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Actresses Felicity Huffman, Lori Loughlin Among Those Being Charged in College Entrance-Exam Scheme; Authorities Hold News Conference on College Entrance-Exam Cheating Scheme. Aired 11:30-12p ET

Aired March 12, 2019 - 11:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(COMMERCIAL BREAK)

[11:31:19] KATE BOLDUAN CNN ANCHOR: We have breaking news out of Boston right now. At least a dozen people, including Actresses Felicity Huffman and Lori Loughlin, are facing charges in a college entrance-exam scheme, a nationwide college cheating scam that justice officials say they have uncovered with a lot of indictments. We are waiting to hear from federal authorities. They are supposed to be holding a news conference to update reporters any minute now. We'll bring it to you because it is wide ranging and it is complicated.

Let me get over to Brynn Gingras, who has been following - actually, I am being told the press conference is starting right now. Let's go there and listen in, in Boston.

ANDREW LELLING, U.S. ATTORNEY, DISTRICT OF MASSACHUSETTS: Good morning. We are here today to announce charges in the largest college admissions scam every prosecuted by the Department of Justice. We have charged -- (VIDEO PROBLEM) -- college entrance exams, meaning the SAT and the ACT. And second, securing admission to elite colleges by bribing coaches at those schools to accept certain students under false pretenses. In return for bribes, these coaches agreed to pretend that certain applicants were recruited competitive athletes, when, in fact, the applicants were not. As the coaches knew, the student's athletic credentials had been fabricated.

Overall, today, we have charged three people who organized these scams, two SAT or ACT exam administrators, one exam proctor, one college administrator, nine coaches at elite schools, and 33 parents who paid enormous sums to guarantee their children's admission to certain schools through the use of bribes and fake academic and athletic credentials.

A central defendant in the scheme, William Singer, will plead guilty today to charges of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States and obstruction of justice.

Singer allegedly ran a college counseling service and something called the Key Worldwide Foundation. Between roughly 2011 and 2018, wealthy parents paid Singer about $25 million in total to guarantee their children's admission to elite schools, including Yale, Georgetown, Stanford, the University of Southern California, the University of Texas, UCLA and Wake Forest. Beyond enriching himself, Singer used that money to bribe college officials, Division I coaches, college exam administrators, all to secure admission to the children of his clients not on their merits but through fraud.

Singer's foundation purported to be a charitable organization but was a front Singer used to launder the money that parents paid him of which he would take a portion and dole it out as bribes to coaches and others.

More specifically with respect to the SAT and ACT scheme, numerous parents paid Singer between $15,000 and $75,000 to have someone either take the exam for their child or to correct their child's answers afterward, all to achieve a sufficiently high pre-agreed score on those tests. Singer accomplished this by paying defendant, Mark Riddell, also charged today, to take or correct the exams and by bribing two exam administrators, defendants, Nicky Williams and Igor Devorski (ph), to allow this to happen on their watch. Singer paid Williams about $5,000 per student and Devorski (ph) about $10,000 per student.

[11:35:16] To facilitate the scam, Singer counseled parents to take their children to a therapist and get a letter saying that, because of purported learning disabilities or other issues, the child needed additional time to complete the ACT or the SAT. Once the companies that administer those exams had agreed to the extra time, Singer arranged for the child to take the exam individually with one of the proctors he had bribed or one of the administrators he had bribed either at a location in Houston or a location in California.

Beyond the SAT and ACT scam, parents also paid Singer money that he then used to bribe coaches and administrators to designate their children as recruited athletes for various schools. In return for bribes, coaches would use slots that their schools had allocated to them for the recruitment of athletes, instead to take the applicants Singer had identified. Singer worked with the parents to fabricate impressive athletic profiles for their kids, including fake athletic credentials or honors or fake participation in elite club teams. In many instances, Singer helped parents take staged photographs of their children engaged in particular sports. Other times, Singer and his associates used stock photos that they pulled off the Internet, sometimes Photoshopping the face of the child onto the picture of the athlete and submitting it in support of the applications for these children to elite schools.

In one example, the head women's soccer coach at Yale, in exchange for $400,000, accepted an applicant as a recruit for the Yale women's team despite knowing that the applicant did not even play competitive soccer. The student was, in fact, admitted and afterward the student's family paid Singer $1.2 million for that service.

