What Happens Next With Guardians’ Contracts After Federal Charges?

Guardians pitchers Emmanuel Clase and Luis Ortiz remain on paid administrative leave, an unusual status for players facing serious federal charges that could ultimately lead to lifetime MLB bans.

The pitchers, indicted Sunday on charges they were part of an illegal sports betting scheme, each face up to 65 years in federal prison for fraud, wire fraud, conspiracy to influence sports betting contests by bribery, and money laundering if convicted. 

Ortiz, who was arrested Sunday and remains in custody, maintained his innocence through an attorney statement, while Clase is “not believed to be in the U.S. at the present time,” according to a law enforcement source. His attorney did not immediately respond to a request for comment.

The players are in danger of receiving lifetime bans. MLB rules state that players who bet on any game they are involved in face lifetime prohibitions. If they receive lifetime bans, their existing contracts would become void; Clase is owed $6.4 million next season with two additional years at $10 million under club options; he has career earnings of more than $15 million. Ortiz, meanwhile, was on a one-year deal last season worth $782,000. He would be going into his fifth MLB season next year and is a pre-arbitration player..

Although they’ve been indicted, the pitchers are innocent until proven guilty. They were placed on non-disciplinary paid leave by MLB when the saga first started and were moved to the restricted list last month after the Guardians were eliminated from the playoffs. MLB said in a statement that it has “fully cooperated throughout the process” and that its own investigation is “ongoing.” The Guardians, meanwhile, said “We will continue to fully cooperate with both law enforcement and Major League Baseball as their investigations continue.” 

Under league rules, players continue receiving their salary while on non-disciplinary paid leave. But what happens if MLB determines infractions were committed? It’s not completely clear.

The league’s policy on domestic violence, sexual assault and child abuse states that if a paid suspension is converted by the commissioner to an unpaid suspension, the player can be required to repay salary that was paid while the investigation played out. 

But that policy does not cover sports betting infractions. The rule governing gambling violations does not include any detail about what happens if a paid leave becomes unpaid leave. 

Something else that remains unclear is whether Clase and Ortiz were receiving their full salaries during their leave. There is precedent for an MLB player receiving only a portion of his salary while on paid leave; in 2024, Wander Franco was paid 50% of his salary by the Rays while on paid leave. The team eventually placed Franco on the restricted list after authorities in the Dominican Republic announced three charges against him, including sexual abuse and human trafficking. Players on the restricted list are removed from a team’s roster and do not get paid.

Representatives for MLB and the MLBPA declined to comment. A representative for the Guardians declined to comment further than the team-issued statement.

The Finlete Problem

Clase has a deal with a company called Finlete that allows fans to invest in his potential future earnings. Finlete uses Regulation Crowdfunding for investors to receive a percentage of a player’s team-related income, which includes salaries and performance bonuses. 

On July 7, Finlete closed its offering on Clase’s earnings, weeks before he was put on paid leave. Rob Connolly, Finlete’s co-founder, told Front Office Sports then that its investors weren’t impacted by Clase’s situation since he was still being paid. 

To date, Finlete has paid out more than $237,000 to those who invested in Clase, and the company has the ability to fund the Clase agreement until Dec. 31, according to a regulatory filing. A provision in the contract says that Finlete and Clase have the ability to “mutually” terminate the agreement, and that if that happens, stockholders “may have little recourse,” the filing says. 

“We are aware of the MLB investigation involving Emmanuel Clase and, like everyone else, we’re following the league’s process closely,” Finlete co-founder and CEO Rob Connolly said in an email to FOS in July.  “While he’s on non-disciplinary paid leave, Clase continues to receive his MLB salary. As long as he is being paid at the Major League level, Finlete will continue to receive its entitled percentage, and dividends will be distributed to investors as scheduled.”

Connolly declined to comment Monday.