Varsity Blues Scandal Update Impact of a May 2023 US Court of Appeals Decision

I-OnAsia is a leading global provider of test security and examination integrity investigations. Cheating on exams is a major global problem. But a recent (May 10^th 2023) US Court of Appeals judgment in the Varsity Blues Scandal[1] has made it harder to crack down on cheats in the US.

Here is a brief update on Varsity Blues Scandal as it relates to the case of two individuals named Mr. Gamal Abdelaziz (“Abdelaziz”) and Mr. John Wilson (“Wilson”), with an eye on the impact for I-OnAsia who develop and administer tests.

WILLIAM RICK SINGER (“Singer”)

Due to a series of whistleblowers[2] and unrelated securities law prosecutions,[3] Singer’s conduct was luckily discovered by the Department of Justice (the “DOJ”). Singer was Charged by Information (the “Information”) on March 5, 2019.[4] The Information alleged Racketeering Conspiracy, Money Laundering Conspiracy, Conspiracy to Defraud the USA, Obstruction of Justice, RICO Forfeiture Allegations, and Money Laundering Forfeiture Allegations.[5]  Singer owned the Edge College & Career Network, LLC (aka “The Key”) and served as Chief Executive Officer of the Key Worldwide Foundation, which were the entities through which he engaged in the alleged offences.[6]  Singer ultimately pleaded guilty on March 12, 2019, in the U.S. District Court in Boston to four felony counts of Racketeering Conspiracy, Money Laundering Conspiracy, Conspiracy to Defraud the USA, and Obstruction of Justice.  He was sentenced to three and a half years in prison, with an additional three years probation as well as being required to make more than US$10 million in restitution to the IRS and forfeiture of millions of dollars in assets.[7]  Singer agreed to cooperate and did cooperate with and was essential to the DOJ’s investigation.

PRIMARY CONDUCT UNDERLYING THE OFFENCES

The primary conduct underlying the alleged offences against Singer and others was detailed ad nauseum in the 204-page Affidavit in Support of Criminal Complaint,[8] but is has been aggressively reduced, for the ease of consumption, to the following:

• bribing exam administrators to facilitate cheating on college and university entrance exams; and
• bribing coaches and administrators of elite universities to nominate unqualified applicants as elite recruited athletes, thus facilitating the applicants’ admission.[9]

A University of Oklahoma history professor, Mr. Wilfred M. McClay, summed up the situation extremely well when saying in an interview, in relevant part, the following: “I’m not going to pretend there isn’t a difference between Harvard and Suffolk County Community College, but I think this situation where the Supreme Court is made up entirely of Harvard or Yale Law School graduates is wrong. The thing driving the current scandal seems to be that ultimately parents were willing to do anything to game the system to get their kids these advantages, not because the education was better but because the legitimation of social position would be better.”[10]

Suffice it to say, the jurors clearly thought Abdelaziz and Wilson were wealthy, unsympathetic fathers “gaming the system”, and they were convinced beyond a reasonable doubt that each father engaged in fabrication of sports credentials to assist their children.[11]

IMPLICATED AND CHARGED PERSONS/CIVIL LAWSUITS/AFFECTED CHILDREN

The DOJ has Charged by Information or Indictment a slew of people,[12] details of whom have been summarized in terms of the various charged defendants, the charges, case status, sentence government recommended, and sentence imposed by the court.[13]  Implicated celebrities have lost lucrative employment, entered guilty pleas and have served lenient sentences.[14]  Civil lawsuits, particularly against the colleges and universities, have been filed.[15]  Several children, who benefited from their parents allegedly illegal conduct have suffered.[16]

For ease of reference regarding the implicated institutions, please note the following universities, their associated athletic programs, and 11 university personnel were involved in the case:

1. Georgetown University, Gordon “Gordie” Ernst, Men’s, and Women’s Tennis
2. Stanford University, John Vandemoer, Sailing
3. UCLA, Jorge Salcedo, Men’s soccer
4. University of San Diego, Lamont Smith, Men’s basketball
5. USC, Donna Heinel, Senior Associate Athletic Director, Laura Janke and Ali Khosroshahin, Women’s soccer, Jovan Vavic, Men’s and Women’s water polo
6. University of Texas at Austin, Michael Center, Men’s tennis
7. Wake Forest University, William “Bill” Ferguson, Volleyball
8. Yale University, Rudolph “Rudy” Meredith, Women’s soccer[17]

Perhaps the most interesting, non-sports-related guilty plea as that entered by Mark Riddell, a Harvard alumnus, who admitted to taking college entrance exams, for a fee, for children of wealthy parents.[18]

