March 12, 2019 / 4:03 PM / 6 months ago

CORRECTED-UPDATE 8-U.S. college admissions scandal sweeps up Felicity Huffman, Lori Loughlin, CEOs

(Corrects spelling of last name of former Stanford sailing coach to Vandemoer. Corrects spelling of “misrepresenting” in second paragraph)

By Nate Raymond

BOSTON, March 12 (Reuters) - Federal authorities arrested dozens of people on Tuesday in what they described as a $25 million scam to help actors Felicity Huffman, Lori Loughlin, some CEOs and other wealthy Americans commit fraud to get their children into elite universities, such as Yale and Stanford.

The most sweeping college admissions scheme ever unearthed in the United States was masterminded at a small college-preparation company based in Newport Beach, California, prosecutors said. It relied on bribes to coaches, phony test takers and even doctored photos misrepresenting non-athletic applicants as elite competitors to gain admissions for the offspring of rich parents.

“These parents are a catalog of wealth and privilege,” Andrew Lelling, the U.S. attorney in Boston, said at a news conference. “For every student admitted through fraud, an honest, genuinely talented student was rejected.”

William “Rick” Singer, 58, pleaded guilty on Tuesday to charges related to running the scheme through his Edge College & Career Network, which charged from $100,000 to as much as $2.5 million per child for the services, which were masked as contributions to a scam charity Singer runs.

“I was essentially buying or bribing the coaches for a spot,” Singer said as he pleaded guilty to charges including racketeering, money laundering and obstruction of justice. “And that occurred very frequently.”

John Vandemoer, a former Stanford University sailing coach who worked with Singer, also pleaded guilty to racketeering conspiracy.

A Los Angeles judge ordered Huffman, who appeared in television drama “Desperate Housewives” and is married to actor William H. Macy, be released on a $250,000 bond. “Full House” sitcom actor Loughlin’s husband, Mossimo Giannulli, was released on a $1 million bond. Huffman, Loughlin and Giannulli have been charged in the case but have yet to enter pleas.

It was the latest in a series of scandals that have rocked the high-stakes, high-stress world of admissions to top colleges. Prosecutors in Boston in recent years have also charged Chinese nationals with cheating on entrance exams, while the College Board, which administers the SAT tests, was rocked in 2016 by a security breach that exposed hundreds of questions planned for tests.

Some 300 law enforcement agents swept across the country to make arrests in what agents code-named “Operation Varsity Blues.” Huffman and Loughlin were due to appear in federal court in Los Angeles later on Tuesday, prosecutors said.

Prosecutors have so far named 33 parents, 13 coaches and associates of Singer’s business.

Other parents charged include Manuel Henriquez, the chief executive of specialty finance lender Hercules Capital; Gordon Caplan, the co-chairman of international law firm Willkie Farr & Gallagher; Bill McGlashan Jr., who heads a buyout investment arm of private equity firm TPG Capital; and Douglas Hodge, the former CEO of the investment management firm Pimco.

Representatives for the companies and for Huffman and Loughlin, either declined to comment or did not respond to requests for comment.

The alleged masterminds of scam and parents who paid into it could all face up to 20 years in prison if convicted.

Huffman, a former Oscar nominee as best actress and wife of actor William H. Macy, starred in ABC’s “Desperate Housewives.” Loughlin, best known for her role in the ABC sitcom “Full House” and the recent Netflix sequel “Fuller House,” is married to Mossimo Giannulli, a clothing designer who was also charged in the scheme.

‘HELP THE WEALTHIEST’

On a call with a wealthy parent, prosecutors said, Singer summed up his business: “What we do is help the wealthiest families in the U.S. get their kids into school.”

Prosecutors said it was up to the universities what to do with students admitted through cheating.

Yale University and the University of Southern California (USC) said in separate statements that they were cooperating with investigators.

“The Department of Justice believes that Yale has been the victim of a crime perpetrated by its former women’s soccer coach,” Yale said in a statement.

The coach, Rudolph Meredith, resigned in November after 24 years running the women’s soccer team. Meredith, who accepted a $400,000 bribe from Singer, is due to plead guilty, prosecutors said. His lawyer declined to comment.

Prosecutors said the scheme began in 2011 and also helped children get into the University of Texas, Georgetown University, Wake Forest University and the University of California, Los Angeles (UCLA).

Part of the scheme involved advising parents to lie to test administrators that their child had learning disabilities that allowed them extra exam time.

The parents were then advised to choose one of two test centers that Singer’s company said it had control over: one in Houston, Texas, and the other in West Hollywood, California.

Test administrators in the those centers took bribes of tens of thousands of dollars to allow Singer’s clients to cheat, often by arranging to have wrong answers corrected or having another person take the exam. Singer would agree with parents beforehand roughly what score they wanted the child to get.

In many cases, the students were not aware that their parents had arranged for the cheating, prosecutors said, although in other cases they knowingly took part. None of the children were charged on Tuesday.

Singer also helped parents stage photographs of their children playing sports or even Photoshopped children’s faces onto images of athletes downloaded from the internet to exaggerate their athletic credentials.

Wake Forest said it had placed head volleyball coach Bill Ferguson on administrative leave after he was among the coaches accused of accepting bribes.

According to the criminal complaint, investigators heard McGlashan of TPG Capital listening to Singer tell him to send along pictures of his son playing sports that he could digitally manipulate to make a fake athletic profile.

“The way the world works these days is unbelievable,” McGlashan said to Singer, according to court papers.

Reporting by Nate Raymond in Boston; Additional reporting by Jonathan Allen, Joseph Ax and Gabriella Borter in New York and Brendan O'Brien in Milwaukee; writing by Jonathan Allen; editing by Scott Malone, Bill Berkrot and Cynthia Osterman

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