Developer sentenced to month in prison
Flaxman was embroiled in admissions scandal
A developer with ties to Arizona was sentenced to one month in prison, 250 hours of community service and a $50,000 fine for paying to help his daughter cheat on entrance tests as part of a massive college admissions scandal.
Robert Flaxman’s sentencing comes as other parents involved in the scheme, including actress Felicity Huffman, have received prison time.
Flaxman, founder and CEO of Crown Realty & Development, was charged by the Justice Department with conspiracy to commit mail fraud and honest services mail fraud in March.
He pleaded guilty in April, along with several other parents involved in the scheme. He was sentenced Friday morning in federal court in Massachusetts, where the cases are being handled. Flaxman is the 10th parent to be sentenced in the college admissions scheme, according to a tweet from the U.S. Attorney’s Office in Massachusetts.
A statement sent through a public relations firm noted that Flaxman immediately pleaded guilty to participating in the scheme.
“He is deeply remorseful and acknowledges the seriousness of the offense,” the statement says. “He is sorry for the harm this has caused. He also accepts the court’s determination of punishment as just.”
His company was behind projects including the Mountain Shadows Resort in Paradise Valley and the Montelucia resort in Scottsdale.
Crown owned and tried to redevelop the Mountain Shadows site from 2007 until 2015, when it was sold to Westroc Hospitality and Woodbine Development Corp., which developed the resort as it is today.
Crown Realty recently won a yearslong legal battle to develop a 96.5-acre chunk of land for an area called City North in Desert Ridge in north Phoenix.
The company’s website now says it’s under construction. In March, the site said Crown Realty had headquarters in Costa Mesa, California, and also had offices in Beverly Hills, Burbank and Paradise Valley.
Its projects are primarily in California, Arizona, Virginia, Idaho and North Carolina, the website said.
Flaxman’s attorney argued he
should be sentenced to time served, two years of supervised release, 250 hours of community service and an “appropriate fine.” In this case, time served consists of the time Flaxman spent in custody the day he was arrested.
The government argued Flaxman should spend eight months in prison, followed by a year of supervised release and a $40,000 fine.
The investigation
The bribery scheme entangled two Hollywood actors, Felicity Huffman and Lori Loughlin, and coaches at multiple selective universities.
In total, more than 50 people were charged in Operation Varsity Blues, 33 of whom were parents. In some instances, parents paid to have someone else take college entrance exams like the ACT and SAT in place of their children, or to replace their child’s answers with correct ones after they had taken the test, according to court documents.
In other instances, parents paid college coaches to accept their children as recruited athletes despite their lack of involvement in sports.
Court filings by the Justice Department initially alleged Flaxman participated in schemes for his daughter and son, although charges only moved forward on an ACT cheating scheme with his daughter.
Leniency sought
In court documents, Flaxman’s attorney argued the developer was trying to help his daughter get into any college, not an elite university, unlike the others who have been charged in the scheme.
Many of the details of his daughter’s situation are redacted from court documents, but they reference a “checkered highschool career, disciplinary record, modest grades, and poor ACT score made admission to any fouryear college unlikely.”
Flaxman was trying to help her make good steps, and college would have helped her move forward. She had moved around to different high schools, missed a semester and struggled with standardized tests, making the process to get into college difficult, his attorney, William Weinreb, wrote in an Oct. 11 sentencing memorandum.
He was “desperate enough to commit a crime” to help his daughter, the memorandum says.
Flaxman himself attended community college but did not graduate, the memo says. He then became a chiropractor before starting in real estate. He doesn’t believe his kids are entitled to elite universities because of his wealth, the memo says.
Weinreb said Flaxman’s payment for an inflated test score was not indicative of entitlement, and the man is not statusseeking.
“Robert did not buy his daughter an inflated ACT score to gild an already burnished college resume; she had no college resume to speak of,” Weinreb wrote. “His goal was not to get her into an exclusive college; he just wanted her in any college where she could live in a supportive environment, stay engaged, and have a sense of purpose. This was not a crime committed to increase her status — or his.”
Flaxman is the “least culpable of the parents who have pleaded guilty,” Weinreb argued.
“Robert is only one of 11 codefendants charged with conspiring to defraud colleges and educational testing services; not all of the codefendants need to go to prison to convey the moral seriousness of that crime,” Weinreb wrote.
Letters from people attesting to Flaxman’s character, including ones from Kirk Adams, former chief of staff for Arizona Gov. Doug Ducey, and Phoenix developer Rick Carpinelli accompanied Flaxman’s sentencing memo.
