The president of the U.S. Gymnastics Federation says a newspaper report alleging questionable financial dealings by the group stems from months of infighting and may hurt the performances of athletes at the Olympic trials that open Friday.
The Los Angeles Times reported Wednesday that documents show the federation failed to report nearly $1.7 million in income over the past two years and that the U.S. Justice Department was investigating the group.A Justice Department spokesman confirmed officials were examining a "sizeable" stack of documents to determine if the non-profit USGF violated any tax, antitrust or conflict of interest laws.
"This is not yet a formal investigation; we are still in the preliminary stages," spokesman Tom Stewart said in Washington.
USGF President Michael C. Donahue blasted the newspaper reportand the sources responsible for it.
"These (allegations) are based more on ego and emotion than fact," said Donahue, who recently moved to Indianapolis to head the National Institute for Fitness and Sport. "But I am worried that this is going to give us a black eye."
The trials for the September Olympics in Seoul, South Korea, begin Friday in Salt Lake City, Utah.
"I'm worried that this will detract from those athletes' moment in the sun," Donahue said. "They only get one shot at the Olympic team."
The Times reported in a front-page story that documents it obtained show the federation failed to report nearly $1.7 million in income and expenses over the past two years. The money was collected at local, state and regional levels.
USGF Executive Director Mike Jacki told the newspaper he discovered the problem a few years after joining the federation in 1983 and reported the problem to the group's board of directors.
Donahue said USGF's business practices are audited each year and added, "I'll take the word of Ernst & Whinney over a cub reporter for the L.A. Times any day."
Donahue admitted the federation failed to list $1.7 million in income received over the past two years. He said the problem was that there was no efficient way to account for money raised and spent by volunteers in local, state and regional offices across the country.
USGF spokesman John Arends issued a statement Wednesday afternoon saying: "These `allegations of wrongdoing' involve the same issues encountered by any national volunteer organization.
"It is important to keep in mind that the income in question is not taxable, so there is no issue of avoiding the payment of taxes. Nor has there been any suggestion that funds are being used by the federation's employees or volunteers for any purpose other than the work of the federation, which is to provide competitive and athletic opportunities for young children," the statement said.