COURT OF APPEAL’S DECISION (the “Decision”)

The Decision is a daunting, not for the faint-hearted, 156-page opinion issued by the United States Court of Appeals For the First Circuit.[19]

A concise statement regarding the alleged conduct, defense and grounds for appeal was provided in the Decision as follows:

“Both men agreed with Singer to make payments purportedly to university accounts in exchange for university employees’ securing their children’s admission as athletic recruits — a path to admission Singer referred to as the “side door.” (Singer contrasted this side door with the “front door” (admission on merit) and the “back door” (admission through large “institutional advancement” donations).  Their defense at trial and on appeal is that they believed Singer’s services and the side door to be legitimate and that they acted in good faith.”[20]

The Decision also neatly outlined the three grounds of appeal as follows:

“First, the defendants moved to dismiss the federal programs bribery and honest services fraud charges, arguing that payments made to the alleged victim of a bribery scheme — here, the universities — cannot constitute bribes. Second, they moved to dismiss the mail and wire fraud charges insofar as these charges alleged that the defendants had defrauded the universities of property, arguing that admissions slots do not constitute property. Third, they moved to dismiss the conspiracy counts, arguing that the indictment alleged a “rimless wheel” conspiracy barred by the Supreme Court’s decision in Kotteakos[21]…and to dismiss the entire indictment because it did not allege that the defendants had participated in a single act, transaction, or series of transactions, such that joinder was improper.”[22]

In an effort to assist the reader further, the Decision summarized the trial court’s denial of the motions to dismiss, which effectively led to convictions, as follows:

“It reasoned that “[p]ayments made to accounts controlled by university insiders, even if such payments were ultimately received by the universities,” could support the…honest services fraud charges…It further concluded that admissions slots “are property interests owned by the university cognizable under the mail and wire fraud statutes.”…And it determined that the indictment adequately alleged a single overarching conspiracy and that, as a result, joinder was appropriate.”[23]

Honest services fraud charges

The Decision held “…that the honest services fraud theory fails as a matter of law and that the government’s arguments with respect to the property theory are not adequate to support the jury instructions given at trial. We vacate the defendants’ mail and wire fraud convictions, including the related conspiracy convictions.”[24]

1. The Decision admitted “…the question is a close one…” when considering the honest services fraud theory. However, it reasoned the DOJ had read the statute far too broadly and despite a clear distaste for the defendants’ conduct (“We do not say the defendants’ conduct is at all desirable”), the Decision stated “[i]f Congress desires to go further, . . . it must speak more clearly than it has.”[25]

Property[26]

The Decision addresses the very complicated issue as to whether or not these specific admissions slots were property of the universities.[27]  The Decision also addressed the jury instructions given by the trial judge that “…[f]or purposes of the mail and wire fraud statutes, admission[s] slots are the property of the [u]niversities.”[28]  For a variety of reasons well beyond the scope of this Memorandum, the Decision held that, in this specific case, the admission slots were not property, and the jury instructions were inappropriate.  The exact, limiting language used in the Decision will be instructive for future cases.[29]  Of equal importance, the issue as to whether or not admissions slots are property of the universities, in general, will almost certainly be decided in due course by The USA Supreme Court.[30]

Conspiracy[31]

The Decision turned to the DOJ’s allegations regarding “conspiracy” by clearly defining the counts as follows:

“Count One of the indictment alleged an overarching nationwide conspiracy among Singer, his staff, university insiders, and parents to facilitate the parents’ children’s admission to Georgetown, Harvard, Stanford, UCLA, and USC by means of mail and wire fraud, in violation of §§ 1341, 1343, and 1346. Count Two alleged an overarching nationwide conspiracy among a subset of the same individuals to secure children’s admission to USC by means of federal programs bribery, in violation of § 666.”[32]

Simply stated, the Decision held “…that the evidence was insufficient to prove that these defendants agreed to join the broader charged conspiracy and that the defendants were prejudiced by the variance, and so we vacate the defendants’ conspiracy convictions.”[33]

