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Possible legal theories
1. Wrongfully denied admission
2. Diminished value of an education (think Penn State Sandusky scandal)
3. Request for refunds
4. Negligence leading to damages
5. California Consumer Legal Remedies Act (“CLRA”)
6. Parents suing other parents for stealing their kids spot
Class action lawsuit filed in California
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
ERICA OLSEN, an individual, and KALEA WOODS, an individual,
WILLIAM “RICK” SINGER, THE KEY ) WORLDWIDE FOUNDATION, THE EDGE ) COLLEGE & CAREER NETWORK, LLC, ) d/b/a “THE KEY,” THE UNIVERSITY OF ) SOUTHERN CALIFORNIA, STANFORD ) UNIVERSITY, UNIVERSITY OF ) CALIFORNIA LOS ANGELES, THE ) UNIVERSITY OF SAN DIEGO, THE ) UNIVERSITY OF TEXAS AT AUSTIN, )
WAKE FOREST UNIVERSITY, YALE UNIVERSITY, and GEORGETOWN UNIVERSITY ,
Here are some allegations rom a recent lawsuit filed in the Northern District of California:
8. Plaintiff Erica Olsen (“Olsen”) is a former resident of Henderson, Clark County, Nevada, in Clark County, Nevada. Olsen currently attends Stanford University and is a Santa Clara County, California, resident located in the Northern District of California.
9. Plaintiff Kalea Woods (“Woods”) is a former resident of San Diego County, California. Woods currently attends Stanford University and is a Santa Clara County, California, resident located in the Northern District of California.
10. Defendant William “Rick” Singer (“Singer”) is, upon information and belief, a resident of Newport Beach, California, in Orange County California, but also does business in Sacramento, California. Singer is a citizen of California.
11. Defendant The Edge College & Career Network, LLC d/b/a “The Key” (“The Key”) is a limited liability corporation with its principal place of business located at 3415 American River Drive, Suite D, Sacramento, CA 95864, in Sacramento, California, and is a resident of Sacramento County, California and a citizen of California. The Key also does business in Newport Beach, California, in Orange County, California.
12. Defendant The Key Worldwide Foundation (“KWF”) is a purported charitable organization with its principal place of business located at 265 Hartnell Place, Sacramento, CA 95825, and is a resident of Sacramento County, California and a citizen of California.
13. Defendant University of Southern California (“USC”) is a private, highly selective university located in or near Los Angeles County, California and is a resident of Los Angeles County and citizen of California.
14. Defendant Stanford University (“Stanford”) is a private, highly selective university located in or near Palo Alto, California, in Santa Clara County, California, and is a resident of Santa Clara County and citizen of California.
15. Defendant University of San Diego (“USD”) is a private, highly selective university located in or near San Diego County, California, and is a resident of San Diego County and a citizen of California.
16. Defendant The University of Texas at Austin (“U-Texas”) is a public, highly selective university located in or near Travis County, Texas, and is a resident of Travis County and a citizen of Texas.
17. Defendant Wake Forest University is a private, highly selective university located in or near Forsyth County, North Carolina, and is a resident of Forsyth County and a citizen of North Carolina.
18. Defendant Yale University is a private, highly selective university located in or near New Haven County, Connecticut, and is a resident of New Haven County and a citizen of Connecticut.
19. Defendant Georgetown University is a private, highly selective university located in or near the District of Columbia, and is a resident and citizen of the District of Columbia.
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24. Defendant Singer owned The Key and served as Chief Executive Officer of KWF.
25. The Key was a for-profit college counseling and preparation business that Singer founded in or about 2007 and incorporated in the State of California in or about 2012.
26. KWF was a non-profit corporation in Newport Beach, California, that Singer established as a purported charity in or about 2012.
27. In or about 2013, the Internal Revenue Service (“IRS”) approved KWF as an exempt organization under Section 501(c)(3) of the Internal Revenue Code, meaning that KWF was exempt from paying federal income tax. KWF maintained several bank accounts (collectively, the “KWF charitable accounts”).
28. Together, The Key and KWF constituted an “enterprise” as defined by 18 U.S. C. Sec. 1961(4) (“the Key Enterprise”), that is, an association, in fact, of entities engaged in, and the activities of which affected, interstate and foreign commerce (“the enterprise”). The Key Enterprise constituted an ongoing organization whose members functioned as a continuing unit for a common purpose of achieving the objectives of the enterprise.
29. ACT, Inc. is a non-profit organization headquartered in Iowa City, Iowa that administers the ACT exam, a standardized test that is widely used as part of the college admissions process in the United States.
30. The College Board is a non-profit organization headquartered in New York, New York. Together with Educational Testing Service (“ETS”), a nonprofit organization headquartered in Lawrence Township, New Jersey, the College Board develops and administers the SAT, a standardized test that, like the ACT exam, is widely used as part of the college admissions process in the United States.
