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Schadenfreude is defined as pleasure derived
from another person's misfortune.
But it should also be defined
as watching a bunch of entitled, rich parents
get indicted for fraudulently trying to get
their stupid kids into college.
So can I get some '90s sitcom music?
(upbeat music)
♪ Ah, ah, ah, ah ♪
♪ Ah ♪
♪ What ever happened to a meritocracy ♪
♪ The class rank, the GPA, even SAT ♪
♪ Ah, ah ♪
♪ Everywhere you look ♪
♪ Everywhere there's a fraud, there's a fraud ♪
♪ A school to pay bribes to ♪
♪ Everywhere you look ♪
♪ Everywhere a white face ♪
♪ Of somebody's who's mom's screwed ♪
♪ Everywhere you look ♪
♪ When your kid's not bright just get on the phone ♪
♪ They have a million to get them enrolled ♪
♪ Everywhere you look ♪
♪ Ah, ah, ah, ah ♪
(vocalizing)
- Hey LegalEagles, today we're talking about
the college admissions scandal.
We're gonna mix things up a little bit
because this story has everything.
The rich and famous
lots of bad things happening to bad people
and RICO violations.
So today we're gonna talk about
the allegations in the indictment
and we're also gonna talk about what it means
to have a RICO prosecution.
So here's the background.
50 people including Full House actress
Lori Loughlin AKA Aunt Becky
and actress Felicity Huffman
are facing federal RICO charges for allegedly participating
in an elaborate bribery scheme
to get their children into elite universities.
There are a lot of rich and famous people here
but most people know about Lori Laughlin from Full House
so I'm going to refer to defendants collectively
as Aunt Becky.
♪ Bad boys, bad boys ♪ (audience laughing)
♪ Whatcha gonna do ♪
- In this case, the kingpin, if you will, William Singer
created a company called
The Edge College and Career Network LLC
also known as The Key, ostensibly as a for-profit
college counseling and preparation business.
He also started the Key Worldwide Foundation or KWF
as a 501(c)3 non-profit for similar purposes.
The government's indictment alleges that Singer
engaged in rampant racketeering or fraud
that falls into three buckets.
First the indictment alleges that Singer
facilitated cheating on the ACT and SAT exams
in exchange for bribes.
Number two, it alleges that he designated applicants
as purported recruits for competitive college athletic teams
without regard to whether the student
had actually participated in athletics at all.
And number three, concealing the nature and source
of these bribery payments by funneling the payments
through the KWF charitable foundation account.
So let's talk about the first type of fraud
and racketeering that's alleged in the indictment.
The government's indictment alleges
that to facilitate the cheating
Singer counseled Aunt Becky to seek extended time
on her kids' exams by having doctors falsely state
that her children had learning disabilities
in order to obtain the medical documentation
required for the college board
to grant extra time on the standardized tests.
- You're in big trouble, mister!
- Additionally the indictment states
that in exchange for bribery payments
co-conspirators allowed Aunt Becky's kids
to secretly take the ACT and SAT tests in special rooms
where they were given more time
or the children's responses were actually replaced
with the correct answers.
- If your children are accepted here
you'll be expected to work with them at home
rather intensively so that they may reap
the optimum benefits from our curriculum.
- Oh, yeah, well our kids love to reap. (chuckles)
- In he second type of fraud Aunt Becky paid Singer
approximately $25 million dollars
over the course of 2011 through 2019
to bribe coaches and university administrators
to designate her children as recruited athletes
or other favored admissions categories
to jump the line into college.
- We may have, well he may have embellished, lied a bit
on our application. (audience laughing)
- Honest, she's been on this honesty kick all week.
- Oh my God, you guys.
The Skillshare plug at the end of this video
is going to be so epic.
Aunt Becky often photoshopped fake photos of her kids
onto other athletes to make the fraud seem more believable.
And given that Aunt Becky lives in L.A.
a lot of the fraud concerned L.A. colleges.
As a UCLA grad myself, it gives me no pleasure to point out
that this scandal appears to permeate through the entire
University of Southern California
resulting in multiple coaches at USC being fired.
It gives me no pleasure at all to point that out.
None at all, none.
And I have no idea why people often refer to USC
as the University of Spoiled Children.
(laughing)
Oh my God, I'm gonna get in trouble for that
but it's worth it.
That takes me to the third type of fraud.
Of course, most or all of these bribery payments
were labeled as charitable contributions.
So essentially these million dollar bribes
were subsidized by the federal government.
In correspondence that Singer sent to Aunt Becky
in response to a purported charitable contribution
to KWF of $251,000, Singer stated that
your generosity will allow us to move forward with our plans
to provide educational and self-enrichment programs
to disadvantaged youth.
So to summarize, Aunt Becky spent millions of dollars
on bribes and fraudulent payments
to get her kids into college
got to write all of that amount off
as a charitable deduction
which effectively cuts the cost in half
subsidized by other taxpayers and got a letter saying
that she was helping disadvantaged youth.