1. The Decision addressed whether or not there was “…an overarching nationwide conspiracy among Singer, his staff, university insiders, and parents to facilitate the parents’ children’s admission to Georgetown, Harvard, Stanford, UCLA, and USC by means of mail and wire fraud.”[34] The defendants raised the defense of a “rimless wheel conspiracy.”[35]  The relevant question raised by the Decision was “whether the nature of the alleged scheme is such that it would be reasonable to infer that any parents who sought the assistance of the core group shared a goal of getting children other than their own into any university just because they sought such assistance for their own children.”[36]  The Decision thoroughly rejected that it would be reasonable to make that inference based on the facts of this case.[37]  In rejecting the DOJ’s arguments, the Decision found “Evaluating the record as a whole, we conclude that there was insufficient evidence from which a rational jury could find beyond a reasonable doubt that the defendants joined the broader conspiracy charged in the indictment.”[38]
2. The Decision went on to indicate “[t]o succeed on appeal, then, the defendants must also show that the variance “prejudiced [them — that] it ‘affect[ed] [their] substantial rights.’”[39] Basically, the DOJ was able to produce evidence of other parents’ conduct at trial that had absolutely nothing to do with Abdelaziz and Wilson.  The Decision also noted earlier in the opinion a fact that clearly influenced their findings: “Singer himself did not testify at trial, despite having cooperated with the investigation. The government did, however, introduce a substantial amount of evidence related to other parents’ work with Singer without showing that Abdelaziz or Wilson were personally aware of those activities.”[40]  The Decision held “…we agree with the defendants that the risk of evidentiary spillover in this case rendered prejudicial the variance between the broader conspiracy charged in the indictment and the narrower ones shown at trial.”[41]

Wilson’s Conviction For Filing A False Tax Return

For the sake of completeness, the Decision affirmed Wilson’s Conviction for Filing a False Tax Return.[42]

CONCLUSION

The Decision identified a need for Congress to draft more specific laws to deal with “honest services fraud”; it was very narrow in relation to the whether or not, and specifically based on these facts, that the admissions slots were “property”; and it clearly defined the elements necessary to prove a conspiracy and the dangers of using evidence about individuals in other, similar but not the same, cases to accuse and convict at trial Wilson and Abdelaziz.

It is a well-reasoned opinion that will likely withstand appeal.  However, given the anger of USA parents about wealthy people “gaming the system”, several elements of the Decision will likely be addressed by Congress (more specific language regarding honest services fraud), and the US Supreme Court (definition of property in relation to admissions slots).

SPORTS FABRICATION (the “SIDE DOOR”)

The possible legitimacy of the Side Door strategy created and promoted by Singer remains an intriguing area.  Revenue generated by college athletics generated US$15.8 billion in 2019 for Division I programs.[43]  However, the number of schools (almost exclusively large Division I) and specific sports (football and basketball) evidencing a net surplus of revenue over expenses in relation to these programs, is much smaller and most other institutions and teams are losing money.[44]

This reality was the foundation of the Side Door, which ostensibly sought to address the shortfall endemic in lesser sports like tennis and water polo.  The fact Singer’s Side Door has been condemned, at least in the court of public opinion, does not change this reality.  It would be foolish to think others will not try to improve upon the Side Door to achieve the dual objectives of (1) wealthy parents “gaming the system” so their kids can get into elite universities based on fabricated sports credentials; and (2) universities seeking revenue generating opportunities to support money losing sports teams.

EXAM ADMINISTRATORS CHEATING

Perhaps the most interesting, non-sports-related guilty plea was that entered by Mark Riddell, a Harvard alumnus, who admitted taking college entrance exams, for a fee, for children of wealthy parents.[45]  Given the potential upside of attending an elite university and earning a degree from the same, one can be assured Exam Administrators Cheating, whether during preparation for, during or after the tests have been taken is and will continue to be widespread.

The difficulty is the moral dilemma faced by, for example, proctors, who are paid a pittance for policing exams.  Proctors are usually already low-paid individuals in their real jobs, and they are providing this service to earn some – much needed – additional revenue.  If approached by someone flashing US$10,000, as in the case of Mark Riddell (albeit not a proctor), such people might choose the “bribe” for the benefit of their family over “doing the right thing”.  In fact, they may even reason taking the “bribe” and looking the other way was the morally correct thing to do.

Money, training, and vigilance remain the only means by which to address this problem.  Applying the lessons learned from the Decision is required.

INTERNATIONAL

Many international investigations being handled by I-OnAsia at the moment point to other problems. The legal issues surrounding cracking down on cheating in foreign jurisdictions can be formidable. And there are costs. But international schools and training academies throughout Asia tout their abilities to assist kids to gain admission to “elite” USA universities.

For more information on exam cheating investigations and test security services, contact James Tunkey via James@ionasia.com.hk

Reference

[1] Please note this Memorandum and its contents are not and should not be construed to be legal advice.