31. The College Board and ETS also develop and administer SAT subject tests, which are also used as part of the college admissions process.
32. The Defendant universities are highly selective universities. Typically, each university receives tens of thousands of applications and only accepts a very small percentage of applicants.
33. Acceptance of a student into one of these universities often makes it easier for a student to obtain a high-paying job or career after graduation.
34. The athletic teams of Georgetown, Stanford, UCLA, USD, USC, U-Texas, Wake Forest and Yale compete in most sports at the Division I level, the highest level of intercollegiate athletics sanctioned by the National Collegiate Athletic Association (“NCAA”).
35. Each of the Universities annually receives more than $10,000 in federal grants.
36. Most selective colleges in the United States require students to take a standardized test, such as the ACT or the SAT, as part of the admissions process.
37. The ACT includes sections on English, mathematics, reading and science. The SAT includes sections on writing, critical reading and mathematics.
38. The ACT and the SAT are typically administered to large groups of students on specified dates and under strict time limits. In some instances, however, students with certain learning or other disabilities may qualify for extended time and, in such circumstances, may take the test alone, under the supervision of a test administrator retained by ACT, Inc. or the College Board.
39. Prior to administering the ACT, test administrators must typically certify that they will administer the exam in accordance with the ACT Administration Manual, and will ensure that the “test materials are kept secure and confidential, used for this examinee only, and returned to ACT immediately after testing.”
40. Similarly, prior to administering the SAT exam, test administrators must typically certify that they will administer the test in accordance with the SAT coordinator's manual, that the SAT test is the property of the College Board, and that no one other than the student can “open the test book and see the test content.”
41. The ACT tests are sent to and from the testing sites via Federal Express, a private, interstate commercial carrier.
42. The SAT tests are sent to and from the testing sites via United Parcel Service (“UPS”), a private, interstate commercial carrier.
43. All of the Defendant Universities require prospective students to submit standardized test scores as part of their application packages.
44. When submitted, standardized test scores are a material part of the admissions process at each of the Universities. All of the Universities recruit student athletes, and may apply different criteria when evaluating applications from students with demonstrated athletic abilities. Recruited student athletes at USC, for example, are typically considered by a designated, admissions sub- committee, which gives significant consideration to their athletic abilities and which frequently admits applicants whose grades and standardized test scores are below those of other USC students, including non-recruited athletes.
45. The admissions offices at the Universities typically allot a set number of “slots” to each head coach of a varsity sport for that coach's recruited athletes. At each of the Universities, the admissions prospects of recruited athletes are higher—and in some cases significantly higher—than those of non-recruited athletes with similar grades and standardized test scores.
46. The principal purposes of the racketeering conspiracy in this case included the following:
(a) to facilitate cheating on college entrance exams;
(b) to facilitate the admission of wealthy students to elite universities as recruited athletes, regardless of their athletic abilities; and
(c) to enrich Singer and his co-conspirators personally.
47. Among the manner and means by which Singer and his companies, along with the Defendants, carried out the racketeering conspiracy were the following:
(a) facilitating cheating on the SAT and ACT exams in exchange for bribes by arranging for or allowing:
(i) a third party to secretly take the exams in place of the actual students, or to replace the 'students' exam responses with his own;
(ii) designating applicants as purported recruits for competitive college athletic teams, without regard for the 'applicants' athletic abilities, in exchange for bribes; and
(iii) concealing the nature and source of the bribe payments by laundering payments through the KWF charitable accounts.
48. On various dates between 2011 and September 2018, Singer and others committed and caused to be committed the following acts, among others, in furtherance of the racketeering conspiracy:
(a) cheating on standardized tests;
(b) Singer agreed with clients whose children were scheduled to take the SAT or ACT exams as part of the college admissions process to have another individual either take the tests in their children's place or correct the children's answers after they had completed the tests;
(c) Parents generally paid Singer between $15,000 and $75,000 per test, typically structuring the payments as purported donations to KWF that they wired or deposited into one of the KWF charitable accounts.
49. To facilitate the cheating, Singer counseled parents to seek extended time on the exams, including by having their children fake learning disabilities in order to obtain medical documentation which ACT, Inc. and the College Board typically required before granting students extended time.
50. Singer used the purported charitable donations from parents, at least in part, to bribe two SAT and ACT test administrators, including one administrator who administered the exams at a private school in Los Angeles, California; and a second test administrator who administered the exams at a public high school in Houston, Texas.
51. Singer typically caused the first test administrator in Los Angeles to be paid $10,000 from one of the KWF charitable accounts for each student who took the exam at his school. Singer initially paid the second test administrator in Houston through a third party, but in July 2018, Singer sent the Houston test administrator a $5,000 check for administering the test to a student.