In addition to the standardized test scam and college admissions scam, Singer also arranged for someone to take online high school classes in place of certain students so that those students could submit higher grades as part of their overall college application packages. The parents' payments to Singer for the services were made, at least

in part, as charitable contributions to the sham charity that Singer had set up. At his direction, employees of the charity sent Singer's clients acknowledgment letters falsely confirming that no goods or services have been exchanged for the purported donation. This enabled the parents to not only mask the true nature of the payment, but also take the tax write-off at the end of the year.

Today, we have charged 33 parents nationwide with hiring Singer's group to defraud testing companies and/or various universities. These parents are a catalog of wealth and privilege. They include, for example, CEOs of private and public companies, successful securities and real estate investors, two well-known actresses, a famous fashion designer, and the co-chairman of a global law firm. Based on the charges unsealed today, all of them knowingly conspired with Singer and others to help their children either cheat on the SAT or ACT and/or buy their children's' admission to elite schools through fraud. Singer's clients paid him between $100,000 and $6.5 million for the service, though, the majority paid between $250,000 and $400,000 per student.

This case is about the widening corruption of elite college admissions through the steady application of wealth combined with fraud. There can be no separate college admissions system for the wealthy, And I will add there will not be a separate criminal justice system either.

Every year, hundreds of thousands of hardworking, talented students strive for admission to elite schools. As every parent knows, these students work harder and harder every year in a system that appears to grow more and more competitive every year. And that system is a zero- sum game. For every student admitted through fraud, an honest, genuinely talented student was rejected.

The parents' charge today despite already being able to give their children every legitimate advantage in the college admissions game instead chose to corrupt and illegally manipulate the system for their benefit. We are not talking about donating a building so that a school is more likely to take your son or daughter. We are talking about deception and fraud, fake test scores, fake athletic credentials, fake photographs, bribed college officials.

[11:40:22] As you can see from the various charging documents unsealed today in this case, the investigation was complex and extremely labor intensive. Two defendants will plead guilty this afternoon. As I mentioned before, William Singer will plead guilty at 2:30 today in this courthouse. And John Vandemoer, who is the head sailing coach at Stanford University, will also plead guilty today at 3:00 p.m.

I want to thank the four prosecutors in my office who were assigned to this investigation for their extraordinary work on this case. The lead prosecutor on this matter, Eric Rosen, is up here with me today. I also want to thank the FBI and the IRS for their usual

professionalism and skill in the investigation and the takedown of this case. The takedown today involved over 200 federal agents nationwide who arrested 50 people in six states and on both coasts. With that, I will hand things over to Joe Bonavolonta, who is the

special agent in charge of the Boston office of the FBI.

Thank you.

JOE BONAVOLONTA, SPECIAL AGENT IN CHARGE, FBI BOSTON FIELD OFFICE: Thank you, Andy.

Once again, my name is Joe Bonavolonta. I am the special agent in charge of the FBI Boston Division.

Operation Varsity Blues culminated early this morning when approximately 300 special agents from the FBI and the IRS Criminal Investigations set out to arrest 46 individuals across the country for their roles in an international college admissions bribery and money laundering scam. So far, 38 individuals have been safely taken into custody and seven are working toward surrender. One is being actively pursued. Another four are expected to plead guilty here in Boston, two later today, and two in the coming weeks. We believe all of them, parents, coaches and facilitators, lied, cheated and covered up their crimes at the expense of hardworking students and taxpayers everywhere.

Our investigation began last May after we uncovered evidence of a large-scale elaborate fraud while working an unrelated undercover operation. Following 10 months of intense investigative efforts using a variety of sophisticated techniques, the FBI uncovered what we believe is a rigged system, robbing students all over the country of their right at a fair shot to getting into some of the most elite universities in this country, such as Yale, Stanford and Georgetown. We believe everyone charged here today had a role in fostering a culture of corruption and greed that created an uneven playing field for students trying to get into these schools the right way through hard work, good grades and community service. Unfortunately, what many students didn't know was that the odds had already been stacked against them by corrupt practices, including but not limited to bribery, falsification of athletic profiles, and near-perfect SAT and ACT scores that were fraudulently obtained on behalf of other students when, in realty, they were far from perfect.

