Varsity Blues: First parents stand trial in college admissions bribery scandal
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Two parents are set to face trial starting Wednesday over their alleged participation in a widespread criminal scheme to fraudulently secure college admissions for their children.
In 2019, the Justice Department announced charges related to an alleged conspiracy that involved parents of aspiring undergraduate students collectively paying more than $25 million to a middleman who secured student-athlete placements at highly selective U.S. universities including Georgetown, Stanford, UCLA, and Yale. Several high-profile parents involved in the scheme pleaded guilty and served time in prison.
Gamal Abdelaziz, a former casino executive, and John Wilson, former chief operating officer for Gap. Inc., are among 57 people charged by U.S. attorneys and are the first to stand trial, following an FBI investigation into a network that allegedly doled out coveted spots to attend U.S. universities in exchange for payments to gatekeepers who circumvented admission procedures.
“I'm not shocked that they went to trial,” Ashwin Ram, a partner at Steptoe & Johnson LLP, told Yahoo Finance. “And frankly, they have a real shot, just like anybody who stands before a jury has a real shot, of having a jury, or a single juror holdout, or maybe of convincing the jury that they were defrauded.”
The investigation, dubbed “Operation Varsity Blues,” led to the arrest and prosecution of high-profile parents, university employees, and advisers. So far, 30 parents involved in the scheme have entered guilty pleas, along with its admitted ringleader, college counselor William “Rick” Singer.
Singer, who was charged with racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the U.S., and obstruction of justice, agreed to cooperate with government attorneys. That cooperation helped build the case against the parents who pleaded not guilty.
“This case tells us nothing about the college admissions process, it tells us about the influence of wealth in American society. It tells us the extent to which some wealthy people will go, both legally (test prep, private school, alumni donations) and illegally (bribery, cheating) to compound their advantages,” Akil Bello, senior director of advocacy and advancement at FairTest, told Yahoo Finance in an email.
Actresses Felicity Huffman and Lori Loughlin, Loughlin’s husband Mossimo Giannulli, and former TPG Capital senior executive Bill McGlashan have already entered into plea agreements with federal prosecutors. (Huffman spent 11 days in prison, Loughlin served a two-month sentence, Giannulli was released to home confinement three weeks before finishing a five-month sentence, and McGlashen will finish serving a three-month sentence this week.)
Bello added that the “fines and sentences handed out simply reinforce that there are two systems of justice in this country, one that gives a slap on the wrist to those suffering from ‘affluenza’ and one that criminalizes poverty.”
'The parents’ defense is going to be...'
There are two competing narratives expected at Abdelaziz’s and Wilson’s trial, according to Ram.
“The government’s narrative is: Singer committed this fraudulent scheme to buy and sell admission seats, and the parents are part of that scheme,” Ram said. “The parents’ defense is going to be: I was defrauded by Singer. I thought I was donating money to the university.”
Ram noted that behind the defendants’ theory is the reality that donating money to a university is a legal path to charter goodwill on behalf of a prospective student. The parents, he said, argue their involvement was limited within that scope.
“You can publicly give $10 million to Harvard right now and have a wing named after you, and if you do that, it naturally increases the chances that your child will go there,” he said. “That's not illegal.”
The government’s most powerful evidence could be telephone recordings obtained from Singer speaking with parents, including Abdelaziz and Wilson.
As of Tuesday, the court had yet to decide on the parents’ request that the court suppress 13 recorded calls. The defendants allege that the government had AT&T continue to monitor Singer’s phone for nearly five months after a court order authorizing the recordings expired.
Underlying all of the charges against Abdelaziz and Wilson is an unsettled legal question that goes to the heart of the government’s case: whether or not an admission seat can be considered property.
While the issue will not be decided at trial, it is one that could be raised on appeal for defendants like Abdelaziz and Wilson should the jury decide to convict them.
A nationwide conspiracy built on college admissions 'side door' deals
Abdelaziz and Wilson pleaded not guilty to charges similar to those faced by other defendants, including conspiracy to commit mail and wire fraud, honest services mail and wire fraud, as well as conspiracy to commit federal programs bribery. (Wilson also pleaded not guilty to filing a false tax return.)
Abdelaziz was the former president and executive director of a Wynn Resorts subsidiary in Macau, China, and opened the Wynn Palace Cotai casino project. He lives in Las Vegas.
Abdelaziz allegedly paid $300,000 in 2018 to get his daughter into USC as a women’s basketball recruit by creating a fake recruitment profile that made up international basketball awards. According to the complaint filed by the U.S. government, this included the daughter receiving numerous falsified honors such as the “Beijing Junior National Team,” “Asia Pacific Activities Conference All Star Team,” and “Hong Kong Academy team MVP.”
Records also stated that the daughter secured a provisional acceptance letter in October 2017. She started school in the fall of 2018 but did not join the basketball team.
Wilson is a founder and CEO of a private equity and real estate development firm. Based in Lynnfield, Massachusetts, he previously worked as a senior-ranking executive at Staples, Gap, Old Navy, as well as Bain & Co.
Wilson paid a total of $1.72 million to Singer, according to prosecutors, which involved allegedly paying $220,000 in 2014 to get his son into USC as a men’s water polo team recruit by conspiring to bribe the water polo coach, Jovan Vavic, and $1.5 million in 2018 to get his two daughters into Stanford and Harvard as recruited athletes. (Vavic is scheduled to stand trial in mid-November.)
Wilson’s son had been depicted with a fake profile that “included fabricated swimming times and awards,” according to the complaint, which was given to Vavic in 2013. The son was granted admission into USC as a water polo recruit in February 2014, got a formal offer letter in March, and withdrew from the team after his first semester at USC.
In September 2018, Wilson asked about “side door” opportunities for his daughters through the same fake athlete recruitment scheme, based on an excerpt from a call with Singer that was noted in the complaint.
By October, Singer had started working with the U.S. government and specifically with the Federal Bureau of Investigation (FBI). That month, Wilson's company allegedly paid $500,000 for a “side door” deal and was later told that one of his daughters had got a spot at Stanford on the sailing team.
In November, Singer (under direction from the FBI) told Wilson that he had secured a spot at Harvard for the other daughter as a fake athletic recruit. Wilson was then asked for an additional $500,000 payment to secure that spot, according to prosecutors.
Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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