52. In exchange for the bribe payments, the two test administrators allowed an imposter to secretly take the ACT and SAT tests in place of the children of Singer's clients, or to replace the children's exam responses with his own, in violation of the duty of honest services they owed to ACT, Inc. and the College Board.
53. Singer typically caused this imposter to be paid $10,000 per test, usually from one of the KWF charitable accounts.
54. The Los Angeles and Houston test administrators then caused the falsified exams to be returned to ACT, Inc. and the College Board via Federal Express and UPS, respectively, so that they could be scored.
55. Singer also was paid approximately $25 million by clients to bribe coaches and university administrators to designate the clients' children as recruited athletes, in violation of the duty of honest services which the coaches and school administrators owed to their employers, thereby facilitating the rich children's admission to the Universities.
56. As one example of the Student-Athlete Recruitment scam, Singer agreed in or about November 2017 to facilitate the admission of an applicant to Yale, in exchange for a payment of $1.2 million.
57. Singer subsequently sent the head coach of the Yale women's soccer team an athletic “profile,” created at Singer's direction, which falsely described the rich applicant as the co-captain of a prominent club soccer team in Southern California.
58. The soccer coach thereafter designated this applicant as a recruit for the Yale women's soccer team despite the fact that, as the coach knew at the time, the Yale applicant did not even play competitive soccer.
59. On or about January 1,2018, after this Yale applicant was admitted to Yale, Singer mailed the soccer coach a check for $400,000, drawn on one of the KWF charitable accounts.
60. In or about the spring and summer of 2018, the rich parent of the admitted student paid Singer approximately $1.2 million in multiple installments, including approximately $900,000 that was paid into one of the KWF charitable accounts.
61. Singer similarly bribed coaches and administrators at each of the Universities to designate students as recruited athletes.
University of Southern California Bribes
62. For example, Singer directed payments totaling approximately $350,000 to a private soccer club controlled by two USC soccer coaches.
63. In exchange for these payments, the coaches designated four children of Singer's clients as recruits for the soccer team, thereby facilitating their admission to USC, despite the fact that none of the children played competitive soccer.
64. Likewise, Singer made payments to a bank account at USC that funded the water polo team.
65. In exchange for the bribes, the water polo coach designated two students as recruits for the water polo team, thereby facilitating the students' admission to USC.
66. Singer also made private school tuition payments for the children of the water polo coach—under the guise of a fabricated scholarship—via checks drawn on one of the KWF charitable accounts and sent to the school via U.S. Mail, in exchange for the water polo coach's commitment to designate one of Singer's clients as a recruit for the USC water polo team in the future.
67. In addition, on multiple occasions, Singer's clients made payments of between $50,000 and $100,000 to a university account controlled by a senior official of USC's athletic department (the “USC Administrator”), typically an account for the USC Women's Athletic Board.
68. Singer also entered into a sham consulting agreement with the USC Administrator, pursuant to which, beginning in July 2018, he directed payments of $20,000 per month to the USC Administrator personally via checks drawn on one of the KWF charitable accounts and sent to the USC Administrator via U.S. Mail.
69. In exchange for the bribes, the USC Administrator helped facilitate the admission of several dozen students to USC as recruited athletes, even though many of those students had fabricated athletic credentials and some did not even play the sports they were purportedly being recruited to play.
72. As another example, in or about 2016, Singer directed $100,000 from one of the KWF charitable accounts to a sports marketing company controlled by the UCLA men's soccer coach.
73. In exchange for that bribe, the coach arranged for the daughter of one of Singer's clients to be designated as a recruit for the UCLA women's soccer team, thereby facilitating her admission to UCLA.
Stanford University Bribes
75. In or about the fall of 2017, the Stanford sailing coach agreed to designate the child of one of Singer's' clients as a recruit for the Stanford sailing team, in exchange for a payment to Stanford sailing.
76. In support of the student's application, Singer, together with others, created a student- athlete “profile” that was submitted to Stanford, and that falsely suggested that this Stanford applicant was a competitive sailor.
77. In May 2018, after the Stanford applicant deferred his application to Stanford for one year, Singer directed a payment of $110,000 from one of the KWF charitable accounts to the Stanford sailing program in exchange for the sailing coach's agreement to designate the Stanford applicant as a sailing recruit in the following year's recruitment cycle.
78. In or about the summer of 2018, after the Stanford applicant decided to attend a different university, the Stanford sailing coach agreed with Singer to use that same recruiting spot for the child of another one of Singer's clients, in exchange for a $500,000 payment to the Stanford sailing program.
79. In support of the student's application, Singer, together with others, created documents falsely indicating that the student was a competitive sailor, although the student in fact had minimal sailing experience.