Make no mistake, this is not a case where parents were acting in the best interests of their children. This is a case where they flaunted their wealth, sparing no expense to cheat the system so they can set their children up for success with the best education money can buy literally. Some spent anywhere from $200,000 to $6.5 million for guaranteed admission. Their actions were, without a doubt, insidious, selfish and shameful. And the real victims in this case are the hardworking students who did everything they could to set themselves up for success in the college admissions process but ended up being shut out because far less qualified students and their families simply bought their way in.

What's also a cause for concern is how this was even allowed to happen in the first place. Evidence we have obtained shows that trusted coaches and administrators manipulated the systems their universities had in place to accommodate students with fake athletic credentials, some of whom did not even play the sports they were recruited to play. It is a sham that strikes at the core of the college admissions process at universities across the country. And the alleged master mind behind it, Rick Singer, offered a variety of cheating options as part of a widespread conspiracy while facilitating cheating on ACT and SAT exams, recruiting applicates on competitive athletic teams in exchange for bribes, and concealing the nature and source of those bribes. There's no telling what their school of thought was while carrying out the conspiracy but today's arrests should be a warning to others: You can't pay to play. You can't lie and cheat to get ahead because you will get caught.

[11:45:46] This was a complex and demanding investigation. And it was charged accordingly. The use of the RICO statute signals the magnitude of the criminal enterprise and the seriousness of the crimes.

I would like to personally recognize the investigators and prosecutors who pursued this case. However, our work is not done. Our investigation continues and we will continue to find and stop those who are not playing by the rules because, as you can see in this case, the impact on every day people is real, has consequences and broad- ranging effect.

My sincerest appreciation for the tremendous work done by the United States attorney and his team, as well as my thanks to special agent in charge, Kristina O'Connell, and her folks at the IRS Criminal Investigation for their continued partnership and support. This was truly a team effort.

Thank you.

KRISTINA O'CONNELL, SPECIAL AGENT IN CHARGE, IRS CRIMINAL DIVISION, BOSTON FIELD OFFICE: Good morning, and thank you all for being here. I would like to thank U.S. attorney, Andrew Lelling, and FBI special agent in charge, Joseph Bonavolonta, for the opportunity to address you here today.

Again, my name is Kristina O'Connell. I am the special agent in charge of the IRS Criminal Division of the Boston field office.

This morning, special agents from IRS Criminal Investigation alongside the FBI arrested dozens of individuals for their role in a nationwide scheme to exchange bribes for college admissions. At the center of the sweeping financial crime is William Rick Singer. Singer and the others arrested today conspired to not only make and receive bribes, but to also funnel the bribe payments for a bogus charity founded by Singer. Utilizing this charitable business facade, Singer was able to conceal the true source and nature of the bribe payments. Then, to further the false legitimacy, Singer advised parents making the bribes that they could deduct the illicit payments as charitable donations on their own individual income tax returns.

Overall, IRS Criminal Investigation and the FBI traced over $25 million in bribes laundered through this alleged charity founded by Singer. Overall, our investigators also revealed that the true objective of those involved was not charity at all, but greed. IRS Criminal Investigation will continue to collaborate with our law

enforcement partners and the United States attorney's office on the complex financial investigations to ensure the honest American taxpayers receive the message that IRS Criminal Investigation will never let financial corruption and greed Trump hard work and honest effort.

Thank you.

LELLING: Questions?

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: It appears to be a conspiracy nationwide in scope. There are several connections to the Boston area. So fake test scores, for example, were submitted to Boston College, Boston University and Northeastern. Two of the defendants live in this state. A lot of the conspiratorial activities, phone calls, meetings, did happen here. And we frankly had resources and the sophistication to takedown a case of this magnitude.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: We don't know the total number. As Special Agent in Charge Bonavolonta mentioned, this is still ongoing. The 33 parents that we have charged, their children were able to get in somewhere. There are more than that, but I'm not prepared to give you a total.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: More than that, but I'm not prepared to give you a total.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: I'm sorry?

UNIDENTIFIED REPORTER: Is anything going to happen to the students?

