Parents await penalty in scam
Others in college scandal opt to fight it out in court
BOSTON – The Justice Department’s “Varsity Blues” college admissions bribery case is entering a new phase in Boston federal court as sentencing begins this week for the first of 20 parents, coaches and other defendants who pleaded guilty to felonies.
Two others agreed to plead guilty and await hearings. The 28 defendants who pleaded not guilty are digging in for trials that could play out for many months.
It’s been a blockbuster case since it was unsealed in March: famous actresses, CEOs, wealthy investors and other rich parents are accused of paying bribes to the scheme’s mastermind, Rick Singer, a college consultant, to get their children accepted into elite colleges. He offered them two tracks: Have someone cheat on their children’s ACT or SAT tests, or falsely classify them as athletic recruits.
Inside the courtroom, prosecutors argued that the parents’ $25 million in total payments to Singer’s sham nonprofit group were crimes – mail fraud. They accused the coaches and test administrators of racketeering.
Big questions remain: How many additional parents will plead guilty? How many more parents and others could be charged? Will judges come down hard or light with their sentences?
Opposite pleas
The case garnered huge attention not only because it exposed a plot for the super wealthy to buy college access – in an unprecedented scope – but because of two names: actresses Felicity Huffman and Lori Loughlin.
A tearful Huffman pleaded guilty last month to conspiracy to mail fraud charges for paying Singer $15,000 to have someone correct SAT answers for her oldest daughter.
Loughlin and her husband, fashion designer Mossimo Giannulli, pleaded not guilty to allegations they paid $500,000 to Singer for their daughters to be classified as athletic recruits to get them accepted into the University of Southern California. Because they did not agree to deals with prosecutors, they’re among the parents who face a money laundering charge.
As a result of her plea agreement, prosecutors recommended four months in prison for Huffman out of a maximum penalty of 20 years.
The charges facing Loughlin are more serious – and the potential sentence more severe – given the substantially higher dollar amount. Singer charged parents more for the recruitment scheme than the test cheating.
Loughlin could have other legal issues as well. In a letter attached to court documents this week, her attorney said that USC’s legal counsel raised the possibility of a legal dispute with Loughlin and Giannulli.
Define ‘bribe’
Defense attorneys signaled what could be a central argument if they go to trial – that parents didn’t know where their money went when they paid Singer.
Singer collected payments as “donations” to his sham nonprofit Key Worldwide Foundation. Prosecutors said he funneled the money to co-conspirators, including coaches, test administrators, proctors and others. Payments to coaches often went to athletic programs or clubs they controlled.
In court, Aaron Katz, an attorney for Elizabeth Henriquez – a California mother accused of paying bribes of $400,000 to get her two children into college – referred to an email that he said suggests prosecutors spoke to other parents who paid Singer but have not been charged. “They told the government (that) Rick Singer told them that their money was going to go to athletic programs or schools, not to bribes,” Katz told a federal magistrate.
The government pushed back at that argument. “It doesn’t matter whether the money went to a coach’s program or the coach directly (for it to be a bribe),” Assistant U.S Attorney Eric Rosen told the judge. He called the transaction a “quid pro quo” regardless.
Extended network
In May, the mother of a Chinese student enrolled at Stanford University confirmed paying $6.5 million to Singer.
The payment from the mother of Yusi Zha, made in 2017, points to Singer’s network extending beyond the 33 wealthy U.S. parents, primarily in California, accused of paying large sums of money to get their children into elite U.S schools.
U.S. Attorney Andrew Lelling mentioned the $6.5 million figure – the most paid by any parent – when prosecutors announced the case in March.
The payment is not mentioned in court documents, and the parents of Yusi Zha, who is no longer at Stanford, have not been charged.
A Hong Kong attorney for the mother said his client was duped into thinking she was making a donation to Stanford. He said she is a victim of Singer’s plot.
3 million pages of evidence
Defense attorneys are sifting through the evidence that the government handed over last month – and there’s a lot of it.
It’s contained in a hard drive and an accompanying DVD that is not available to the public. The evidence spans 3 million pages, including 1 million pages of emails, 4,500 separate wiretapped phone conversations and extensive bank records and other documents kept by Singer.
It’s so voluminous that the defense is struggling to find the portions relevant to their clients. Rosen told the judge that one defense attorney asked for more indexes. “We’ve tried to make it as easy to streamline as possible,” he said.
More information is likely to be released periodically.
Most of the defendants who pleaded guilty did so before their lawyers had a chance to look at the evidence. That’s a reflection of the damaging details highlighted in the charging document, thanks largely to the cooperation of Singer, who got many of his clients to restate their transactions by phone while FBI investigators listened in.
Cooperation grows
As they reached plea deals with defendants, the prosecution also got cooperation agreements from six defendants to assist in the FBI’s investigation into the college admissions scandal.
The government had cooperation from Singer and former Yale women’s soccer coach Rudy Meredith before prosecutors announced the case. In recent weeks, Singer’s accountant Steven Masera, former USC women’s head coach Ali Khosroshahin, former women’s soccer assistant coach Laura Janke and parents Davina and Bruce Isackson signed cooperation agreements.
Donna Heinel, former senior associate athletics director at USC, pleaded not guilty.
The cooperation agreements could complicate the cases of defendants tied to USC, and they could lead to others being charged.
Parents’ restitution
In several of the plea agreements made with parents, prosecutors recommended not just prison time but also financial restitution to the Internal Revenue Service or even universities.
Stephen Semprevivo, an executive at the sales company Cydcor, pleaded guilty last month to charges related to paying a $400,000 bribe to Singer to get his son into Georgetown University as a tennis recruit.
Prosecutors recommended Semprevivo pay an undetermined amount of restitution to cover Georgetown’s attorneys fees even though the university is not a party in the case. That’s in addition to 18 months in prison and other penalties recommended.
Bruce Isackson, the head of Bay Area real estate firm WP Investments, pleaded guilty in April to charges of paying more than $600,000 in bribes to get his daughters accepted into UCLA and USC as athletic recruits.
The government recommended 37 to 46 months of prison time and restitution payments to the IRS totaling $139,509. The amount is equal to payments Isackson deducted from his taxes as charitable contributions.
Some of the restitution amounts are not spelled out in the plea agreements. Federal Judge Indira Talwani expressed concern that the lack of specifics could give judges a “blank check” that defendants wouldn’t be able to appeal.
Those not charged
To help with the defense strategy on what constitutes a bribe, lawyers seek FBI documents known as 302 reports that detail investigators’ interviews with parents who weren’t charged in the case.
They sought the records as exculpatory evidence – which the prosecution would be obligated to turn over before trial – but prosecutors resisted.
“We are not going to hand over all our 302s willy-nilly because defendants have some theory about what can be exculpatory,” Rosen said in court.
Federal Magistrate Page Kelley denied the defense’s request for now, saying she wants to see the case play out.