[2] Buckley School Whistleblower Stumbled Onto Rick Singer’s Fake College Applications Long Before Admissions Scandal, CBS, July 31, 2019, https://www.cbsnews.com/losangeles/news/buckley-school-whistleblower-stumbled-onto-rick-singers-fake-college-applications-long-before-admissions-scandal/.

[3] Must Reads: The bizarre story of the L.A. dad who exposed the college admissions scandal, Los Angeles Times, March 31, 2019, https://www.latimes.com/local/lanow/la-me-morrie-tobin-college-admissions-scandal-20190331-story.html.

[4] Like an indictment, an information is a formal charging document that describes the criminal charges against a person and the factual basis for those charges. Unlike an indictment, however, an information does not require a grand jury’s vote.

[5] Information, Case 1:19-cr-10078-RWZ, https://www.justice.gov/file/1142901/download.

[6] Ibid.

[7] College admissions scam mastermind sentenced to 3.5 years in federal prison, CNN, January 4, 2023, https://edition.cnn.com/2023/01/04/us/william-rick-singer-sentencing-college-admissions-scandal/index.html.

[8] Affidavit in Support of Criminal Complaint, https://games-cdn.washingtonpost.com/notes/prod/default/documents/d216435e-e073-41f6-b6fa-33ed835d053d/note/1310d5d4-ef15-4ea9-ad35-5edaac10cbb5.pdf#page=1.

[9] Other conduct of note included using a charitable organization to conceal the source and nature of laundered bribery payments.

[10] An End to Affirmative Action? Why the College Admissions Scandal Could Fulfill Critics’ Wish to Scrap Race-Based Program, Newsweek, March 22, 2023, https://www.newsweek.com/2019/04/12/affirmative-action-college-admissions-statistics-scandal-1372652.html.

[11] Law 360’s Pro Say – News & Analysis on Law and the Legal Industry, EP 220: Lessons from the first Varsity Blues Guilty Verdict, https://podcasts.apple.com/us/podcast/law360s-pro-say-news-analysis-on-law-and-the-legal-industry/id1240435608?i=1000538732198.  See also 2 parents are convicted in the 1st trial of the ‘Varsity Blues’ admission scandal, NPR, October 8 2021, https://www.npr.org/2021/10/08/1044510811/varsity-blues-conviction-college-admissions-scandal.

[12] Wealthy parents, actresses, coaches, among those charged in massive college cheating admission scandal, federal prosecutors say, CNN, March 13, 2019, https://edition.cnn.com/2019/03/12/us/college-admission-cheating-scheme/index.html.  See also March 12, 2019, NBC News, https://www.nbcnews.com/news/us-news/feds-uncover-massive-college-entrance-exam-cheating-plot-n982136.

[13] Investigations of College Admissions and Testing Bribery Scheme, USA Department of Justice, January 6, 2023, https://www.justice.gov/usao-ma/investigations-college-admissions-and-testing-bribery-scheme.

[14] Netflix’s ‘Fuller House’ drops Lori Loughlin after college bribery scandal: report, The Hill, March 16, 2019, https://thehill.com/blogs/in-the-know/in-the-know/434377-netflixs-fuller-house-drops-lori-loughlin-after-college-bribery/.  See also Lori Loughlin Begins Serving 2 Month Prison Sentence For College Admissions Scam, CBS News, October 30, 2020, https://www.cbsnews.com/boston/news/lori-loughlin-prison-sentence-serving-college-admissions-scam/.  Felicity Huffman Gets 14 Days in Jail and a Fine for Her Role in Operation Varsity Blues, Vulture, September 13, 2019, https://www.vulture.com/2019/09/felicity-huffman-jail-sentence-college-admissions-scandal.html.

[15] College cheating scandal: Lawsuits filed by students at elite schools, NBC News, March 14 2019, https://www.nbcnews.com/news/us-news/college-cheating-scandal-first-lawsuits-filed-students-elite-schools-n983211.  See also Celebrities lose work, students sue U.S. colleges in admissions scandal, Reuters, March 14, 2019, https://www.reuters.com/article/us-usa-education-cheating/spurned-students-sue-us-colleges-in-admissions-scandal-idUSKCN1QV20W.  Felicity Huffman, Lori Loughlin & Others Sued by Angry Parent for $500 Billion Over College Admissions Scandal, CBS, March 14, 2019, https://www.etonline.com/felicity-huffman-lori-loughlin-others-sued-by-angry-parent-for-500-billion-over-college-admissions.

