As many White Sox fans are at least vaguely aware, the White Sox made their first push towards re-establishing their international operations beginning in 2003. They hired Dave Wilder to become their director of player development, which put under his purvey the club's Latin American operations.
After signing and developing such impact players as Magglio Ordonez and Carlos Lee in the 1990s, for a variety of reasons, the Latin American pipeline of amateur talent disappeared for the White Sox, with only middling players like Arnie Munoz and Pedro Lopez working their way up the organizational ladder. While the average fan has little interest in what 16-year-old Latin Americans his team is signing, the impact of such players can be massive. One can simply look at the 2005 club to see this, with players like Freddy Garcia and Juan Uribe playing substantial roles, and the likes of Damaso Marte and Pablo Ozuna in secondary roles. Of course, none of those players were signed or developed by the White Sox. And that's what Wilder was supposed to address.
The Wilder Era
For awhile, it looked like he and his scouts (among them, Victor Mateo, Domingo Toribio, Jorge Oquendo Rivera and Deni Gonzalez*) were on the right track. The club ramped-up its acquisition of Latin American players. This influx of players resulted in the White Sox fielding a team (shared with the Orioles) in the Venezuelan Summer League for the first time in 2006. In 2007, the White Sox consolidated their foreign affiliates in the Dominican Republic, where they had enough players to now fill two teams in the Dominican Summer League.
The quality also appeared to increase, culminating with players like Juan Silverio ($600,000) and Rafael Reyes ($525,000), who signed with the club in the summer of 2007. Their bonuses -- often one of the few bits of information known about amateur signings -- suggested they possessed significant potential.
While it would be years before these players could conceivably be playing for the White Sox, now there at least was hope that the White Sox could again sign and develop some Latin American talent of their own. And to develop that talent, in January 2008 the White Sox further showed their renewed commitment to the international amateur market with the opening of a new academy in the Dominican Republic, to be run by long-time organizational coaching soldier Rafael Santana. And that's when things began to unravel.
Buscones and a Dream
The international amateur free agent market is a dirty business, plain and simple - particularly in the Dominican Republic where, in contrast to Venezuela, the other major baseball factory in Latin America, poverty is high and opportunities for advancement few. Because of this, a unique system developed.
In a nutshell, Dominican players are identified at very young ages - I've heard tell of 8-year-olds - by buscones, which translates into "finders". But buscones are more than finders. They bring the kid to their baseball academy, where the buscon basically raises him to be a baseball player -- at no cost to a child's family -- with the sole aim for him to be signed at age 16 by a major league team.
The buscon is making what he considers an investment in the players he is training. And the purpose of any investment is to make money. And buscones are no different. But the only way to realize on their investments is for them to get large signing bonuses, from which it is standard for them to to take 25-30 percent or more (or, from a 2001 tale, a whole lot more if you were Willy Aybar).
In order to increase their odds of a payoff, buscones will do just about anything. The most frequently used tricks in their bag are fudging a player's age/identity and giving a player steroids. Venezuelans and players from other parts of Latin America rarely lied about their ages, something which would be very difficult to do given the record-keeping in those countries, but players certainly use steroids to enhance their chances of being signed.
The Scandal Unfolds
Santana quickly learned from his young White Sox charges that something beyond the standard tricks had been happening. Some of them had been forced to give Wilder part of their signing bonuses. In late February 2008, Santana met with Jerry Reinsdorf at the White Sox's spring training facility in Tucson and told the club's owner what he had heard.
The White Sox brought in their outside legal counsel, the firm of Katten Muchin Zavis Rosenman LLP (among other connections, whose name partner Allan Muchin is a White Sox owner and former law partner of Reinsdorf) to investigate the allegations. The firm's then-head of its internal investigations practice, and former Assistant U.S. Attorney, Sheldon Zenner, led the investigation (assisted by an associate, Bryan Stroh, who is now General Counsel for the Pittsburgh Pirates). The White Sox also informed the Commissioner's Office, whose just-created Department of Investigations (a product of the then-recently released Mitchell Report) launched an investigation, too.
In March 2008, U.S. Customs stopped Wilder at Miami International Airport as he tried to re-enter the country with between $30,000 to $40,000 in undeclared cash. This either precipitated the U.S. Department of Justice beginning its own investigation or, more likely, was the result of the DOJ being informed by MLB of the allegations it had heard from the White Sox.
The three parallel investigations moved forward, with Zenner and Stroh's investigation eventually including interviews with the victimized White Sox players, most of whom were still teenagers. In May 2008, armed with the formidable results of a two-month long investigation, the White Sox attorneys confronted Wilder.
During this interview, he initially denied any wrongdoing - even later permitting attorneys from the DOJ and FBI investigators to sit in (protip: innocent or guilty, don't ever allow yourself to be interviewed by your employer regarding alleged criminal activity without your attorney present; majorleaguetip: if you want to go to prison, always agree to assistant U.S. attorneys and FBI agents joining in on the fun).
Eventually, Wilder gleaned it was probablymaybe a good idea to have his own attorney present in this menagerie of representatives from the legal system, and the interview ended. Shortly thereafter, the White Sox announced the firings of Wilder, Mateo and Toribio** for then-unspecified violations of club policy.
Indictments Handed Down
Two and a half years later, the U.S. Attorney's Office for the Northern District of Illinois announced a federal grand jury had indicted Wilder, Mateo and Rivera on seven counts of mail fraud. The White Sox investigation ended up being the starting point for the investigation and discovery of a number of similar allegations involving at least other several teams.
The indictment, taken together with a few other sources, laid bare a comprehensive, multi-year scheme to defraud the White Sox, victimize young Dominicans, Brazilians and Venezuelans and their families and enrich Wilder personally.
The government alleged that the three defendants took approximately $400,000 in kickbacks for the signings of 23 players between December 2004 and February 2008. The indictment's seven counts detailed payments to various individuals in the Dominican Republic, Brazil, Venezuela and Mexico in order to acquire 11 of those players (designated Players A through K). Those payments were alleged to be bonuses or payments for players not worth the Wilder-inflated amounts they received from the White Sox; Wilder and his co-conspirators would then receive the "inflated" portion as the kickback.
The scheme started when Rivera told Wilder he could get a $60,000 kickback from the owner of a Mexican baseball team if he agreed to sign three of its players. Oquendo then began to specifically target players on Mexican League teams who would give a kickback on the amount the White Sox paid to buy their players.
From there, Wilder's scheme branched out with Oquendo (and later Mateo, whom Oquendo hired in 2006) specifically targeting amateur players for kickbacks, having discussions with players and their representatives about doing so before agreeing to terms.
* It should also be noted that Gonzalez, who directed the White Sox scouting operations in the Dominican Republic (including serving as the administrator of their academy), never was charged with any crime; however, the White Sox did not renew his contract after the 2007 season and it is widely assumed that he was involved. Gonzales denied any wrongdoing and said that his departure from the White Sox was a result of the team "going in a different direction." Given that his replacement was whistle-blower Rafael Santana, who we know took over the White Sox Dominican academy in January 2008 prior to anyone knowing about the bonus-skimming, he may be telling the truth. Players he signed for the White Sox included eventual major leaguers like Arnie Munoz, Pedro Lopez, Fautino De Los Santos and Fabio Castro.
** It should also be noted that Toribio, one of three scouts then-responsible for the Dominican Republic, was fired by the White Sox, along with Wilder and Mateo; however, he was never charged with a crime (perhaps only due to the vagaries of jurisdiction and the DR's less than stellar criminal justice system).