complaints to law enforcement or Child Protective Services – even though they were informed by the organization that they were mandated reporters.
Instead, USA Gymnastics employees prior to 2015 were told to forward sexual misconduct complaints to attorneys representing the organization – first Jack Swarbrick, and later Scott Himsel, Jamison said. Swarbrick is currently the University of Notre Dame athletic director.
The policy, Jamison said, was one of the reasons why Penny and USA Gymnastics did not notify Michigan State University officials about sexual assault allegations against Nassar when they were first brought to Penny’s attention in June 2015. Michigan State officials said they did not become aware of allegations that Nassar had sexually assaulted Team USA members under the guise of medical treatment until the allegations were made public in September 2016.
Top USOPC officials were aware of allegations that Nassar had sexually abused Nichols and other U.S. national team members in the summer of 2015 but took no action to report the abuse to law enforcement or discipline Nassar and continued to be briefed on efforts by Penny to conceal the allegations from the public and potential future victims.
Nassar continued to sexually abuse new victims at Michigan State, where he was on the sports medicine staff, in the 16 months between when USA Gymnastics, the USOPC and the FBI were told of the allegations against him and when Nassar’s abuse became public in September 2016.
USOPC officials were also briefed on discussions between Penny and W. Jay Abbott, the special agent in charge of the FBI’s Indianapolis office, about Abbott receiving a top level security position with the USOPC.
The Justice Department’s Office of Inspector General recently determined that Abbott lied to DOJ investigators about applying for the USOPC post. The OIG investigation found that Abbott also lied to investigators about the initial steps he took in the days and weeks after he learned of allegations against Nassar in July 2015.
Abbott retired from the FBI in January 2018.
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