Newport Beach man at center of scam pleads guilty
By Sara Hall | NB Indy
Federal authorities revealed a wide-reaching college admissions scam this week that included millions paid in bribes, as well as falsified exam scores, achievements, and athletic accomplishments. Authorities charged 50 people Tuesday—including a Laguna Beach CEO—in connection with the largest college admissions scandal in Justice Department history.
The scandal involves university athletic coaches, college exam administrators, and wealthy parents across the country, including Hollywood celebrities, CEOs, business executives, a fashion designer, and more.
At the top of the list of those charged is William “Rick” Singer, 58, who founded Edge College & Career, LLC, also known as “The Key,” based in Newport Beach. He also served as the CEO of the Key Worldwide Foundation, a nonprofit corporation that he established as a purported charity.
Singer was charged with racketeering conspiracy, money laundering conspiracy, conspiracy to defraud, and obstruction of justice. He pled guilty to all counts on Wednesday. Sentencing is scheduled for June 19 at 2 p.m. He was released on a $500,000 unsecured bond.
A few parents involved are also local, including former CEO of Newport Beach-based investment management company PIMCO, Douglas Hodge, 61, of Laguna Beach.
Hodge is charged with using “bribery to facilitate the admission of two of his children to USC as purported athletic recruits” and seeking to “enlist [Singer] to secure the admission of a third child to college through bribery as well.”
Other local parents involved include: Michelle Janavs, 48, of Newport Coast, a former executive of a large food manufacturer; and I-Hin “Joey” Chen, 64, of Newport Beach, who operates a provider of warehousing and related services for the shipping industry.
Parents spent anywhere from $200,000 to $6.5 million to guarantee admissions to elite schools for their children, according to United States Attorney for the District of Massachusetts Andrew Lelling.
“There will not be a separate admissions system for the wealthy,” Lelling said. “And there will not be a separate criminal justice system either.”
The scheme centered around cheating on college entrance exams and the admission of students to elite universities as purported athletic recruits.
Since the scheme began in 2011, parents allegedly paid Singer approximately $25 million to bribe coaches and university administrators to designate the clients’ children as recruited athletes, to ensure their admission into the elite universities.
Prosecutors claim the scheme used the façade of Singer’s charitable organization to conceal the nature and source of the bribes.
According to the indictment, Singer would bribe SAT and ACT officials to allow a third party to secretly take the exams in place of the actual students or replace the students’ exams with his own. Singer also often allegedly advised parents to ask for extended time on the tests by claiming their kids have learning disabilities.
“In many instances, the students taking the exams were unaware that their parents had arranged for the cheating,” according to authorities.
The couple of test administrators Singer worked with accepted bribes of as much as $10,000 per test. Singer’s clients paid him between $15,000 and $75,000 per test, with the payments structured as purported donations to the KWF charity.
Another “side door” arrangement included bribing university athletic coaches and administrators to facilitate the admission of students to elite universities under the guise of being recruited as athletes, regardless of their athletic experience and abilities.
Athletic coaches from University of Southern California, Yale, Stanford, Wake Forest and Georgetown universities, among others, are implicated.
The charge of racketeering conspiracy provides for a sentence of no greater than 20 years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater and restitution. The charge of conspiracy to commit money laundering provides for a sentence of up to 20 years in prison, up to three years of supervised release, and a fine of not more than $500,000 or twice the value of the property involved in the money laundering. The charge of conspiracy to defraud the United States provides for a sentence of no greater than five years in prison, up to three years of supervised release and a fine of $250,000. The charge of obstruction of justice provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000.
Most of the parents involved are charged with conspiracy to commit mail fraud and honest services mail fraud, and of conspiracy to commit wire fraud and honest services wire fraud, which provide for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of 250,000 or twice the gross gain or loss, whichever is greater.