In early 1985, a gambling scheme involving Tulane basketball players, fraternity members, and local bettors exploded into one of the most damaging scandals in college sports history. Prosecutors alleged that non-athlete student Gary Kranz, along with fellow Tulane students Mark Howard Olensky and David J. Rothenberg, recruited players into a point-shaving operation. Kranz already had access to several players and had allegedly supplied them with cocaine, helping establish the relationship that prosecutors said was later used to persuade them to manipulate games. The scheme focused not necessarily on losing, but on ensuring that Tulane failed to cover bookmakers' point spreads. The players accused of participating included star center John "Hot Rod" Williams, David Dominique, Bobby Thompson, Clyde Eads, and Jon Johnson.
The indictment centered on three games. Tulane allegedly shaved points in a 64–63 home victory over Southern Miss on February 6 and in a 60–49 loss to Memphis State on February 20; in both contests, the Green Wave failed to cover the spread. Prosecutors said the players were paid $3,500 for the Southern Miss game and $13,500 for the Memphis State game, with roughly $18,000 divided among the participants. They also investigated an attempted fix of Tulane's 66–65 loss to Virginia Tech on February 16, which allegedly failed, while discussions about fixing a game against Louisville were abandoned because the players wanted Tulane to win. The case began after lawyer and Tulane athletics supporter Edward Kohnke IV heard rumors from a street source and contacted bookmakers, who reportedly confirmed that they knew of a fix. Arrests followed on March 26, when Williams and Kranz were taken into custody, followed the next day by Dominique and Thompson; additional arrests brought the total to eight. Several defendants later pleaded guilty to conspiracy to commit sports bribery, while Kranz pleaded guilty to ten sports-bribery counts. Williams maintained his innocence and went to trial, where he was acquitted.
The scandal widened when Williams testified that former assistant coach Tom Green and another man had paid him $10,000 to commit to Tulane while he was a high-school player, and that head coach Ned Fowler had given him a $100 weekly stipend during his senior season. Fowler admitted making improper cash payments to players, although neither he nor his assistants was implicated in the point-shaving operation. Fowler, assistants Max Pfeifer and Mike Richardson, resigned on April 5, and athletic director Hindman Wall—who was not accused of wrongdoing—later resigned, citing exhaustion from the controversy. Tulane president Eamon M. Kelly called the violations intolerable and ordered the men's basketball program permanently disbanded in 1985, despite protests from a booster-organized campus march. Tulane was subsequently dropped from the Metro Conference, and its women's basketball team became an independent. The men's program, founded in 1905, was eventually revived several years later. Williams, whose reputation survived his acquittal, went on to become an NBA player.
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