80. Although that student ultimately did not apply to Stanford, Singer directed a payment of $160,000 from one of the KWF charitable accounts to the Stanford sailing program.
84. In or about 2016, in exchange for a bribe paid to a third-party, a varsity coach at USD designated the son of one of Singer's clients, who did not play that sport, as a recruit for the university's team, thereby facilitating his admission to USD.
85. In or about 2017, in exchange for an additional bribe, the same coach designated another student as a recruit to manage the same USD team, thereby facilitating her admission to USD.
86. To add insult to injury, the fraudulent scheme of these Defendants allowed rich participants in the fraudulent scheme to actually deduct payments made as bribes as charitable contributions on their tax returns.
87. Beginning in or about 2013, Singer agreed with certain clients of The Key to disguise bribe payments, at least in part, as charitable contributions to KWF.
88. At Singer's direction, employees of KWF sent these clients acknowledgment letters falsely attesting that no goods or services were exchanged for the purported donations.
89. A principal purpose and object of the tax fraud conspiracy was to allow clients of The Key to improperly deduct the cost of the bribes from their federal income taxes, and thereby to defraud the United States by underpaying federal income taxes.
90. Among the manner and means by which Singer and others carried out the tax fraud conspiracy were the following:
(a) registering KWF under Section 501(c)(3) of the Internal Revenue Code;
(b) directing purported charitable donations to KWF, even though those funds were intended to be used, at least in part, to bribe test administrators, athletic coaches and university administrators; (c) ending acknowledgment letters falsely attesting that no goods or services were exchanged for the purported donations to KWF; and
(d) using the false acknowledgment letters as a basis to support fraudulent deductions from their federal income taxes. 91. On various dates between 2012 and September 2018, Singer and others committed or
caused to be committed numerous overt acts, among others, in furtherance of the tax fraud conspiracy.
92. In or about 2016, Singer agreed with a Hillsborough, California couple who wanted their daughter to attend UCLA (the “Hillsborough Parents”) to use bribes to facilitate their daughter's admission to the university as a purported soccer recruit.
93. On or about May 24, 2016, the Hillsborough Parents emailed Singer their daughter's high school transcript and standardized test scores.
94. Singer forwarded the transcript and test scores to the UCLA men's soccer coach, who forwarded them to the UCLA women's soccer coach.
95. On or about June 28, 2016, the UCLA Student-Athlete Admissions Committee approved the Hillsborough Parents' daughter for “provisional student-athlete admission,” pursuant to which she would be admitted to the university on the condition that she met certain requirements, including that she successfully completed her senior year of high school and participated on the UCLA team as a student-athlete for a minimum of one full academic year.
96. On or about July 6,2016, the UCLA men's soccer coach emailed Singer that the Hillsborough Parents' daughter had been provisionally admitted to the university as a student- athlete.
97. On or about July 7, 2016, Singer directed a payment of $100,000 from one of the KWF charitable accounts to a sports marketing company controlled by the UCLA men's soccer coach.
98. On or about July 8,2016, an employee of KWF emailed a $250,000 invoice to the mother of UCLA Applicant. The invoice stated: “Private Contribution- Letter of receipt will be provided upon payment.”
99. On or about July 11, 2016, the father of the UCLA Applicant emailed Singer asking him to confirm in writing that the $250,000 would be returned to them in the event his daughter did not receive final admission to UCLA. Singer replied that he would return the money in the event the UCLA Applicant did not receive final admission to UCLA.
100. On or about July 15, 2016, the Hillsborough Parents donated 2,150 shares of Facebook, Inc. stock to KWF as a purported charitable contribution. The stock transfer settled that same day.
101. On or about July 21,2016, a KWF employee sent the Hillsborough Parents a letter acknowledging a charitable contribution of $251,159. The letter stated: “Your generosity will allow us to move forward with our plans to provide educational and self-enrichment programs to disadvantaged youth.” The letter falsely stated that “no goods or services were exchanged” for the donation.
102. On or about November 2017, the Hillsborough Parents filed personal tax returns that falsely reported total gifts to charity in 2016 of $1,061,890—a sum that included the purported contribution to KWF.
NOTE: THESE ARE ALL MERELY ALLEGATIONS THAT HAVE TO BE RAISED AND PROVEN BY THE PLAINTIFF. EVERYONE IS INNOCENT UNTIL PROVEN GUILTY.
Cases in the news
The lawsuit also named the University of California, Los Angeles, Wake Forest University, the University of San Diego, the University of Texas at Austin, Georgetown University and Stanford University. Some students will be requesting their money back.
Contact a Law Firm to review your College Cheating Scandal
If you believe you may have a case related to this massive cheating scandal which has resulted in the indictment of college coaches, administrators and parents, contact us at (877) 276-5084 for a free initial consultation. Not all cases will qualify.