Adams described Flaxman as “an honest person who inspires trust and confidence in others.”
Flaxman accepted responsibility and expressed remorse for his actions and offered to meet with prosecutors to tell them what he knew about the scheme after his arrest, Weinreb said.
How scheme worked
In sentencing memos from Flaxman and prosecutors, details of how Flaxman participated in the scheme are spelled out. Those involved didn’t fully explain to him how the ACT scheme worked, but “Robert knew it was probably illegal,” Weinreb wrote.
Helping his daughter cheat on the ACTs increased her score from a 20 to a 28, which Weinreb described as “enough to help ensure she could attend a college, but not an elite one.”
The memo claims Flaxman felt he was out of options to help his daughter. He had used the services of Rick Singer, a man who orchestrated the schemes using his nonprofit, in the past for “legitimate counseling” for his son, and reached out to Singer to see where his daughter could realistically go to college.
Singer replied, “nowhere,” the memo says.
“Only then, feeling out of options and increasingly desperate, did Robert make the terrible decision to break the law,” Weinreb wrote.
Flaxman paid Singer $75,000, more than some of the other parents involved in the scheme.
His daughter’s test location was switched to Houston, where there was a compromised testing site with a proctor, Mark Riddell, who facilitated the cheating. Riddell fed answers to his daughter and another student, whose parents were also charged in the scheme. The person advised them to answer different questions wrong so they wouldn’t get caught, prosecutors said.
Houston is 2,000 miles from where his daughter lived, according to the government’s sentencing memo, written by U.S. Attorney Andrew Lelling.
Flaxman said he was originally told by Singer that his daughter would not know about the cheating. But, the memo notes, Riddell involved his daughter and another girl in the cheating to save time.
Some parents sought additional time for testtaking by faking the need for accommodations for their children. In Flaxman’s case, his daughter’s need for extra time on the test was real, Weinreb wrote.
Prosecutors described Flaxman’s actions by saying he “hijacked” his daughter’s legitimate need for more time on the test to “advance the scheme, with no intention that she would legitimately use any of the extra time for which she qualified.”
“And his actions resulted in his daughter becoming complicit in the cheating,” Lelling wrote.
According to the prosecutors’ memo, his daughter was suspended from college for a semester after the scheme was found out.
“Flaxman’s crime thus placed his daughter directly in harm’s way,” Lelling wrote. “His actions didn’t just demonstrate his own disregard for the law but also one of the most basic principles of parenting: don’t teach your kids to break the law.”
Taxes questioned
Part of the government’s interest in a tougher prison sentence related to Flaxman’s taxes and how the $75,000 payment to Singer’s foundation was treated in those taxes.
In a phone call with Singer, when Singer revealed his foundation was being audited by the Internal Revenue Service, Flaxman asked what he should tell the IRS about the $75,000 payment.
“We’ll say the payments were made to our foundation to help kids — underserved kids,” Singer said, according to the government’s memo.
“Okay, that’s fine,” Flaxman said. “I’m wondering if we took the deduction. I’m assuming he did.”
Prosecutors pointed to this call as Flaxman being willing to lie to the IRS. He also deducted the payment from his taxes, prosecutors said. These actions should result in a “meaningful term of incarceration,” Lelling wrote.
“Flaxman may not bribe someone to cheat on another college entrance exam, but his sentence needs to reflect his nonchalant willingness to commit tax fraud, and to dissuade him from doing so again when he thinks no one is looking,” Lelling wrote.
In a subsequent court filing, Flaxman’s attorney disputed the government’s tax fraud claim. Flaxman had donated $250,000 to Singer’s foundation previously to support the University of San Diego’s sports programs. When his accountant prepared his taxes, the accounting software automatically included both the $250,000 contribution and the $75,000 payment as charitable deductions, Weinreb wrote.
Flaxman should have foreseen the deduction issue and done something to prevent it, Weinreb said, but he was preoccupied with helping his daughter find a college.
“But he did not fail to do so because he was intent on defrauding the IRS. He failed to do so because he was asleep at the switch,” Weinreb said.
After the call with Singer, Flaxman looked at his tax returns to confirm the deductions. Including both deductions likely had “no effect” on his taxes because he had a “large net operating loss” that offset his income for two years, making deductions irrelevant, Weinreb wrote. He fixed the issue by not carrying forward the unused deduction to his 2018 tax return, Weinreb said.
Removing the unused deduction from the 2016 return resulted in an $86 tax increase, which he paid, Weinreb wrote.
While Flaxman acknowledged he was “inexcusably careless” with the tax issue, it should not result in a longer sentence, Weinreb contended.