Parents will do anything to help their kids succeed and in some cases that means breaking the law. Just recently, the FBI uncovered a multi-million-dollar entrance admissions scandal. FBI prosecutors say wealthy parents paid William Rick Singer to guarantee placement at high-profile universities, including Georgetown, Stanford, UCLA, and Yale.
FBI prosecutors say Singer helped parent’s fake admissions exam scores and pass off children as student-athletes, even if the student possessed no athletic ability. The scandal has different parts and parents were given different options they could choose to have their kid admitted. Some parents paid thousands of dollars to either have someone take a college entrance exam for their student or to have their child’s exam responses corrected after they had completed the test. Other parents paid Singer to promote their child as a recruit for a college athletic team in order to have the child admitted to the college. In one instance, Singer sent a coach an athletic profile claiming the prospective student was co-captain of a prominent club soccer team even though the student did not play competitive soccer.
This scheme didn’t stop there. Where many parents could get into additional trouble is dependent on how they claimed this expense on their taxes. As part of the scheme, Singer disguised the payments from parents as charitable contributions for a nonprofit organization, the Key Worldwide Foundation. This allowed those parents to use that payment as a tax break. Despite the foundation being real and even registered, the receipts given to the IRS showing how the foundation spent its money showed that money was not spent for actual charitable reasons, but instead were payments for services to guarantee college acceptance for the donor’s children. The foundation even sent letters that falsely stated no goods or services were exchanged for the donation, which allowed the parents to deduct that payment on their federal income tax as a charitable donation. Because of this, parents who paid into the scheme could be charged with tax fraud for claiming that payment as a donation. It is not known how many parents claimed the payment as a charitable contribution on their taxes or how much money the government lost through the $25 million scheme.