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This charity was touted as helping the underprivileged. Instead, it funneled college admissions scam money

Posted: 5:53 AM, Mar 19, 2019
Updated: 2019-03-19 06:53:54-04
This charity was touted as helping the underprivileged. Instead, it funneled college admissions scam money

For parents allegedly taking part in Rick Singer's college admissions cheating scheme, payments for his services usually came in the form of donations to the nonprofit arm of his "private life coaching and college counseling company" — the Key Worldwide Foundation.

"When families pay for either, either takin' the test or goin' through the side door, all the money goes through my foundation, and then I pay it out to whoever needs to get paid," Singer said to one parent, in a conversation recorded by law enforcement. (The federal complaint identifies the speaker as "CW-1." CNN has confirmed that CW-1 is Singer.)

That blunt admission from the California businessman, who pleaded guilty last week in Boston to four federal charges — racketeering conspiracy, money laundering, tax conspiracy and obstruction of justice — shows just how much the foundation corrupted its stated purpose of providing "guidance, encouragement and opportunity to disadvantaged students around the world."

A form filed several years ago with the Internal Revenue Service painted a glowing portrait of the foundation's aims, including helping to bring members of the Crips and Bloods — notorious Los Angeles street gangs — to play basketball together and "develop consensus building programs to stop gang violence."

But rather than concentrating largely on the less fortunate, the charity allegedly served as a giant piggy bank to collect money from wealthy parents wanting to get their children into schools they may not have been qualified to attend on their own.

One aspect of the alleged scheme, according to a federal criminal complaint, went toward bribing college entrance exam administrators and stand-in test takers to help students get better scores on standardized tests. The second part of the effort was allegedly paying off coaches and administrators at top schools to designate some applicants as recruited athletes when, at times, the students may never have even played that sport.

Prosecutors said the business owners, executives and celebrities named in the complaint participated in a massive conspiracy. And Singer, who made a deal with prosecutors, laid out how he said it occurred.

"We would send (parents) a ... receipt stating that they made a donation to our foundation to help underserved kids, which, in fact, was not the case," Singer said. "That was not the reason why they did it."

Charity says it helped 'underserved' kids

Tax filings for the Key Worldwide Foundation show that it made donations to nonprofit organizations and several schools, some of which had employees who have been implicated in the scheme and charged.

While none of its four board members was reported as receiving income through the foundation, filings show the foundation had thousands of dollars in expenses, including travel, administrative and accounting costs. It reported just over $7 million in revenue from 2013 to 2016 and $5 million in spending.

A 990 form filed with the IRS for 2013 says Key's contributions to major athletic university programs "may help to provide placement to students that may not have access under normal channels."

The form says the foundation, among other efforts, helped to launch a financial literacy project, create a residential summer program for 100 homeless youth living in Southern California shelters and helped fund a program to assist "800 underserved African-American youth for four weeks in each location providing academic, athletic and financial classes to prepare each high school student for college."

From 2013 to 2016, the LadyLike Foundation, Friends of Cambodia and Loyola High School in Los Angeles were among those listed as receiving thousands of dollars. CNN reached out to several organizations to see if they actually received the money, but did not hear back.

The family that founded the organization Friends of Cambodia in Palo Alto told Palo Alto Online that their organization , which no longer exists, never received any of the $37,750 that the Key Worldwide Foundation reportedly donated to them in 2015 and 2016.

Singer also listed more than $33,000 between 2014 and 2016 in contributions to "community donations" — with an address that is the same as that of the Key Worldwide Foundation.

But it really served wealthy families, prosecutors say

Singer disguised bribe payments from clients as charitable contributions to the foundation. Rather than go to charity, much of that money was instead used to pay off coaches and athletics officials, federal prosecutors said.

Afterward, a KWF employee would mail letters to the clients thanking them for their donations to the charity.

"Your generosity will allow us to move forward with our plans to provide educational and self-enrichment programs to disadvantaged youth," the letter said, according to prosecutors. The letters also falsely wrote that "no good or services were exchanged" for the donations, prosecutors said.

Athletic entities at the University of Southern California reportedly received a total of $550,000 over three years from the KWF — including to its women's athletics board, water polo team, soccer, baseball, and volleyball programs.

USC water polo coach Jovan Vavic and Donna Heinel, the school's senior associate athletic director, were fired and both face racketeering conspiracy charges for allegedly helping a vineyard owner facilitate his daughter's admission to USC. The university said the pair "went to great lengths to conceal their actions from the university" and that it is in the process of identifying any funds received by the university in connection with the alleged scheme.

CNN reached out to Vavic and Heinel. Vavic has not responded. Jerome Haig, an attorney who represented Heinel, said last week she had a "storied and spotless career" at USC. There has been no response to CNN's most recent contact.

Four people sat on the foundation's board. Among them was Singer, the president and CEO, and Steve Masera, the charity's treasurer. Masera has been charged with racketeering conspiracy. CNN has reached out to an attorney for comment but received no response.

Two others sat on the board as director and secretary, but because they have not been charged with crimes, CNN is not naming them.

The heat was on Singer, and he turned on his clients

Singer, facing a mountain of evidence against him, began cooperating with federal investigators last fall. He made 34 calls to clients to help investigators gather evidence.

The criminal complaint against parents includes transcripts of these recorded phone calls that can border on absurdist comedy. Many freely admitted to knowledge of the scam, and some even said that they had used their charitable donation to the foundation as a write-off on their taxes.

During a recorded call in October 2018 between Singer and a parent charged in the scheme, Singer told her that the increase in money coming into his foundation caught the eye of authorities.

"What's happened ... is our foundation has grown significantly," Singer said in the call. "So what's happened now people are focused on, OK, where's all this money going? Who are you really helping? Is this money, you know, being used for the appropriate reason?"

A major facet of the conspiracy was arranging for cheating on standardized tests.

According to the indictment, Singer arranged for a third-party individual to secretly take tests in the students' place or replace their responses with his own. Parents who hired Singer as part of the scheme allegedly paid between $15,000 and $75,000 per test, the indictment states.

"The only way that the scheme would work was if I controlled the proctor and the site coordinator," Singer said during his plea hearing.

Money from parents' donations to the foundation would go toward orchestrating the cheating: paying test takers to take exams for students, or proctors who would help them "correct" their answers.

One accused parent, the complaint says, worked with Singer to create a fake athletic profile for his son and was instructed to provide money to the foundation so that it could pay an SAT and ACT test administrator accused of accepting bribes to allow someone to take tests instead of the prospective college student. Such a scenario played out for about 30 students, according to the complaint.

In some cases, students would take the exam and would put their answers on a separate sheet.

"That way, my proctor could actually bubble in all the answers, and we wouldn't have erase marks," Singer said. "The kids thought they really took their tests, but the families, (proctor) and the site coordinator knew that was not the case."

"I put everything in place, and put all the people in place, and made the payments to everybody directly," Singer said in court.