“It all comes down to: Life isn’t fair. Sometimes that’s just the way it is. That’s not always a federal crime unless there is deceit.” Attorney Steve Frank summed up a reality of the college admission process during an event at BC Law on the national case known as the Varsity Blues Scandal.
The Criminal Law Society hosted the November 2 panel of three attorneys who worked on the prosecution and defense. Frank is chief of the Securities, Financial & Cyber Fraud Unit of the US Attorney’s Office for the District of Massachusetts and was the lead prosecutor for the US Attorney’s Office on the variety of Varsity Blues cases. Anthony Fuller of Hogan Lovells represented the University of Southern California (USC), and Nixon Peabody’s Joshua Sharp defended one of the parents charged with making payments to get his child into college. BC Law Associate Professor Jeffrey Cohen moderated the discussion.
Frank began the conversation with an overview of the investigation and trial. The code name for the investigation was “Operation Varsity Blues,” a ruse that became front page news when more than four dozen individuals were charged with a variety of crimes, including conspiracy to commit wire fraud, money laundering, substantive wire fraud, and—for a few defendants—even tax fraud, in efforts to influence admission decisions for applicants to several universities. Although the cases spanned the country, the US Attorney’s Office in Boston handled the prosecution.
The individuals were parents, coaches, and university administrators as well as test proctors who helped with the reported test cheating. Rick Singer, who owned two firms involved in the scheme, was charged as its architect, with the allegation, as Frank put it, that “Singer and his associates had masterminded a scheme to basically get high school students into the colleges of their choice. We charged the coaches and Singer’s insiders with racketeering and conspiracy, for basically running a criminal enterprise that was devoted to committing these kinds of crimes.”
Complicating the case was the question of how involved the schools were in the subterfuge, which, in many instances, entailed working through the college athletic recruitment system. “These parents had basically paid bribes to insiders at the universities to get the universities to recruit their kids for the teams, mostly for money,” Frank explained. “By recruiting the team, it essentially gave them guaranteed admission into the school.”
For his part, Fuller, who represented the USC, offered his opinion on universities’ perspectives. He said that unlike other admission scandals, the government, rather than the schools, initiated the investigation, which meant they communicated directly with the government as to where the money went.
Fuller argued that the university can be seen as the victim in these circumstances. In essence, one alleged scheme orchestrated by Singer was to use the athletic recruiting “back door” to get children of parents willing to pay large sums into USC. Athletic recruits were virtually guaranteed admission spots if the coach was willing to designate a recruitment spot to a student athlete. Instead, Singer arranged for athletic spots to go to students who were unqualified so long as the parents were willing to make handsome payments to Singer and the coaches. According to Fuller, at USC, the admissions officers were unaware that parents of recruits were paying coaches to secure spots on teams that they their children never intended to play on.
Frank added his own perspective, stating that “the admissions office was duped. Our allegation was that the coaches were duping their colleagues. It was the coaches who had the responsibility to say, these are the people I want for my team.” It was the coaches’ recommendation that played a huge factor for the admissions committee in determining who to accept. Coaches started by taking money for their programs, but then eventually started taking it to their pockets. It might seem odd to think that the universities were getting an influx of money and not know the source. However, as Frank put it, “the universities knew they were getting the money, but they didn’t know the reason for the money.”
As one of the defense attorneys during the trial, Sharp led the discussion as to why his client went to trial and what he saw as the strength of his client’s position.
Sharp started by explaining the process of actually going to trial. “It’s very difficult to take a case to trial because the stakes are so high,” he said. “When the government is offering plea deals, clients want to take those deals because they want certainty, and the conviction rate is very, very high. You have to have a client who really believes in their innocence to take the case to trial.” Sharp continued, “In my client’s case, the government acknowledged that my client thought the money was going to the school, not the coach’s pocket.”
Although Sharp’s client lost at trial, he successfully appealed to the First Circuit. There, Sharp and his team argued that the government’s theory that USC could be both the victim of the fraud and the recipient of the bribe payment was inconsistent and against the meaning of the mail fraud statute. “The reason we won on appeal was that the court ruled you can’t have a services fraud where the bribe money itself is going to the victim. The person purported of being deceived was also the one that was receiving the money,” Sharp said. To make matters worse for the government, he posited that a mail fraud scheme must deprive the victim of some “property.” In this case, Sharp argued, admission slots at universities do not meet the traditional definition of “property.”
Frank disagreed. From his perspective, the admission slots counted as traditional property because there were only so many of them. “[The universities] don’t have literal space,” he said. “They were duped into giving up one of those precious admission slots.”
The First Circuit’s decision did not resolve the matter, but did side with the defendants by stating that, in this case, the admission slots were not proven to be property in the traditional sense, although the court left open the possibility that in another case the result could be different.
Photograph by Vicki Sanders