College admissions scandal: Parents' sentences at stake as judge presses prosecution
The college admissions scam involving Lori Loughlin and Felicity Huffman shows how some rich families use a “side door” to game an already unfair education system. USA TODAY
BOSTON — A federal judge Tuesday pressed the government over a key legal question in the nation's college admissions scandal that could determine whether prosecutors are successful in getting stiff sentences, including prison, for parents who have pleaded guilty.
Judge Indira Talwani challenged Assistant U.S. Attorney Eric Rosen on the prosecution's argument that universities and testing companies suffered financial losses as a result of parents paying the mastermind of a nationwide cheating and bribery scheme to get their children into elite colleges and universities.
The 45-minute hearing, with more than two dozen defense attorneys watching from inside the courtroom, concluded with no decision on that question. A decision is expected before Friday, when the first parent who has pleaded guilty in the sweeping "Varsity Blues" case, actress Felicity Huffman, is sentenced.
Government wants payment amount to factor into sentences
In a white-collar fraud case, the severity of sentences often comes down to proving a victim suffered financial loses.
Federal judges use rules called sentencing guidelines to advise how severely they punish defendants. The plea agreements that prosecutors reached with parents in the college admissions scandal singled out the federal fraud statute as the basis of sentences.
"I think we’re stuck with (the fraud guidelines), for better or for worse," Talwani concluded Tuesday.
But the Justice Department has asked the judge to "enhance" sentences based on stronger guidelines that exist in the commercial bribery statute, which would mean looking at how much parents paid to Rick Singer, a college consultant who operated the scheme.
If a financial loss is identified, but how much cannot be "reasonably determined," the court can use the amount paid by the defendant to determine culpability. Prosecutors are pursuing this avenue, noting that otherwise defendants would be sentenced the same whether they paid $15,000 or $400,000 to Singer.
The prosecution's request, outlined in a memorandum filed last week, came after the court's probation officer found no financial losses in the case. Prosecutors want the judge to determine the opposite.
What Talwani decides could have ramifications for the entire case.
While Huffman has pleaded guilty to paying $15,000 to have someone cheat on the SAT for her older daughter, other defendants paid significantly more. That includes Stephen Semprevivo, a California business executive, who admitted to paying $400,000 to get his son into Georgetown University. Prosecutors have recommended Huffman receive one month in prison, compared to 18 months for Semprevivo.
Talwani scheduled Tuesday's hearing to take up the prosecution's claim that the probation officer is "mistaken." Semprevivo's sentencing, originally set for this week, was delayed as a result. So was the sentencing of another parent, Devin Sloane.
'One penny' lost is still a loss, prosecutor says
Rosen told the judge that the University of Southern California and Georgetown experienced multiple losses from parents who paid to have their parents admitted as fake athletic recruits: the value of the corrupt university employees' "honest service;" costly internal investigations by the schools; the cost to fight costly lawsuits against them filed as a result of the scandal; and an anticipated decline in applications because of bad PR from the scheme.
He said the College Board, which operates the SAT, and the ACT have suffered harm from other parents who paid Singer to have someone take one of the exams for their children to boost their scores. He said that includes wages the testing companies paid to corrupt proctors, the cost of internal investigations, the cost of strengthening security practices, a decline in the value of their intellectual property and lost revenue as a result of fewer people taking the exams.
“All of these events that I talk about cost money – money that came out of the victims' pockets," he said. "These costs were expensive and above all were reasonably foreseeable."
He said if "one penny" was lost it is still a loss.
Talwani proposed to Rosen that the prosecution would need to show which losses, and how much, were applicable to each defendants. But Rosen said it's "impossible" in this case to quantify specifically how much each victim lost. He said the court should therefore look at the "gain" for the defendants determined by the bribe amount.
Talwani did not address each of the prosecution's theories on what constitutes losses in the college admissions case. But she questioned whether application fees collected by universities would be one.
"I don’t think any of the colleges here would want to make their application fees a (revenue-maker)" the judge said.
Rosen said the application fees are a revenue-maker regardless of whether that's the intent from the universities. He pointed to studies suggesting the number of students applying to universities tied to the scheme has decreased as a result of the scandal.
What's next with Huffman case
Fifty-one defendants, including 34 parents, have been charged with crimes in the college admissions scandal, which the prosecutions first unsealed in March. Twenty-three defendants have pleaded guilty while the remaining are preparing for trial.
Huffman, former actress of "Desperate Housewives," faces a one-month sentence recommendation from prosecutors, down from four months when she pleaded guilty to conspiracy to commit mail fraud and honest services mail fraud in May.
Huffman, who has apologized and explained why she cheated in a letter to the judge, is seeking no prison. A report from the probation officer that will separately recommend a sentence for Huffman is expected before her hearing.
Reach Joey Garrison on Twitter @joeygarrison.