02:46 - Source: CNN
How the alleged college admission scheme worked
CNN —  

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 no