Ex-TPG Leader McGlashan Among 16 Indicted in College Scandal

(Bloomberg) -- Sixteen parents in the U.S. college scandal, including former TPG executive Bill McGlashan and actor Lori Loughlin, were indicted by a federal grand jury as prosecutors aggressively pursue the biggest admissions scam they have ever taken on.

The indictments, which also include former Pimco chief executive Douglas Hodge, come on the heels of 13 parents -- including Gordon Caplan, the former co-chair of law firm Willkie Farr & Gallagher, and actor Felicity Huffman -- agreeing to plead guilty.

The U.S. is taking a hard line with the parents swept up in the scandal, swiftly wresting pleas from those looking for deals to reduce their punishment -- and raising the stakes for those who balked. The 16 parents indicted Tuesday now face two charges: one count of conspiracy to commit fraud and a new count of money laundering conspiracy. They must appear in federal court in Boston to be arraigned. The judge may also set a trial date in the fast-moving case.

“The prosecutor’s case against Mr. McGlashan is deeply flawed and ignores important exculpatory facts,” his lawyer John Hueston said in a statement. “We look forward to presenting his side of the story.”

The U.S. has accused 33 parents of conspiring with college counselor and admitted mastermind William “Rick” Singer to shower $25 million in bribes on entrance exam administrators, a surrogate test taker and corrupt university sports coaches and officials in order to get their children into Yale, Georgetown, Stanford and other exclusive schools. Singer pleaded guilty and agreed to cooperate with the government, secretly recording conversations he had with the parents to help prosecutors build their case.

‘Life-Altering’

Loughlin’s husband, Mossimo Giannulli, was also named in the revised indictment. Sean Berkowitz, a lawyer for the couple, didn’t immediately respond to requests for comment on the indictments. Joan McPhee, a lawyer for Hodge, declined to comment.

All the parents were arrested last month, most on a criminal complaint, essentially a statement of facts. An indictment is more serious, suggesting the government may not be as lenient in any further plea negotiations. The parents fighting it out now are charged with felonies that carry significant prison time.

“Since any felony conviction is life-altering, sometimes it’s best to stand and fight,” said attorney William Fick, of the Boston firm Fick & Marx, who isn’t involved in the case. “There are important issues for someone to challenge here: Is the alleged misconduct actually a federal crime? Did government agents and informants act properly?”

McGlashan was a managing partner of TPG’s growth equity business before the firm fired him following the charges. He is accused of paying a $50,000 bribe to Singer that was concealed as a charitable donation to falsify his son’s ACT entrance exam results and get him admitted to the University of Southern California.

$500,000 in Bribes

Loughlin, best known for the sitcoms “Full House” and “Fuller House,” and her husband agreed to pay bribes totaling $500,000 to have their two daughters marked as recruits to the USC crew team, even though they didn’t row crew, according to court papers.

Hodge, the former CEO of Pacific Investment Management Co., allegedly worked with Singer to get his eldest daughter into Georgetown as a tennis recruit and then paid $200,000 to fabricate a profile of a younger daughter as a champion soccer player to get her into USC. Prosecutors say he later paid $250,000 to help his younger son gain admission to USC as a football recruit.

In a technical move that angered some defense attorneys, the charges were added to an indictment filed earlier against Vancouver dealmaker David Sidoo, who has pleaded not guilty. They wrote to U.S. District Judge Patti Saris, the chief judge in Boston, asking that their clients not be tried together with Sidoo, whose case has been assigned to U.S. District Judge Nathaniel Gorton.

Judge Shopping?

They called it “a clear form of judge shopping” and said they didn’t want their clients tried with a defendant they had never met. While not complaining about Gorton, they asked that the cases be randomly assigned to a different judge to “stamp out any perception that the prosecutors have manipulated the charging process."

In response, Andrew Lelling, the U.S. attorney in Boston, called the request “a ‘Hail Mary’ by people who know better.” In his own court filing, he said “what counsel fail to say -- but of course mean -- is that they want a different judge because they perceive Judge Gorton as imposing longer sentences in criminal cases than other judges in this district.”

Prosecutors have said the investigation continues and, in a March 29 filing, that they expected to make more arrests. In addition, a revised criminal complaint against two of the 13 parents pleading guilty suggests a new avenue of inquiry for the government -- tax and financial advisers who may have helped conceal bribes as charitable donations. The government added a tax conspiracy charge against one parent, saying he and “others known and unknown to the United States Attorney” helped prepare fraudulent returns.

To contact the reporters on this story: Patricia Hurtado in Federal Court in Manhattan at pathurtado@bloomberg.net;Janelle Lawrence in Boston at jlawrence62@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey

©2019 Bloomberg L.P.