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Not sure, it is going to happen, Smith seems to view the situation as Williams being a victim.
Lovie Smith says Mike Williams "was a victim"
To address the question at hand, I would sign Williams if I were the Patriots. I think he has a lot of upside and they could turn him around, he is immature.
Before the latest incident GM Jason Licht was asked about Williams, and he something like "well, he hasn't been in the news, so that's a good thing".
After the incident Licht said he was "disappointed", and couldn't have been too happy that he was unable to reach Williams for three days.
Personally I think Smith is just being PC here, just my opinion. On the other hand you may be right; he's still on the team. If he was going to be cut, why not do it now? Perhaps waiting until after the draft, for better leverage with trade partners?
Party house brings more trouble for Bucs' Williams | Tampa Bay Times
Feb 20: New Bucs general manager Jason Licht, asked what Williams had to learn, said: "He has to learn not to make headlines off the field. Start there."
Licht: Bucs have not heard from Williams since stabbing | Tampa Bay Times
March 24: More than 18 hours after police were called to the home of Bucs receiver Mike Williams to find he'd been stabbed in the thigh, Bucs general manager Jason Licht said neither he nor head coach Lovie Smith had talked to him about the injury... "Disappointed, just that we had a player in that situation that could have been seriously injured,"
Feb 21: Williams Off-Field Antics Exposed - a laundry list on what Williams has been up to
Feb 21: Tampa Bay Buccaneers unhappy with WR Mike Williams
Feb 20: Buc Quotes: Jason Licht at the Combine