UCLA was able to sign former Tennessee quarterback Nico Iamaleava out of the transfer portal in large part because of an influx of NIL money that was moved through a tax-exempt charity. This secret, behind-the-scenes operation sets the stage for one of the biggest scandals in college sports history.
It could not only amount to an “improper private benefit” by definition of the NCAA, it might also violate IRS rules and regulations.
David Covucci was the first person to discover this potentially illegal enterprise, as reported in the weekly newsletter ‘FOIAball.’ He found emails that show UCLA steered donors to a 501c3 to claim tax deductions while earmarking the funds for college football.
Nico Iamaleava rumors led UCLA to a charity workaround.
The FOIAball investigation, which can be read in full HERE, traces this NIL scheme back to April 10, 2025. That was the day the world found out about Iamaleava’s uncertain future at Tennessee.
The floodgates broke wide open over the course of the next 48 hours. Iamaleava’s contract demands (really, his father’s) were made public after he skipped out on spring practice.
And then he was gone.
Tennessee chose to part ways with Nico Iamaleava before he could leave on his own accord, which led to the lasting image of his father packing a U-Haul to move out of Knoxville. He officially signed with the Bruins less than 10 days later on an NIL deal worth seven figures.
But where did that money come from?
According to Covucci, boosters attached to the UCLA program were eager to land Iamaleava as soon as news broke of his disgruntlement in Knoxville. They quickly raised $60,000 to donate to the official NIL collective, Bruins for Life. However, those donations were instead directed elsewhere. The athletics department told them to send their donations to a tax-exempt charity for at-risk youth called Shelter 37.
Shelter 37 is run by former UCLA football star James Washington and prominent entrepreneur John Manuck. Hm.
NIL donations are not tax deductible.
The IRS considers NIL payments as “private benefits” that go directly to identifiable individuals, specifically student-athletes, and not to the general public. Thus, the NIL donations are not tax-deductible. Charitable donations are only tax-deductible under United States tax law when they support a recognized charitable purpose, not specific people.
UCLA boosters cannot deduct their donations to the Bruins for Life collective from their taxes. They can deduct their donations to the Shelter 37 charity from their taxes.
FOIAball obtained multiple emails that show UCLA administrators direct donors to Shelter 37 whenever they intended their financial gifts to support the football program through NIL.
Those specific members of the staff even told these donors to give them a heads up before they sent their checks to make sure Washington knew it was coming. That way the money could be specifically directed to Bruins for Life.
Donations of more than $300,000 were all moved through Shelter 37 with the stated purpose of supporting NIL activity within the football program. The recruitment of Iamaleava was a big focus of that support.
The Bruins might’ve broken IRS rules.
As previously mentioned, the IRS ruled in 2023 that NIL payments cannot be treated as charitable activity because they primarily benefit individual athletes. Donors are not legally allowed to receive tax deductions for NIL-related contributions.
Because of the IRS ruling, donor-advised funds started to reject NIL gifts. Those funds were often run by large financial corporations like Bank of America, Schwab, etc.
When those contributions were blocked, emails obtained by FOIAball shows the staff direct the donors to Shelter 37 as a workaround. That is illegal. Charities cannot be used as “pass-throughs” to deliver money to specific individuals. The donors cannot receive tax breaks.
One law professor even went so far as to tell Covucci that the emails he reviewed suggested UCLA actively encouraged its donors to engage in fraud. James Washington claims that is not what happened and denied that Shelter 37 ever forwarded money to Bruins For Life.
Meanwhile, Bruins for Life’s website quietly disappeared from the internet after David Covucci of FOIAball started asking questions. This is only the tip of the iceberg but it certainly does not look good.