LELLING: There are two aspects to that question. What is the reaction of the schools they go to? We leave that to the schools. That's not my bailiwick. As to charges against them, we're still considering that. It's not an accident that there are no students charged in these charging documents. The parents, the other defendants are clearly the prime movers of this fraud. It remains to be seen whether we charge any of the students.

(CROSSTALK)

[11:50:10] UNIDENTIFIED REPORTER: What degree of the students graduate? In the sense of the students that got in fraudulently, will they graduate with degrees?

LELLING: I don't know the answer to that question.

(CROSSTALK)

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: I'm sorry?

UNIDENTIFIED REPORTER: Those two parents, Felicity Huffman and Lori Loughlin, it sounds like they took two different routes. Can you go into detail about that?

LELLING: There were essentially -- I'll speak more broadly. There are essentially two kinds of fraud that Singer was selling. One was to cheat on the SAT or ACT, and the other was to use his connections with Division I coaches and use bribes to get these parents' kids into school with fake athletic credentials. Some parents took advantage of one. I think Ms. Huffman, for example, took advantage of one of these, which was the SAT cheating scam. Some took advantage of the other, and some took advantage of both. There's no pattern that way.

UNIDENTIFIED REPORTER: Any answers as to why she didn't do it for her second child?

LELLING: I can't comment on that.

UNIDENTIFIED REPORTER: Can you tell us more about how you guys uncovered this?

LELLING: I think I can say that our first lead in this case came during interviews with a target of an entirely separate investigation who gave us a tip that this activity might be going on.

UNIDENTIFIED REPORTER: How did Rick Singer get this started? How did he build up all these connections?

LELLING: I think he began in this college counseling business years and years ago and built up his connections over time. Beyond that, I can't really comment. As you can tell from the charging documents, the recruitment part of the scam depended on the personal relationships he had established with Division I coaches at a variety of elite schools.

(CROSSTALK)

UNIDENTIFIED REPORTER: The students are minimally involved in the exam cheating, but for a lot of these things, in terms of the scam, how involved were the students? How much did they know was going on?

LELLING: That varies tremendously. For example, when you look at the complaints affidavit, it's quite long, you'll see where it's important to the parents that their child not know this occurred. In that kind of instance, the student would actually go and take the exam and someone work for Singer would come in afterward and correct the answers, submit the exam. In some instances, however, the child did know. In fact, there's an instance in the complaints affidavit where a particular defendant and his daughter are on conference call with Singer to discuss the scam. So there was a pretty wide range of how parents tried to play this. And Singer, I think, attempted to accommodate whatever the parents wanted to do.

UNIDENTIFIED REPORTER: The people taking these bribes, was it for personal gains or sometimes for the athletic programs at the school?

LELLING: It was both. There's one coach who did not take any of the money for himself. The other coaches all took some money for themselves, some took all of it for themselves, but most, it appears, gave portions to the school's program and took some for their own use.

UNIDENTIFIED REPORTER: Was this case tied to the other case? Was this the Jerome Allen (ph) case?

LELLING: No, it was not.

UNIDENTIFIED REPORTER: You said there were victims of the admissions. Can you elaborate on that?

LELLING: They all received test scores that were artificially inflated through the cheating scandal. In one instance, as you'll see in the complaint, it appears one of the defendants entered a quid pro quo with Singer where Singer would help that defendant's student commit fraud, and in exchange, the parent would help one of Singer's other clients with admission to Northeastern University. I know it's a little confusing but you'll see that in the complaint.

UNIDENTIFIED REPORTER: There's no evidence that the schools knew anything about this? They just believed it?

LELLING: I think that's an important distinction to draw. It appears the schools are not involved. It appears that in all of these instances, with the exception of one USC administrator who we have charged, University of Southern California administrator that charged, coaches were allotted slots for athletic recruitment, the coaches worked with Singer, meaning they accepted bribes. Singer gave the coaches sufficiently impressive fake athletic credentials. The coaches used those athletic profiles to convince everyone internally that this was a good recruit for the team, the person was admitted, and the coach pocketed the bribe.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

[11:55:03] LELLING: It's a little premature for that. The statutes that we charge people under all have very high statutory maximums. But the actual sentence someone might face, we just don't know that yet. It's very premature for that. Some of these bribes are substantial, bribes between, as I said, usually $250,000 and $400,000. Actually, I should say donations to Singer from which he made these bribes of college coaches. It's a little premature to say what ranges of sentencing they might be in.