[16] Yale rescinds admission of a student whose family paid $1.2 million to get her in, CNN, March 26, 2019, https://edition.cnn.com/2019/03/25/us/yale-rescinds-student-admissions-scandal/index.html.  See also Stanford expels student in connection with college-fraud scheme, Palo Alto Weekly, April 8, 2019, https://paloaltoonline.com/news/2019/04/08/stanford-expels-student-in-connection-with-college-fraud-scheme.

[17] Investigations of College Admissions and Testing Bribery Scheme, USA Department of Justice, January 6, 2023, https://www.justice.gov/usao-ma/investigations-college-admissions-and-testing-bribery-scheme.

[18] Mark Riddell, college admissions scandal test-taker, pleads guilty, NBC News, April 13, 2019, https://www.nbcnews.com/news/us-news/harvard-alum-who-took-exams-students-college-admissions-scandal-pleads-n993956.

[19] United States Court of Appeals For the First Circuit, No. 22-1129 and No. 22-1138, http://media.ca1.uscourts.gov/pdf.opinions/22-1129P-01A.pdf.

[20] Ibid, page 3.

[21] Kotteakos v. United States, 328 U.S. 750 (1946), Justia Connect, https://supreme.justia.com/cases/federal/us/328/750/. “A conspiracy does not necessarily arise when one person has criminal interactions with two or more people who have no connection with each other, despite their connection to the original person.”

[22] United States Court of Appeals For the First Circuit, No. 22-1129 and No. 22-1138, http://media.ca1.uscourts.gov/pdf.opinions/22-1129P-01A.pdf, pages 24 and 25.

[23] Ibid, page 25.

[24] Ibid, page 41.

[25] Ibid, page 56.  A detailed discussion of the Decision regarding this point is well-beyond the scope of this Memorandum.

[26] The Law Dictionary, https://thelawdictionary.org/property/.  “The ownership of a thing is the right of one or more persons to possess and use it to the exclusion of others.” See also Encyclopedia Britannica, https://www.britannica.com/topic/property-legal-concept.  “property, an object of legal rights, which embraces possessions or wealth collectively, frequently with strong connotations of individual ownership. In law the term refers to the complex of jural relationships between and among persons with respect to things.”

[27] United States Court of Appeals For the First Circuit, No. 22-1129 and No. 22-1138, http://media.ca1.uscourts.gov/pdf.opinions/22-1129P-01A.pdf, page 57.

[28] Ibid.

[29] Ibid, 59. “We emphasize the narrowness of our holding: We do not hold that admissions slots cannot ever be property. Nor do we hold that the jury instruction given by the district court could never be appropriate. The resolution of these questions will require much more detail, both legal and factual, on the nature of the purported property interest at issue.”

[30] Ibid, page 72.  “We recognize that our analysis leaves considerable uncertainty as to how district courts should apply the mail and wire fraud statutes’ property requirement in cases involving admission to educational institutions. There are sound reasons to be prudent and cautious about criminalizing conduct, even unethical conduct, in this complicated area affecting so many students and parents.”

[31] Cornell Law School, https://www.law.cornell.edu/wex/conspiracy.  “Conspiracy is an agreement between two or more people to commit an illegal act, along with an intent to achieve the agreement’s goal.” See also Encyclopedia Britannica, https://www.britannica.com/topic/conspiracy.  “conspiracy…an agreement between two or more persons to commit an unlawful act or to accomplish a lawful end by unlawful means.”

[32] Ibid, page 73.

[33] Ibid, page 77.

[34] Ibid, page 73.

[35] See footnote 21.

[36] United States Court of Appeals For the First Circuit, No. 22-1129 and No. 22-1138, http://media.ca1.uscourts.gov/pdf.opinions/22-1129P-01A.pdf, page 86.

[37] Ibid, page 89.  “We do not say that, on different evidence, it would be impossible for any parent who sought out services from Singer and the core group to have adopted the common goal of advancing the success of children seeking admission though side doors. Some parents may have had an interest in the broader success of the venture.”

[38] Ibid, page 106.

[39] Ibid, page 107.

[40] Ibid, page 26.

[41] Ibid, page 123.

[42] Ibid, page 155.

[43] Analysis: Who is winning in the high-revenue world of college sports?, PBS, March 18, 2023, https://www.pbs.org/newshour/economy/analysis-who-is-winning-in-the-high-revenue-world-of-college-sports#:~:text=Division%20I%20athletics%20generated%20%2415.8,among%201%2C100%20colleges%20and%20universities..

[44] Ibid.

[45] See footnote 18.