Donaghy pleads guilty in scheme

Former NBA referee Tim Donaghy pleaded guilty Wednesday to two felony counts for his role in an illegal gambling scheme, including some games that he refereed, in a scandal that has shaken the league.

Donaghy, a 13-year veteran official, pleaded guilty to conspiracy to engage in wire fraud and transmitting waging information through interstate commerce. He faces up to 25 years in prison. Donaghy, 40, was released on a $250,000 bond.

In a Brooklyn courtroom, U.S. District Judge Carol Bagley Amon said Donaghy provided two co-conspirators with confidential information about league officials and players. Donaghy gave his recommendations, or picks, and he was paid up to $5,000 per tip if his information led to his associates winning bets, Amon said.

“I was in a unique position to predict the outcome of NBA games,” Donaghy told the judge. “Some of my picks included games I had been assigned to referee.”

The judge said Donaghy’s “unique access” included what NBA crews would officiate specific games, information about the interaction of different officials and players, and the physical condition of certain players.

The scheme was concealed from the NBA, the judge said.

NBA Commissioner David Stern said in a statement: “We will continue with our ongoing and thorough review of the league’s officiating program to ensure that the best possible policies and procedures are in place to protect the integrity of our game,”

On ESPN’s Dan Patrick show, Stern added that “it’s our understanding there are no other NBA officials involved.”

The Donaghy conviction was a subject at the U.S. men’s basketball training camp in Las Vegas.

“It’s funny, but I never thought about someone else out there trying to cheat,” Cleveland’s LeBron James said. “It’s bad for the game of basketball, but we’re professionals and we have to move on.”

The Lakers’ Kobe Bryant added: “All we can do is let the people who deal with this stuff handle it and once the season comes around, we have to be ready.”

Court records released Wednesday provided some insight on how the Donaghy scandal took shape. Law enforcement authorities allege that Donaghy’s former high school classmate James “Baba” Battista, 42, and Thomas Martino, 41, conspired with Donaghy to profit from his inside information.

Battista and Martino surrendered to FBI agents in New York on Wednesday and appeared in Brooklyn federal court. They were released after posting $250,000 in bond, a U.S. attorney’s spokesman said.

In early 2007, the FBI received information the pair bet “large amounts of money” on NBA games with a referee’s assistance, according to court records.

Federal prosecutors said Donaghy began betting four years ago on NBA games through a friend, including bets on games that he officiated. NBA rules prohibit referees from gambling, except on horse races during the summer.

The friend who Donaghy originally bet through has emerged as a confidential source to the FBI, which was reportedly investigating the Gambino crime family when it learned of Donaghy’s gambling.

Donaghy told authorities Battista “confronted” him about his bets in a meeting with Martino. The referee agreed to Battista’s suggestion that Donaghy provide them inside information on games. He began receiving cash in mid-December 2006 for providing inside information, according to the court records.

Donaghy earned $2,000 for games when the gamblers won by using his information; later it was boosted to $5,000. Martino acted as the intermediary between Donaghy and Battista, court records say. The betting scheme continued to April 30.

Donaghy gave his tips to Martino in telephone calls, sometimes in code.

Federal authorities didn’t specifically identify the NBA games Donaghy was providing tips on, but court documents offer some clues: Phone tips were made by Donaghy, prosecutors said, on or about Dec. 13 and Dec. 26, and he received cash payments in Pennsylvania about Dec. 14, as well as in Phoenix in January, Toronto about March 11, and Washington, D.C., in April -- all sites where Donaghy worked NBA games.

Donaghy was the referee at the Dec. 13 Boston-Philadelphia game that the Celtics won, 101-81, easily covering the 3.5 point spread. However, the game fell short of the 194-point over/under figure by 12 points. Some gambling experts speculate Donaghy could have most easily manipulated the “over” number by calling extra fouls that produce more free throws.

Battista was interviewed by FBI agents in April and admitted he was a “professional gambler” who would make several bets on one game with multiple bookmakers, court records showed. Martino told the FBI in May that Battista was a high school friend who used Martino’s home to conduct his gambling business.

Battista’s attorney said a grand jury is expected to decide whether to indict Battista and Martino.

“Mr. Donaghy walked away with a nice situation for himself,” said Jack McMahon, Battista’s attorney. “He is the linchpin. . . . I don’t know if that is fair.”

Donaghy was ordered to pay a $500,000 fine and at least $30,000 in restitution. He will be sentenced in November.

In court, Donaghy said he is receiving psychiatric treatment for his gambling problem and is taking antidepressant and anxiety medications. Defense attorney John Lauro said that Donaghy “deeply regrets his involvement in this matter and especially the pain it has caused his family, friends and co-workers.”

The case has been described by Stern and other league referees as an “isolated” episode among the league’s 60-person officiating crew.

“The appeal of legitimate professional sports is that the outcome of the competition is determined solely by the competitors,” FBI assistant director-in-charge Mark J. Mershon said. “That an official, responsible to his sport. . . placed bets on games he officiated undermines everyone’s faith in the integrity of the competition.”

The credibility questions raised by Donaghy’s crimes are expected to linger into the 2007-08 season.

“Some of the taunts will be nasty, we know,” said one NBA official who declined to be identified due to Stern’s gag order on Donaghy-related subjects.

Some NBA officials say privately that there are obvious flaws in the league’s current review system with four group supervisors. There is also an observer at every NBA game recording and assessing officials’ calls and non-calls. The game observers are sometimes criticized by NBA referees for lacking the credentials to properly grade an NBA official, they said.

The FBI first told the NBA on June 20 about information that a referee was betting on games. Donaghy worked into the second round of this year’s playoffs, including an assignment in the San Antonio-Phoenix series.

Stern has said Donaghy was ranked as a “top-tier” official before the FBI contacted the league.

“There wasn’t a squawk about this guy,” one league official said. “I worked a game with [Donaghy], and he was very good. My sense was this was a guy trying to move up the ladder, not trying to fix a game.”

Times staff writers Lonnie White and Mark Heisler contributed to this report. White reported from Las Vegas, Heisler from Los Angeles. Times wire services also contributed to this report.

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lance.pugmire@latimes.com