Celebrities lose work, students sue U.S. colleges in admissions scandal

[March 15, 2019]  By Lisa Richwine

LOS ANGELES (Reuters) - Hollywood actress Lori Loughlin was dropped by a TV network and her daughter lost a sponsorship deal on Thursday, while students sued prestigious universities in growing fallout from a massive college bribery scandal.

Crown Media Family Networks, the company that owns the Hallmark cable channel, cut ties with Loughlin, its "Garage Sale Mysteries" star, after she was charged in the scandal, it said on Thursday.

"We are no longer working with Lori Loughlin and have stopped development of all productions that air on the Crown Media Family Network channels" involving the actress, the company said in a statement.

Hallmark's announcement followed an earlier one from LVMH's Sephora beauty chain, which said it was ending its partnership with Loughlin's daughter, Olivia.

Olivia Giannulli, the 19-year-old daughter of the "Full House" star and designer Mossimo Giannulli, is a social media "influencer" who goes by the name Olivia Jade online.

Products from her makeup collaboration had been removed from Sephora's website by Thursday afternoon. It was not immediately clear whether her products were available in stores.

A representative for Olivia Giannulli could not immediately be reached for comment.

Loughlin and her husband were accused on Tuesday of paying $500,000 in a scheme that involved cheating on college entrance exams and bribing athletic coaches to help Olivia and her sister, Isabella Giannulli, get into the University of Southern California (USC), according to court documents.

Loughlin and her husband were taken into federal custody and later released on separate $1 million bonds on Wednesday.

DENIED A FAIR SHOT

Lawsuits began emerging on Wednesday, a day after federal prosecutors said a California company made about $25 million from parents seeking spots for their children in top schools, including Georgetown University, Stanford University and Yale University.

Fifty people, including 33 parents and athletics coaches, have been criminally charged in the nation's largest known college admissions scandal. The accused mastermind, William Singer, pleaded guilty to racketeering charges.

In one civil lawsuit, Stanford students Erica Olsen and Kalea Woods said they were denied a fair opportunity to win admission to Yale and USC because of alleged racketeering, and said their degrees from Stanford will be devalued.

Singer and eight colleges were named as defendants in the lawsuit, which seeks unspecified damages including refunds of application fees paid to the schools over seven years by unsuccessful applicants.

Another lawsuit filed by Joshua Toy and his mother said he was denied college admission despite a 4.2 grade point average, and seeks $500 billion of damages from 45 defendants for defrauding and inflicting emotional distress on everyone whose "rights to a fair chance" to enter college was stolen.

The defendants in that case include Singer and accused parents, including "Desperate Housewives" actor Felicity Huffman, Loughlin and Giannulli, and TPG Capital private equity partner William McGlashan Jr., who was fired by the firm on Thursday.

A person walks by the Trojan Shrine at University of Southern California in Los Angeles, California, U.S., March 13, 2019. REUTERS/Mario Anzuoni

"These class-action cases are opportunistic creatures of lawyers trying to obtain a windfall," Donald Heller, a lawyer for Singer, said in a phone interview.

Lawyers for the other plaintiffs did not immediately respond to requests for comment.

Both lawsuits were filed in California. More lawsuits are likely.

Prosecutors said Singer used his Edge College & Career Network and an affiliated nonprofit to help prospective students cheat on college admission tests and bribe coaches to inflate or create athletic credentials.

The Stanford case is notable because it is among the country's most prestigious and selective universities, admitting just 4.3 percent of its applicants last year.

But Olsen and Woods said their degrees are "now not worth as much" because prospective employers might question whether they were admitted on merit or through bribes by parents.

A Stanford spokesman said the university is reviewing the lawsuit.

TIP THAT LED TO FRAUD DISCOVERY

The original tip that led to uncovering the college scandal stemmed from an unrelated securities fraud probe into Morrie Tobin, a Los Angeles resident who prosecutors said engaged in "pump-and-dump" stock market schemes, a person familiar with the matter said on Thursday.

Tobin, who pleaded guilty on Feb. 27 to conspiracy and securities fraud charges, told authorities a Yale University women’s soccer coach had sought a bribe in exchange for helping his daughter get into the Ivy League school, the person said.

That now-former coach was Rudy Meredith, who agreed to plead guilty to conspiracy and wire fraud charges.

The FBI after receiving the tip secretly recorded a meeting between Meredith and Tobin in which he sought $450,000 in exchange for recruiting her for a spot on the soccer team, according the person and related court records.

At the meeting, Meredith accepted $2,000 cash as a partial payment, according to charging documents.

Brian Kelly, a lawyer for Tobin, declined to comment. Meredith's lawyer did not respond to a request for comment.

(Reporting by Lisa Richwine in Los Angeles, Jonathan Stempel in New York; additional reporting by Nate Raymond in Boston; Editing by Bill Tarrant and Bill Berkrot)

[© 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.