Newport Beach is at the center of nationwide bribery for admissions scandal

American higher education, from the ivy covered walls of Yale and Georgetown to the sun drenched campuses of USC and Stanford, was rocked Tuesday by a federal racketeering case that alleges celebrities and other wealthy parents funneled millions through an Orange County non-profit foundation in return for fraudulent entrance test scores and college admission facilitated by corrupt coaches and athletic department administrators.

Described by a federal prosecutor as “catalog of wealth and privilege,” Emmy Award-winning actress Felicity Huffman, actress Lori Loughlin, Jovan Vavic, USC’s 16-time national championship water polo coach, USC senior associate athletic director Donna Heinel, UCLA men’s soccer coach Jorge Salcedo and coaches at Yale, Georgetown and Wake Forest were among the 50 people indicted on racketeering charges unsealed in U.S. District Court in Massachusetts.

“This case is about the widening corruption of elite college admissions through the steady application of wealth combined with fraud,” U.S. attorney Andrew Lelling said. “There can be no separate college admission system for the wealthy, and I’ll add that there will not be a separate criminal justice system either.

“For every student admitted through fraud, an honest, genuinely talented student was rejected.”

The indictments in what U.S. attorneys called the “largest college admission scandal in the history of the Justice Department” came against the backdrop of an ongoing federal bribery scandal in college basketball that has implicated adidas and at least nine schools, including UCLA, and impacted more than 20 programs total.

William Rick Singer of Newport Beach and Sacramento, a 58-year-old former Sacramento State assistant basketball coach, pled guilty Tuesday to racketeering, money laundering and obstruction of justice charges for his role in directing a $6.5 million scheme in which wealthy parents between 2011 and last month funneled money through The Key Worldwide Foundation, a Newport Beach 501 (c) (3) non-profit, in return for bogus ACT and SAT test scores for their children and admission to schools as preferred athletic recruits in sports they had not demonstrated college-level potential, if they had played the sport at all.

Singer, the author of the 2014 book “Getting In: Gaining Admission To Your College of Choice,” is a cooperating witness for the Justice Department, even wearing a wire during the investigation.

“I am absolutely responsible for it,” Singer said in federal court in Boston Tuesday. “I put everything in place. I put all the people in place and made the payments directly.”

Among those also indicted are Doug Hodge, former Pimco chief executive officer, William E. McGlashan Jr., founder and managing partner of TPG Growth, a Silicon Valley investment fund and Robert Zangrillo, CEO of venture firm Dragon Global,

USC is at the center of much of what federal law enforcement called “Operation Varsity Blues.”

The school has been through repeated recent scandals. USC recently settled a $215 million class action lawsuit filed by dozens of women who accused longtime campus gynecologist George Tyndall with sexual misconduct. While Dean of the Keck School of Medicine, Carmen Puliafito had done meth with a woman who overdosed. USC President Max Nikias was forced to resign in the wake of the scandals. Current interim President Wanda Austin will deal with this scandal.

USC, like the other seven schools named in federal indictment, offers preferential admission to students recruited and identified by university coaches as college level athletes but who would not otherwise be admitted to the institution based on their academic qualifications.

Heinel is charged with helping more than two dozen students gain admission to USC with fabricated athletic credentials, in some cases for students who didn’t play the sport at all. In return parents paid $1.3 million between 2014 and 2018 to a women’s athletic fund controlled by Heinel. Heinel, beginning in July 2018, also received a monthly $20,000 payment from a Key Worldwide charitable account.

Loughlin, a cast member of the television show “Full House,” and her husband Mossimo Giannulli, a fashion designer, paid $500,000 in bribes to USC in return for their two daughters gaining admission to the university as designated rowing recruits, federal officials said. Neither daughter rows.  Loughlin and Giannulli were charged with conspiracy to commit wire fraud.

Giannulli was arrested Tuesday morning. Loughlin was in British Columbia and was expected to report to the U.S. District Courthouse in Los Angeles Tuesday.

Key Worldwide Foundation donated $250,000 to a USC water polo fund controlled by Vavic, a 15-time national coach of the year and the Pac-12 water polo coach of the century. Key Worldwide also paid $39,900 in 2016, $37,970 to Loyola High School in Los Angeles where Vavic’s son Marko, a current Trojan player, attended, according to documents the foundation filed with the Internal Revenue Service.

