Commercial Real Estate Execs Arrested In Massive Bribery Scheme To Get Kids Admitted To Elite Universities
CEOs and presidents of major real estate and development companies were among the more than two dozen prominent and well-heeled parents involved in a massive $25M bribery scheme to get their kids admitted to some of the nation’s most elite universities.
Crown Realty & Development founder and CEO Robert Flaxman, WP Investments President Bruce Isackson, Dragon Global CEO Robert Zangrillo and John B. Wilson, a founder and CEO of an undisclosed private equity and real estate development firm, were among the 32 defendants charged with conspiracy to commit mail and wire fraud, according to a criminal complaint filed by the U.S. Department of Justice in Massachusetts.
Other big names caught up in the scheme include Douglas Hodge, the former CEO of Pacific Investment Management Co. (PIMCO); actors Felicity Huffman and Lori Laughlin; Laughlin’s husband, fashion designer Mossimo Giannulli; and Hercules Technology Chairman and CEO Manuel Henriquez.
Another 18 suspects that include former university athletic coaches, university administrators and teachers were also indicted with charges that range from money laundering conspiracy and racketeering to obstruction of justice.
The U.S. Attorney’s office has identified William Singer as the alleged ringleader of the scheme. Singer is CEO of the nonprofit Key Worldwide Foundation and owner of the for-profit Edge College & Career Network.
“Singer allegedly conspired with dozens of parents, athletic coaches, a university athletics administrator, and others, to use bribery and other forms of fraud to secure the admission of students to colleges and universities including Yale University, Georgetown University, Stanford University, the University of Southern California, and Wake Forest University, among others,” according to a news release released by the U.S. Attorney’s office Tuesday.
Singer pleaded guilty to the charges, according to the LA Times, which cited court records.
The U.S. Attorney’s office alleges the scheme ran from 2011 to February 2019.
According to the U.S. Attorney’s office, parents agreed to contribute to Singer’s nonprofit and/or company, giving as much as $250K per student, in return for having their child admitted to a university as a faux student-athlete. The parents would then write off the money as a charitable donation. Singer and those purported to be part of the scheme would use that money to bribe coaches, university officials and others to secure the student's spot, according to the U.S. Attorney's office.
For example, a cooperating witness told law enforcement that Isackson and his wife, Davina, "agreed with him (the witness) to use bribery to secure their older daughter’s admission to college as a recruited athlete."
A cooperating witness who worked for Singer told agents their company created a fake soccer profile of Isackson's older daughter and later gave $25K to former USC head coach of women's soccer Ali Khosroshahin and $100K to a sports marketing company controlled by UCLA's men soccer coach Jorge Salcedo.
After their oldest daughter was accepted to UCLA as a soccer player, the Isacksons contributed $250K in Facebook stock to Singer’s nonprofit, according to the criminal complaint.
The couple also wanted “to secure their younger daughter’s admission to USC as a purported rowing recruit, even though she was not competitive in rowing, but instead was an avid equestrian.”
The cooperating witness told federal agents the company flew in someone, who is another witness, from Tampa, Florida, to proctor the Isackson's younger daughter's ACT college entrance exam and later bribed USC Senior Associate Athletic Director Donna Heinel.
The younger daughter was later accepted to USC as a rower. The Isacksons then sent $249K in Facebook stock to Singer's nonprofit.
The criminal complaint also alleges Flaxman, the founder of Crown Realty, participated in the recruitment scheme for his son and the college entrance exam scheme for his daughter. The cooperating witness alleges Flaxman paid $250K after Flaxman's son was admitted to the University of San Diego as a soccer player and another $75K for his daughter's SAT and ACT score.
"[A cooperating witness] has advised investigators that he assisted Flaxman's daughter and [another] student to answer questions on the exam, and instructed them to answer incorrectly so that they did not have the same incorrect answers on their tests, and the ACT would therefore not suspect cheating," the complaint read.
Flaxman's daughter received a score of 28, which places her in the 88th percentile nationally. Months earlier she had scored a 24, the complaint read.
Wilson, the founder and CEO of an undisclosed private equity and real estate development company, is accused of conspiring "to bribe Jovan Vavic, the USC water polo coach, to designate his son as a purported recruit to the USC men’s water polo team, thereby facilitating his admission to USC. Wilson also sought to use bribes to obtain the admission of his two daughters to Stanford University and Harvard University as recruited athletes," according to the criminal complaint.
The U.S. Attorney's office alleges Zangrillo, the founder and CEO of a Miami-based private investment firm focused on venture capital and real estate investment, "conspired to bribe athletic department officials at USC to designate his daughter as an athletic recruit ... as well as to have [the witness'] employee, Mikaela Sanford, secretly take classes on behalf of his daughter."
After being initially rejected at USC in 2017, the following year Zangrillo's daughter was accepted to USC as a transfer for the spring 2019 semester. Sanford allegedly retook classes that Zangrillo's daughter failed or had low marks in. Heinel, the USC senior associate athletic director, had advocated on Zangrillo's daughter's behalf to the admissions committee.
Zangrillo later donated $200K to Singer’s nonprofit and $50K to USC Women's Athletics.
On Tuesday, USC fired Heinel and USC water polo coach Jovan Vavic, according to reports.