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Parents in College Scandal Say Cash Was a Gift, Not a Bribe

Lawyers for the indicted parents are exploring an arsenal of defenses, and most have the money to make them aggressively.

Parents in College Scandal Say Cash Was a Gift, Not a Bribe
Gordon Caplan, former co-chairman of Willkie Farr & Gallagher, right, speaks to members of the media while exiting federal court in Boston, Massachusetts, U.S. (Photographer: Scott Eisen/Bloomberg)

(Bloomberg) -- Some of the 19 parents indicted in the largest college-admissions scandal in U.S. history may try to fight the charges by arguing they were duped by the scam’s ringleader about where their money was going.

Defense attorneys for the parents told a federal judge in Boston on Monday that they need more access to investigators’ reports they say show William “Rick” Singer assured parents who weren’t charged that their payments weren’t bribes but would go to college athletic programs. Singer has admitted to bribing school officials and arranging for bogus test results.

“The government may have had conversations with other parents that the government has not charged,” Aaron Katz, one of the defense lawyers, told U.S. Magistrate Judge M. Page Kelley. "They said Rick Singer told them that their money was going to go to athletic programs or schools -- not to bribes. That goes to the heart of the honest-services charge, a bribe in exchange for the breach of their fiduciary duty.”

Prosecutors have resisted the request for FBI documents, saying the defense isn’t entitled to see them, Katz told the magistrate.

Katz’s client is Elizabeth Henriquez, who is charged along with her husband, Manuel, with paying at least $400,000 in bribes to get their children into school. The Atherton, California, couple allegedly paid for proctors to help their two daughters cheat on college-entrance exams and arranged to bribe the head tennis coach at Georgetown University to designate their older daughter as a recruited athlete and set up fake athletic profiles for her.

Manuel Henriquez stepped down as chief executive officer of Hercules Capital Inc. after charges were filed.

Government lawyer Eric Rosen argued the government has already turned over at least 3 million pages of evidence to defense lawyers, including records of 4,500 phone calls and more than 1 million emails. He dismissed the assertion that Singer’s claims to parents who weren’t charged would aid the defense of those who were.

Arsenal of Defenses

“It doesn’t matter whether the money went to a coach’s program or into a coach’s pocket,” Rosen said. He said the U.S. wouldn’t “disclose the information willy-nilly just because the defense has some theory that certain things could be exculpatory.”

Thirteen parents have admitted guilt in the scandal, with a 14th due to plead this month. Nineteen are fighting charges that include money laundering and conspiracy. Along with Singer, who is cooperating with prosecutors, the U.S. has charged 16 college coaches and test proctors. Of those, Singer and six others have admitted guilt.

According to a court filing unveiled Monday, Ali Khosroshahin, a former women’s soccer coach at the University of Southern California, has agreed to plead guilty to conspiracy to commit racketeering. He would be the fifth coach to admit guilt in the case. Prosecutors said Khosroshahin, 49, worked with Laura Janke, who’s agreed to plead guilty in the scheme. Khosroshahin was fired in 2013, prosecutors said, while Janke left in 2014.

Prosecutors have agreed to recommend Khosroshahin serve on the low end of 46 to 57 months in prison. Khosroshahin’s attorney Jessica Hedges declined to comment as she left a hearing on the case Monday afternoon.

Lawyers for the indicted parents -- including former TPG executive Bill McGlashan, ex-Pimco chief Douglas Hodge and TV sitcom veteran Lori Loughlin -- are exploring an arsenal of defenses, and most have the money to make them aggressively. In April, attorneys for Gregory and Amy Colburn of Palo Alto, California, sought a dismissal of the charges against them, wielding several arguments.

Notably, they invoked a 1946 Supreme Court case, Kotteakos v. U.S., in which a broker was accused of conspiring with 32 loan applicants to defraud the government. The high court reversed the resulting convictions, noting the defendants had only the broker in common, not one another, and that there were at least eight separate conspiracies, not just one as alleged.

Turn It Over

Kelley told the lawyers to cooperate during the exchange of evidence, and urged the government to turn over any required documentation.

“If defendants can show you why something is exculpatory, you might as well turn it over, if you can bring yourself to do that,” Kelley said.

Donations to university programs are not bribes, according to Reuben Camper Cahn, a defense lawyer representing one of the parents, Southern California warehouse and shipping executive I-Hsin “Joey" Chen.

“We contend that’s an everyday event,” Cahn said after the hearing. “Those are legitimate donations outside of the realm of criminal law.”

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

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