Palatella, McGlashan plead not guilty in college bribery scam

Gregory and Amy Colburn of Palo Alto ask court to dismiss second indictment

Two Midpeninsula parents in the college-admissions bribery scandal pleaded not guilty to charges in the nationwide $25-million scandal while a Palo Alto couple has asked the federal court to dismiss the same charges against them in the case, according to court documents.

Marci Palatella, 63, of Hillsborough and former Palo Altan William McGlashan, 55, now of Mill Valley, filed a waiver to appear in federal court in Massachusetts. They also pleaded not guilty to charges of money laundering conspiracy and conspiracy to commit mail and wire fraud and honest services mail and wire fraud.

An attorney for Dr. Gregory Colburn, 61, and Amy Colburn, 59, of Palo Alto, filed a motion to dismiss the indictment on the grounds that it "fails to state an offense." The couple previously pleaded not guilty to the sames charges Palatella and McGlashan face on April 3.

The four locals are among 33 parents caught up in the nationwide $25-million scandal that accuses the parents of paying bribes to coaches at top-tier universities and colleges to portray their children as athletes for recruitment, to pay people to take college-admissions tests for their children to improve their scores or to have a test proctor to correct the answers after their child took the SAT or ACT tests for improved scores. The alleged scam was orchestrated by college preparatory counselor William "Rick" Singer of Newport Beach and others, according to federal prosecutors.

On April 8, 14 of the 33 parents filed papers with the court agreeing to plead guilty to related charges in the case, including Menlo Park residents Marjorie Klapper, 50 and Peter Jan Sartorius, 55; Hillsborough residents Bruce Isackson, 61, and Davina Isackson, 55; and actress Felicity Huffman, 56, of Los Angeles.

The Colburns' attorney David Schumacher claimed that prosecutors erred in pursuing conspiracy prosecutions, relying on a statute that casts too wide a net, which case law and some Supreme Court decisions have reined in, according to the motion. The court should dismiss the indictment against the Colburns because it doesn't allege sufficient facts or legal grounds to treat the Colburns as members of a single conspiracy that includes all of the other alleged co-conspirators, according to Schumacher.

The government's claim that the 19 parents who didn’t plead guilty are part of a single conspiracy doesn’t hold up because the parents didn’t know each other or had any interest in children outside of their own, according to the motion. The parents live in various cities and engaged in different fraudulent schemes and their activities were separated by years.

"The only thing the defendant parents have in common is their common relationship with William 'Rick' Singer, who the government alleges was at the center of the conspiracy," wrote Schumacher, a partner at the Boston law firm Hooper, Lundy & Bookman PC.

Citing a 1946 Supreme Court decision, Schumacher noted the justices had referred to a Court of Appeals analogy that thieves using a single "fence" to dispose of their loot do not become "confederates" and lumping all of the defendants into a single trial went too far.

Palatella allegedly wired $75,000 to The Key Worldwide Foundation, an organization Singer created to launder the bribes, for Florida resident Mark Riddell to proctor her son's SAT exam and to correct his answers in 2017. Palatella ultimately paid $500,000 to have her son represented as a purported football recruit to the University of Southern California. She allegedly paid $100,000 to Donna Heinel, USC's senior associate athletic director, who allegedly presented the boy's application to the university's subcommittee for athletic admissions and obtained approval to admit him as a recruit.

Palatella allegedly agreed during a 2018 phone call with Singer to mislead the Internal Revenue Service if anyone inquired about her payments to the foundation, according to the indictment.

McGlashan allegedly paid Singer $50,000 through the foundation to arrange for Riddell to proctor his son's ACT exam at a West Hollywood test center and to secretly correct the answers without the boy's knowledge, according to the grand jury indictment. Singer and Riddell used the southern California center frequently in their scheme after getting students transferred there through a fraud in which the parents claimed their children had learning disabilities and needed more time to take the exams. Singer funneled payments to Riddell and other conspirators through his foundation.

McGlashan also allegedly paid a total of $250,000 to Singer to facilitate his son's admission as a football recruit to USC by creating a fake football player profile for the boy and used Photoshop to place the son's head onto the body of a kicker, according to the indictment.

Each parent faces a maximum sentence of 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater, for the conspiracy to commit mail and wire fraud and honest services mail and wire fraud. They each face a maximum sentence of 20 years in prison, three years of supervised release and a fine of $500,000 or twice the value of the property involved if convicted on the money laundering charge.

Two other parents, Elizabeth Henriquez, 56, and Manuel Henriquez, 56, of Atherton, did not enter pleas Monday. Another indicted parent, actress Lori Loughlin, also entered a not-guilty plea.

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