Venture capital CEO, former PIMCO CEO among those charged in vast college-admissions plot

Parents, university coaches and a college-admissions counselor were among dozens charged Tuesday in a sweeping criminal conspiracy that sought to help applicants win admission to elite schools including Yale, Stanford, UCLA and Georgetown.

Wealthy parents — including celebrities, a top mergers attorney, a former Pacific Investment Management Co. CEO and a venture capital CEO — are alleged to have paid bribes to get their kids into school, giving cash to test-takers to help students cheat on entrance exams and paying coaches to designate applicants as athletic recruits. Parents paid from $100,000 to $6.5 million in bribes, with most payments about $200,000, according to prosecutors.

"The parents are a catalog of wealth and privilege," Andrew Lelling, the U.S. Attorney in Boston, said at a news conference. "The case is about the widening corruption of elite college admissions through the steady application of wealth combined with fraud."

Investigators detailed a scandal that perverted much of the admissions process for America's elite colleges. Unlike most other SAT cheating cases, the scheme reached deep into the academy, implicating college officials who allegedly subverted the missions of the universities themselves.

In all, the government said clients paid $25 million in bribes to coaches and administrators from 2011 to 2018. In some cases, the bribes would be disguised as charitable contributions. An informant involved in the alleged plot said clients could also pay $15,000 to $75,000 to cheat on each standardized test — in some cases, getting a proctor to change wrong answers in the test center.

"And it works?" one client asked an informant, according to court papers.

"Every time," the informant replied, with a laugh.

The FBI informant said he told parents the alleged cheating and bribery amounted to a "side door" for wealthy parents at the most selective schools. The "front door" involved children getting in on their own merits, and the "back door" entailed making multimillion-dollar donations, which was legal though far more expensive.

"Who we are — what we do is we help the wealthiest families in the U.S. get their kids into school," the informant told parents. "They want guarantees, they want to get this thing done. They don't want to be messing around with this thing. And they want in at certain schools."

The charges come two weeks before Ivy League schools and other top universities are scheduled to announce admissions for the class of 2023. The scandal, perhaps the largest ever in admissions, is certain to call into question the process by which top colleges fill highly competitive freshmen classes, while highlighting the extremes to which some wealthy parents will go to win a seat.

The charges were unsealed by prosecutors in Massachusetts, California, Texas, Florida and North Carolina, and defendants included celebrities Felicity Huffman and Lori Loughlin, who allegedly paid bribes to win admission for their children. Thirty-eight people were in custody and 33 parents were charged, prosecutors said.

Among the four dozen charged are top names in finance, philanthropy and law, including Gordon Caplan, the co-chairman of the Willkie Farr & Gallagher law firm in New York; Manuel Henriquez, chief executive officer of Hercules Capital; and Douglas Hodge, the former CEO of PIMCO.

Messrs. Caplan and Henriquez are scheduled to appear in court later Tuesday. Messrs. Hodge and Caplan's lawyer declined to comment.

"I know this is craziness, I know it is," another defendant, Jane Buckingham, the founder of marketing firm in Los Angeles, said on an FBI recording in arranging for someone to take a test for her son, according to court papers. "I need you to get him into USC."

An email to her firm wasn't immediately returned.

Prosecutors accused the former women's soccer coach at Yale, the senior associate athletic director at the University of Southern California, the women's volleyball coach at Wake Forest University and the sailing coach at Stanford. A college prep school director is also charged. Calls to them weren't immediately returned.

Two defendants are scheduled to plead guilty Tuesday in Boston, including Stanford's sailing coach, John Vandemoer, and William Rick Singer, who ran a college admissions counseling company in California and is central to the scheme. Mr. Singer cooperated with authorities after he was caught up in the plot and helped build cases against others, according to court papers.

The U.S. dubbed the investigation "Operation Varsity Blues," a reference to a 1999 film about a football team in Texas.

The scheme is alleged to have two key elements. According to prosecutors, college entrance-exam proctors took bribes to help applicants cheat on admissions tests by allowing others to pose as test-takers or giving students the answers. In other instances, university coaches were bribed to designate applicants as athletic recruits "regardless of their athletic abilities" — or even, prosecutors said, when they didn't play the sport at all.

Yale said in a statement that the school "has been the victim of a crime perpetrated by its former women's soccer coach," while UCLA, Georgetown and USC also suggested they were victims. Stanford said it is "deeply concerned about the allegations." Wake Forest, Stanford and the University of Texas announced Tuesday that they had suspended or fired coaches.

"Integrity in admissions is vital to the academic and ethical standards of our university," the University of Texas said in a statement.

The arrests "send a clear message that those who facilitate cheating on the SAT – regardless of their income or status – will be held accountable," the College Board, which administers the SAT, said in a statement.

At the center of the scheme is a Newport Beach, Calif.-based company called Edge College & Career Network LLC, which was run by Mr. Singer, prosecutors said. He allegedly agreed with clients to have an accomplice, Florida resident Mark Riddell, take the ACT or SAT college admissions tests in their children's place or correct their answers after they took the exams themselves. The parents allegedly paid between $15,000 and $75,000 to Mr. Singer per test, structuring their payments as donations to a California-based charity affiliated with his company, Key Worldwide Foundation, according to prosecutors.

Mr. Singer instructed parents to "seek extended time on the exams, including by having their children purport to have learning disabilities," authorities claim.

Mr. Singer allegedly used the bogus charitable donations to bribe two other defendants, who administered the tests at a private school in Los Angeles and a public school in Houston, according to the indictment. The bribes to let Mr. Riddell take the tests were typically $5,000 to $10,000, the U.S. said.

The defendants disguised "the nature and source of the bribe payments by funneling the money through the accounts of a purported charity, from which many of the bribes were then paid," according to court papers.

He also helped parents construct phony athletic profiles for their children, which sometimes included manipulated images, to supplement fraudulently obtained exam scores and inflated grades.

The yearlong investigation included wiretaps, undercover operatives and dozens of agents from the Federal Bureau of Investigation and the Internal Revenue Service from across the country. Mr. Lelling said the probe began when federal authorities were interviewing a target in a different case who tipped them to the admissions plot.

He said fake test scores were sent to Boston College, Boston University and Northeastern University. Coaches who took bribes put some of the money into their athletic programs, he added. No students were charged, and the universities are not targets of the investigation, authorities said.