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Money Management

Money management executives among those implicated in college admissions scam

William "Bill" McGlashan, founder and managing partner of TPG Growth LLC

Among the dozens of individuals charged in a college admissions scam by the Department of Justice in a Boston federal court were several executives in money management, including William McGlashan, founder and managing partner at private equity firm TPG Growth.

The charges, announced Tuesday by the U.S. attorney's office in Massachusetts, allege the individuals participated in a nationwide conspiracy that facilitated admissions to universities including Stanford University, University of California at Los Angeles and Yale University through cheating on college entrance exams and false claims as athletic recruits.

Wealthy parents are alleged to have paid bribes to get their children admitted to these schools, providing cash to test-takers to help students cheat on those 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.

TPG put Mr. McGlashan on indefinite administrative leave as a result of the charges, the company said in a statement. Jim Coulter, TPG's co-CEO, was named interim managing partner of Mr. McGlashan's TPG Growth and The Rise Funds and "will lead all investment work for both going forward," the statement said.

In addition to Mr. McGlashan, those indicted include Douglas Hodge, former CEO of Pacific Investment Management Co., Newport Beach, Calif., from 2014 to 2016 who retired in 2017; Manuel Henriquez, founder, chairman and CEO of venture debt manager Hercules Capital; and Robert Zangrillo, the founder of private investment firm Dragon Global Management, all of whom were charged with conspiracy to commit mail and wire fraud.

A PIMCO spokeswoman declined comment. Officials at Dragon Global Management could not be immediately reached to provide comment.

Michael Hara, Hercules Capital spokesman, also couldn't be reached. But in a Wednesday news release, Hercules Capital announced Robert P. Badavas, lead independent director, had been named interim board chairman and Scott Bluestein, the company's chief investment officer, as interim CEO.

Mr. Henriquez stepped down from his firm Wednesday, after analysts worried that Hercules' access to capital and origination growth may be hurt. Even so, Wells Fargo said there was likely "excessive selling in the stock," and advised investors to "lean in as fears of catastrophe are overblown." Shares rose less than 1% in early Wednesday trading, after closing down 8.9% Tuesday at the lowest price since Jan. 15.

In response to the arrests, Yale said in a statement on its website that its office of undergraduate admissions was a "victim of a crime perpetrated by its women's soccer coach, who is no longer at the university. The university has cooperated fully in the investigation and will continue to cooperate as the case moves forward."

In in an email to students and faculty, UCLA Chancellor Gene D. Block his school was also a victim. "The indictment also asserts that the individuals accused of these crimes worked to conceal their actions from UCLA and the other universities," Mr. Block said, adding that UCLA will cooperate with federal investigators. "We will also perform a detailed internal review to ensure proper controls are in place to prevent any repeat of these actions in the future," he said.

In a statement on its website, Stanford University said it "has been cooperating with the Department of Justice in its investigation and is deeply concerned by the allegations in this case. The university and its athletics programs have the highest expectations of integrity and ethical conduct."

Bloomberg contributed to this story.