'Full House' actress out on bond after U.S. college entrance scam exposed

[March 14, 2019]  By Nate Raymond and Alex Dobuzinskis

BOSTON/LOS ANGELES (Reuters) - "Full House" actress Lori Loughlin appeared in federal court in Los Angeles on Wednesday to face charges of taking part in a scheme in which dozens of wealthy parents are accused of paying for their children to cheat their way into prestigious U.S. universities.

U.S. Magistrate Judge Steve Kim ordered Loughlin, one of several high-profile figures from entertainment and business caught up in the scandal, released from federal custody on $1 million bond following a brief hearing.

Douglas Hodge, the former chief executive of the investment firm Pimco, and another of the 33 parents charged in the $25 million scam, appeared earlier in the day in a Boston court. He was released on $500,000 secured bond by a federal magistrate who overruled a federal prosecutor's objection to Hodge keeping his passport.

The Los Angeles judge ruled that Loughlin could continue traveling to and from British Columbia for a number of productions she is working on as long as she notifies U.S. authorities in advance of each trip. But the TV star was ordered to relinquish her passport by December.

Loughlin and Hodge are among 50 people charged with taking part in a scam that steered graduating high school students into elite universities, including Yale, Georgetown and Stanford, by cheating the admissions process. Prosecutors called it the largest such scandal in U.S. history.

The University of Southern California's interim president, Wanda Austin, issued a statement saying anyone involved who applied for the upcoming academic year will be denied admission, while current students implicated in the scheme will be reviewed on a case-by-case basis. USC said Tuesday two employees -- a senior associate athletic director and women's water polo coach -- were fired in connection with the scandal.

Another parent charged in the scheme, Manuel Henriquez, resigned as chief executive officer of the finance company Hercules Capital Inc , the company said early on Wednesday.

Gordon Caplan, who prosecutors say paid $75,000 last year to have some of his daughter's wrong answers corrected on a college entrance exam, was placed on leave from his post as co-chairman of the global law firm Willkie Farr & Gallagher, the company said on Wednesday.

MONTHS OF WIRETAPS

The mastermind of the scheme, William "Rick" Singer, pleaded guilty on Tuesday to racketeering charges. Prosecutors in the U.S. attorney's office in Boston say his company, Edge College & Career Network, made $25 million since embarking on the fraud in 2011, offering what he promised was a "guarantee" of admission.

After months of having his calls wiretapped, Singer ended up cooperating with investigators last September, helping them secretly record incriminating conversations he had with parents.

The elaborate scheme involved bribing the administrators of college entrance tests to allow a child's wrong answers to be corrected or for someone else to take the test in their place. Singer also arranged for parents to bribe university coaches to attest to a child being athletically gifted.

In some cases, though not all, Singer ensured the child was oblivious to the cheating.

Actor Lori Loughlin appears in this court sketch at a hearing for a racketeering case involving the allegedly fraudulent admission of children to elite universities, at the U.S. federal courthouse in downtown Los Angeles, California, U.S., March 13, 2019. REUTERS/Mona Shafer Edwards

"They feel good about themselves," he told Caplan in a phone call, according to the criminal complaint. "And they just have no idea that they didn't even get the score that they thought they got."

In some instances, Singer even helped doctor photographs to make a child appear athletic.

Parents made their payments to a sham charity Singer ran, prosecutors said, which also allowed them to take a fraudulent tax write-off. The fake charity, Key Worldwide Foundation, purported to help provide an education to "underprivileged students."

It was unclear how many children benefited, and investigators said more parents and coaches may yet be charged. In telephone conversations intercepted by investigators, Singer brags of having helped hundreds of students, while in others he reassures parents he has helped more than 20 or 30 other students cheat in recent years.

GIFTED ROWERS

Loughlin is accused of paying Singer $500,000 to help both her daughters cheat their way into USC by bribing an athletics official at the school to pretend the girls were gifted rowers. Her husband, the designer Mossimo Giannulli, is also charged with fraud, and appeared in court in Los Angeles on Tuesday before being released on $1 million bail.

One of the daughters, Olivia Giannulli, has become a prominent "influencer" on social media under the name "Olivia Jade."

"Officially a college student!" she captioned an Instagram photograph she posted in September, which showed her in her USC dorm room decorated with items she had ordered from online retailer Amazon.com Inc , which paid her for the post.

Other notable parents charged by the Boston U.S. attorney's office include actress Felicity Huffman, who starred in "Desperate Housewives"; and Bill McGlashan Jr., who headed a buyout investment arm of private equity firm TPG Capital, which put him on indefinite leave after he was charged.

Huffman was one of several charged who appeared in court on Tuesday before being released on bonds.

Representatives of accused parents either declined to comment or did not respond to inquiries. Several of the coaches accused of accepting bribes have been fired, placed on leave or have resigned.

(Reporting by Nate Raymond in Boston and Alex Dobuzinskis in Los Angeles; Additional reporting by Steve Gorman in Los Angeles; Writing by Jonathan Allen; editing by Bill Tarrant and Lisa Shumaker)

[© 2019 Thomson Reuters. All rights reserved.]

Copyright 2019 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.