USC fired Heinel and Vavic Tuesday. Vavic was arrested in Hawaii Tuesday morning where the Trojan women’s team is scheduled to play the University of Hawaii Saturday.

Hodge is alleged to have bribed Singer as part of a scheme to have two of his daughters admitted to USC as athletic recruits.

“We understand that the government believes that illegal activity was carried out by individuals who went to great lengths to conceal their actions from the university,” USC said in a statement.  “USC is conducting an internal investigation.  Donna Heinel and Jovan Vavic have been terminated and the university will take additional employment actions as appropriate.

“USC is in the process of identifying any funds received by the university in connection with this alleged scheme. Additionally, the university is reviewing its admissions processes broadly to ensure that such actions do not occur going forward.”

Financial records suggest that the scandal could extend to other USC athletic programs. Key Worldwide contributed $100,000 to the USC soccer program during the fiscal years 2014, 2015, and 2016, according to IRS filings. The foundation donated $100,000 to the Trojan baseball program in 2014 and $75,000 to USC volleyball in 2015.

Former Trojan soccer coaches Ali Khososhahin, who guided USC to the 2007 NCAA title, and Laura Janke were also indicted on racketeering charges and heavily involved in Singer’s scam, according to court filings.

Khososhahin was fired by USC in 2013 after three consecutive sub .500 seasons. Janke left the program in January 2014.

Khososhahin and Janke designated four children of Singer clients as USC soccer recruits even though none of the students played competitive soccer, according to the document.

Janke also created a fake soccer resume for the child of a Singer client trying to gain admission to Yale. The student did not play competitive soccer. The client agreed to pay $1.2 million, $900,000 of which was donated to Key Worldwide.

Khososhahin and Salcedo were also involved in the admission of the daughter of another Singer client as a soccer player at UCLA. Key Worldwide in July 2016 paid $100,000 from charitable accounts to Princeville Enterprise, a sports marketing company controlled by Salcedo. Key Worldwide also paid Salcedo $100,000 in October 2018 for identifying the son of another Singer client as a Bruin soccer recruit. The parents paid Singer with Facebook stock at the time worth more than $250,000. Khososhahin received $25,000 from Key Worldwide in both UCLA cases.

Salcedo, a former Bruin All-American and Major League Soccer player who has coached UCLA to two NCAA title matches, was placed on leave Tuesday.

“The conduct alleged in the filings revealed today is deeply disturbing and in contrast with the expectations we have of our coaches to lead their teams with honesty and integrity,” UCLA said in a statement. “If the facts alleged are true, they represent a grave departure from the ethical standards we set for ourselves and the people who work here.”

Key Worldwide donated $325,000 to Chapman University in 2015 and 2016, $546,500 to the University of Texas athletic department those same two years and $338,379 to NYU’s athletic department between 2014 and 2016, according to IRS documents.

“Chapman University has been and is currently cooperating with the Department of Justice in their investigation,” the school said in a statement. “Chapman prides itself on an open and fair admission process. We are not aware nor have we been advised that we have been involved in any wrongdoing.

“Chapman University like all great institutions routinely receives funds from foundations and any irregularities in the gifts from the Key Worldwide Foundation, should they exist, were and are totally unknown to us. We take this matter very seriously and intend to review this relationship in depth to assure ourselves that our principles have not in any way been compromised.”

Shellee Howard, knew of William Rick Singer, when she opened College Ready, in Corona Del Mar in 2016.

“His name came up continuously,” she said. “Parent would ask me, ‘Can you guarantee my kid will get into the school he wants, like Mr.Singer.’ He was making a guarantee he could get their kid in their first choice. I said, ‘I can’t that isn’t how it works.’”

Huffman paid $15,000 to Key Worldwide  “to participate in the college entrance exam cheating scheme on behalf of her oldest daughter,”  according to a court filing.

Huffman was arrested Tuesday morning and was expected to be released $250,000 bond later Tuesday.

The associate, believed to be Mark Riddell, a Florida man traveled to West Hollywood to administer the test. Huffman’s daughter Sofia received a 1,420 score on the test, approximately 400 points higher than her PSAT test.

Igor Dvorskiy, director of the West Hollywood College Prepatory School and administrator for the College Board and ACT Inc, was among those indicted. Between 2011 and this past February parents paid Singer between $15,000 and $75,000 to have someone take the entrance exams for their children or doctor the test results, according to the indictment. Dvorskiy was paid $10,000 per student from a Key Worldwide charitable account.