BOSTON (Reuters) – Four wealthy parents including the former chief executives of bond manager Pimco and specialty finance lender Hercules Capital Inc (HTGC.N) are set to plead guilty on Monday to participating in a vast U.S. college admissions cheating and fraud scheme.
Douglas Hodge, former PIMCO CEO, arrives at the federal courthouse for a hearing in a nationwide college admissions cheating scheme in Boston, Massachusetts, U.S., October 21, 2019. REUTERS/Brian Snyder
Federal prosecutors in Boston say ex-Pimco CEO Douglas Hodge, Hercules Capital founder Manuel Henriquez and his wife, Elizabeth, and onetime food manufacturer executive Michelle Janavs took part in a bribery scheme that helped their children gain admission to universities as fake athletic recruits.
Hodge, 61, was the first to plead guilty, admitting he paid $525,000 to facilitate the admission of his daughter and son to the University of Southern California (USC) as soccer and football recruits through the use of bribery.
“I acted out of love for my children, but I know that this explanation for my actions is not an excuse,” Hodge, who will be sentenced in January, said in a statement.
The four are among 52 people charged with participating in a vast scheme in which wealthy parents conspired with a California college admissions consultant to use bribery and other forms of fraud to secure the admission of their children to top schools.
William “Rick” Singer, the consultant, pleaded guilty in March to charges he facilitated cheating on college entrance exams and helped bribe sports coaches at universities to present his clients’ children as fake athletic recruits.
The 35 parents charged in the investigation include executives and celebrities, such as “Desperate Housewives” star Felicity Huffman and “Full House” actress Lori Loughlin.
Huffman reported to prison last week to serve a 14-day term after admitting she engaged in the cheating scheme. Loughlin has pleaded not guilty. [nL2N27013O]
Hodge was CEO of Allianz SE’s (ALVG.DE) Pimco, the world’s largest bond manager, from 2014 to 2016. Prior to his arrest in March, Manuel Henriquez was chairman and CEO of Hercules.
Janavs was formerly an executive at her family’s company Chef America, which produced the microwavable snack Hot Pockets before being bought by Nestle for $2.6 billion in 2002.
The Henriquezes turned to Singer to help fraudulently inflate their two daughters’ entrance exam scores and also paid him $400,000 to bribe a tennis coach to help their oldest child gain admission to Georgetown University, prosecutors alleged.
Janavs conspired with Singer to pay $600,000 to facilitate admission of two of her children to USC and Georgetown as athletes, and paid another $100,000 to have a corrupt exam proctor correct her two daughters’ answers on the ACT exam, prosecutors said.
Reporting by Nate Raymond in Boston; Editing by Lisa Shumaker and Bill Berkrot