You want class riots?
Because this is how you get class riots.
By the way, it's worthy noting that all of this got started
because one of the participants wanted to get
a lighter sentence for securities fraud.
The SEC was investigating a guy named Morrie Tobin
a Los Angeles financial exec
for a pump-and-dump investment scheme.
He actually plead guilty
to conspiracy to commit securities fraud
and hasn't actually been charged
in this particular college admissions scandal
but it appears that he snitched on Aunt Becky
to get a reduced sentence in that case.
But let's talk about the RICO prosecution.
If you follow Ken White on Twitter
and you absolutely should
he often says that it is never RICO.
RICO is to Popehat what lupus is to Dr. House.
It's just never that.
But this time it actually is RICO.
RICO, or The Racketeer Influenced
and Corrupt Organizations Act, is a weird animal.
I've handled a few RICO claims
but always from the civil side because I'm a civil attorney.
But this is criminal RICO.
Most people think about RICO prosecutions
as being synonymous with, the government is really serious
and is bringing down the hammer.
But that's generally wrong.
It's also understandable
because of the context in which RICO usually appears.
RICO was initially passed in the 1970s
with the intent to pursue the Mafia.
The idea behind RICO was to tie all of their crimes together
into one case which allowed the prosecution
to be able to connect the incidents
allowing for convictions of the bosses behind all the crimes
with all of the underlings as well.
It was necessary because it's really hard
to prosecute the mob.
Traditional tools like conspiracy charges were hard to prove
without direct links to the upper mob bosses.
So some would say that RICO is written intentionally vaguely
to capture enterprises like the mob
that would otherwise evade prosecution.
To this day, when prosecutors have
traditional criminal law tools available to use
they often use those to avoid
the convoluted issues of RICO.
But in general, a properly stated RICO claim requires
one, conduct, two, of an enterprise, three, a pattern
and four, a pattern of racketeering activity.
Conduct here is pretty clear.
Bribes, fraud, it's all over the place.
The enterprise at issue here is The Key
and all the participants of that organization.
A pattern under RICO only requires two acts
and here there are many more of that.
And the element of racketeering activity is extremely broad.
The statute includes things like kidnapping, gambling,
arson, robbery, bribery, extortion
and a list of a whole lot of other things.
It's actually impossible to have a racketeering claim
without a finding that the defendant is guilty
of another criminal violation.
Often this is called a RICO predicate.
Here the RICO predicates include mail fraud, wire fraud
and money laundering.
And interestingly, here the ring leader Singer
was a cooperating witness
and basically went through this Rolodex of co-conspirators
calling up his old acquaintances and saying
hey, remember the fraud we did last year?
You were a willing participant, right?
(trombone squawking)
Cool, cool.
If the government proves up its case
which it looks like it should be able to do
it should be a pretty straightforward RICO prosecution.
And a quick note about the class action lawsuits
that have been filed by other students that didn't get in
in the wake of this RICO prosecution.
They're going to fail and they're going to fail hard.
The point of a class action is to adjudicate
a bunch of very similar cases at the same time.
And that just isn't the case here.
First it would be nearly impossible to prove
that you were harmed, in other words,
that you didn't get into college
because of this other fraud that was going on.
It would also be nearly impossible to prove
that you were particularly injured in a similar way
to all of the other class members
since admissions decisions are on an individual basis.
And on top of that, what would your damages be?
So these class action cases
lack the commonality and typicality
that is necessary for a class action case to proceed.
Unfortunately this RICO prosecution
couldn't have happened to a nicer person.
- I'm like excited to go prank my,
like, do the school prank
but I'm also literally never at school
that I think my class doesn't even.
Maybe they forget I go there.
(laughs) I'm just kidding.
- Olivia Jade clearly got into USC on merit.
Now what I don't understand is why you would spend
millions of dollars bribing your way into college
especially USC, when you could, you know,
just be a better student.
For example, you could take Francesco D'Alessio's
Skillshare class on how to be a productive student.
Francesco shows you how to do all the things
that Olivia Jade never learned, like getting organized.
- I don't really know what my plan is today.
I had a really late breakfast.
It was at like 12:30-ish.
- Planning ahead.
- So, once again, I didn't film anything today
but I did get tan.
- Becoming a super student.
- I don't really care about school as you guys all know.
Skillshare is an online learning community
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like lifestyle, design and technology.
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will get two free months of Skillshare
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Clicking that link really helps out this channel.
The free premium membership gives you
unlimited access to must-know topics
so you can improve your skills and learn new things.
So don't pay $251,000
when you can pay $8 per month on Skillshare.
- Hopefully I find motivation to do it
because if I don't I'm gonna be so made at myself.
- Do you agree?
Leave your objections in the comments
and check out this playlist of all my other real law reviews
where I will see you in court.