Parents Got Tax Write-Off Amidst Alleged College Admission Scandal - NECN

Parents Got Tax Write-Off Amidst Alleged College Admission Scandal

Officials said the scam allowed millions of dollars to then become tax write-offs for the parents at the end of the year

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    NEWSLETTERS

    Court Documents Outline Sham Charity in College Admission Scam

    The NBC10 Boston Investigators have learned how some of the accused parents in the nationwide college admissions scam were allegedly able to get tax write offs. The FBI says those parents wrote checks to a phony charity as both a cover up and a way to pocket some money.

    (Published Tuesday, March 12, 2019)

    The 32 parents implicated in the college admission fraud case announced in federal court in Boston Tuesday not only bought admission for their kids into prestigious universities, but also used the payments as charitable tax write-offs.

    William Rick Singer, 58, of Newport Beach, Calif., set up two corporations to run a scam that included $25 million in payments, and bribes to nine university coaches and several administrators.

    The first was a business called Edge College & Career Network, a for-profit college counseling and preparation business, according to federal prosecutors.

    The second was called the Key Worldwide Foundation, a non-profit Singer established as a purported charity.

    That charity served both as a front for payments from Singers’ clients, and as a way for parents to pocket some money.

    The FBI said Tuesday those involved “lied, cheated and covered up their crimes” to get their kids into elite schools.

    Prosecutors called Key Worldwide Foundation a “sham charity” in court documents unsealed in U.S. District Court in Boston Tuesday morning.

    “Singer’s foundation purported to be a charitable organization, but was actually a front Singer used to launder the money parents paid him, of which he would take a portion to dole out as bribes to coaches and others,” U.S. Attorney Andrew Lelling said at a press conference Tuesday.

    IRS documents show Singer’s foundation enjoyed a steady increase in “contributions,” from less than half a million dollars for 2013 growing to eight times that to nearly $4 million for 2016.

    “At his direction, employees of the charity then sent Singer’s clients acknowledgment letters falsely confirming no goods or services had been exchanged for the purported donation,” Lelling said.

    Officials said the scam allowed millions of dollars to then become tax write-offs for the parents at the end of the year.

    “The IRS and FBI traced over $25 million in bribes laundered through this alleged charity founded by Singer,” Kristina O’Connell, an IRS criminal investigator, said Tuesday.

    Key Worldwide Foundation’s IRS documents said its mission was “to provide education that would normally be unattainable to underprivileged students.”

    The mission statement went on to say, “Our contributions to major athletic university programs may help to provide placement to students that may not have access under normal channels.”

    Court documents show one cooperating witness in October called a parent claiming on a recorded call for police that the IRS was investigating the Key Worldwide Foundation.

    The witness, dubbed “CW-1” in the documents, said, “I’m going to tell the IRS that your $400,000 payment was made to our foundation to help serve underserved kids…. We’re not going to say anything about [your son]… The payment is being made to (former Georgetown tennis coach) Gordie (Ernst) and then through Georgetown tennis.”

    The parent responded, “Okay.”

    Prosecutors made clear today no students have been charged. Many of them are enrolled in those school right now.

    They also called it an ongoing investigation, meaning more parents may be charged.

    Key Worldwide Foundation has not responded to our request for comment.

    Singer pleaded guilty Tuesday in U.S. District Court in Boston to racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States and obstruction of justice.

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