UNIDENTIFIED REPORTER: Are there corroborating witnesses?

LELLING: As you guys know, and as you can see in the complaint affidavit, we do occasionally flip targets and they wind up cooperating, but I can't comment on whether any of these people will. I will say that the investigation remains active. These are not the only parents involved. We suspect these probably aren't the only coaches involved. And so we will be moving ahead to look for additional targets. (CROSSTALK)

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: I'm sorry?

UNIDENTIFIED REPORTER: Did Singer ever work for one of these major universities before?

LELLING: Meaning was he an employee of one of these universities?

UNIDENTIFIED REPORTER: Right, as an administrator. Did he get his start that way?

LELLING: Sitting here now, I don't know that. I'm sorry.

UNIDENTIFIED REPORTER: Any criminal history?

LELLING: I'm not going to comment on that.

UNIDENTIFIED REPORTER: You said he's planning on pleading guilty today. What's been the conversation that led up to that? Obviously, he didn't hear about the charge just this morning.

LELLING: I can't shed a lot of light on that because most of it is confidential. I can state the obvious, which is that we identified Singer some time ago and he has decided, under a plea agreement, to plead guilty to racketeering, among other charges. You knew that already, but that's really all I can tell you.

UNIDENTIFIED REPORTER: You don't know the sentencing tied to that, then?

LELLING: Offhand, I don't remember what the provisions of the plea agreement will say about sentencing, but the plea agreement should ultimately become a public document and you will be able to see that yourself. It will be docketed.

UNIDENTIFIED REPORTER: You mentioned that it appears the schools are not involved with the exception of that one administrator. Are the schools under investigation versus are they currently part of the ongoing investigation?

LELLING: Right now, the schools themselves are not targets of this investigation. As you can see from the charges we brought, the investigation was very broad. We've charged a lot of people throughout the investigation in our investigation of each of these targets. We have not seen the schools as co-conspirators with this activity.

UNIDENTIFIED REPORTER: How long has this investigation been underway since that first tip you got?

LELLING: I think it's been under investigation a little over a year.

Am I right about that? A little over a year.

UNIDENTIFIED REPORTER: What about the students who purportedly played these sports that got into these programs and they don't play the sport?

LELLING: It varied. Some simply never showed up for the athletics. Some pretended an injury. And I think some played briefly and then quit.

UNIDENTIFIED REPORTER: One of the defendants -- (INAUDIBLE)

LELLING: Beyond what's in the complaint, I can't tell you about that.

UNIDENTIFIED REPORTER: Are any of the students still currently enrolled, children of these parents being charged?

LELLING: No. As you'll see from the charging documents, most of this activity is fairly current, so I assume -- I can't tell you directly -- that the vast majority of the students admitted under false pretenses are in these schools and are enrolled and are active students.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: I don't know the answer to that. I can tell you that, based on what I've seen in the charging documents, I don't think that's the case. I think they got admission, but I don't think they got separate athletic scholarships. What Singer was good at doing was calibrating the fake credentials to appear realistic and not so impressive as to invite suspicion or additional scrutiny.

UNIDENTIFIED REPORTER: Did he have any relationship with the clients or was it entirely a scheme?

LELLING: I don't know the answer to that.

UNIDENTIFIED REPORTER: (INAUDIBLE QUESTION)

LELLING: One defendant is in Hawaii, and so it's a time difference.

Question? There are rules governor earning what times of day federal agents can make arrests. You can't show up at 2:00 in the morning and arrest somebody. So that's what accounts for that.

UNIDENTIFIED REPORTER: When he was taking the exams, I know sometimes he would change the answers. Was he equipped to know those answers or was he -- (INAUDIBLE)

LELLING: He was just a really smart guy. If I understand your question correctly, he didn't have inside information about the correct answers. He was just smart enough to get a near-perfect score on demand or to calibrate the score. So Singer would discuss with his clients what kind of score they were looking for.