In February 1982, Dailey was arrested for sexually assaulting a female resident assistant two months earlier. He pleaded guilty in June to a lesser charge of attempted assault, receiving three years' probation. During the investigation, Dailey admitted to accepting $5,000 for a no-show job at a business owned by a prominent USF non-sports donor. A month later, university president the Rev. John Lo Schiavo announced that he was shutting down the basketball program. USF had been on NCAA probation twice in recent years, and LoSchiavo called the revelation about Dailey's no-show job "the last straw." The program wouldn't return until 1985. Four days after his guilty plea, the Bulls selected Dailey as the seventh overall pick in the 1982 NBA draft.