Grand jury adds money-laundering charge for four local parents | April 17, 2019 | Almanac | Almanac Online |


News - April 17, 2019

Grand jury adds money-laundering charge for four local parents

Defendants in college-scam case could face lengthier sentences for alleged bribery

by Sue Dremann

For the second time in two weeks, federal authorities on April 9 let the other shoe drop on parents involved in the college admissions scandal, adding fraud and money laundering charges against 16 parents, including four from the Midpeninsula.

The defendants are among 50 people charged last month in connection with the nationwide bribery scheme in which they allegedly conspired with William "Rick" Singer, 58, of Newport Beach, California. The scheme involved alleged bribes with SAT and ACT exam administrators to allow a test taker to fill out college entrance exams in place of students or to correct the students' answers after they had taken the exam. University athletic coaches and administrators were also bribed to portray the students as athletic recruits in order to facilitate their children's acceptance into top universities and colleges.

The grand jury indictment released April 9 accuses the parents of conspiring to launder bribes and other payments by funneling them through Singer's purported charity, The Key Worldwide Foundation, and his for-profit corporation, The Key Worldwide. They also allegedly transferred the money into the U.S. from outside of the country to promote the fraud scheme.

The indictment charges the 16 parents with one count of conspiracy to commit money laundering in addition to an original charge of conspiracy to commit mail and wire fraud and honest services mail and wire fraud. The local parents who face these charges are Elizabeth Henriquez, 56, and Manuel Henriquez, 56, of Atherton; William McGlashan Jr., 55, a former Palo Alto resident who now lives in Mill Valley; and Marci Palatella, 63, of Hillsborough.

Palo Alto residents Dr. Gregory Colburn, 61, and Amy Colburn, 59, were indicted by a federal grand jury on the same charges on March 26.

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.

The Henriquezes allegedly paid Singer $25,000 in 2015 to have Mark Riddell, another co-conspirator, fly out from Florida to proctor the SAT exam for their older daughter at her private college preparatory school in Belmont. Riddell allegedly provided the daughter with answers to the exam. Singer then paid Riddell $10,000 in three separate installments through his nonprofit.

The Henriquezes also allegedly paid Singer $400,000 to help get their daughter into Georgetown University as a purported tennis recruit. Singer allegedly directed Elizabeth Henriquez and her daughter to send a letter to tennis coach Gordon Ernst misrepresenting her tennis experience. The daughter also emailed her fraudulent SAT scores to Ernst, according to the complaint.

Singer paid Ernst $950,000 through The Key Worldwide Foundation for the coach to designate the Henriquezes' older daughter and several other students as purported tennis recruits.

The couple also allegedly hired Singer in 2016 to have Riddell proctor and provide answers for the ACT exam to their younger daughter and other students at a testing facility in Houston, Texas. They allegedly lied to her school guidance counselor, claiming they needed to move the test site because they would be in Houston at that time.

Singer paid his cohorts $70,000 for their roles in facilitating the falsified exam for the Henriquezes' younger daughter and another student. Manuel Henriquez agreed to help Singer secure the admission of an applicant to Northeastern University in Boston, Massachusetts, in lieu of paying for the cheating. The couple also allegedly paid Singer $25,000 in cash for facilitating cheating for their younger daughter in the SAT exam in 2017.

McGlashan allegedly paid Singer $50,000 through the foundation to arrange for Riddle to purport proctoring his son's ACT exam at the 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 center frequently in their scheme after getting students transferred there through a fraud in which the parents claimed their children had learning disabilities. They said the children needed more time to take the exams because of purported disabilities rather than being tested along with other students at their regular schools. 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 the University of Southern California. Singer had a fake football player profile created for the boy and used Photoshop to place the son's head onto the body of a kicker, according to the indictment.

Palatella wired $75,000 to Singer's foundation for Riddell to proctor her son's SAT exam and to correct his answers in 2017. Singer paid his co-conspirators from that account for aiding in the SAT test fraud. Palatella ultimately paid $500,000 to have her son represented as a purported football recruit to USC. She paid $100,000 to Donna Heinel, USC's senior associate athletic director. Heinel allegedly presented the boy's application to the university's subcommittee for athletic admissions based on falsified credentials and obtained approval to admit him as a recruit.

Palatella allegedly wired $400,000 to Singer's foundation after her son was accepted into USC and agreed during a 2018 phone call with Singer to mislead the IRS if anyone inquired about her payments to the foundation, according to the indictment.

Attorneys for the defendants could not be reached for comment. An arraignment date for the parents has not yet been scheduled.

Actress Lori Loughlin, 54, of Los Angeles, and her husband, clothing designer Mossimo Giannulli, 55, were also among the 16 indicted on April 9 on the same charges for allegedly paying Singer $500,000 for facilitating admission for their two daughters into USC as purported crew team recruits.

The grand jury indictment came a day after U.S. Attorney for Massachusetts Andrew Lelling announced that 14 defendants — including four Midpeninsula residents — have agreed to plead guilty in the scandal. The group includes Menlo Park residents Marjorie Klapper, 50, and Peter Jan Sartorio, 53; Hillsborough residents Bruce Isackson, 61, and Davina Isackson, 55; and actress Felicity Huffman, 56. They each intend to plead guilty to one count of mail fraud and honest services mail fraud. In addition, Bruce Isackson plans to plead guilty to one count each of money laundering conspiracy and conspiracy to defraud the IRS.

Sue Dremann is a staff writer for the Palo Alto Weekly, The Almanac's sister paper.


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