William "Rick" Singer, who has been working with investigators since last September in the hope of receiving a more lenient sentence, founded The Key and the foundation in Sacramento before moved them to Newport Beach. He pleaded guilty on March 12 to racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States and obstruction of justice.
Mark Riddell, a director of college-entrance-exam preparation at a private college preparatory school in Brandenton, Florida, is also cooperating with the investigators. Identified as facilitating test-taking fraud with many of the parents, Riddell agreed to plead guilty to charges of conspiracy to commit mail fraud and honest services mail fraud.
In numerous cases, Riddell was paid $10,000 to either take, give answers on or correct each student's SAT and ACT test before submitting it for assessment, the federal complaint states. His involvement was verified through emails, consensual recordings and interviews with other witnesses, or other communications, according to the complaint.
According to the complaint, many students taking the exams were actually unaware that their parents had arranged for the cheating.
Also indicted were two SAT and ACT exam administrators, a college administrator and nine coaches at universities including Yale University, The University of Southern California, Wake Forest University and Georgetown University, among others.
As part of the investigation, Singer recorded phone calls with the parents last October and November under the direction of law-enforcement agents, under the pretense that his foundation was being audited by the IRS. In those phone calls, Singer reviewed with the parent the fraud that they had perpetrated together so that the parent would acknowledge it, but he did so saying that they all needed to get "on the same page" with their fabricated stories should they be contacted by the IRS.
Palo Alto parents Amy and Gregory Colburn used The Key's services and allegedly participated in the test-taking scheme for their son. On Dec. 31, 2017, The Key staff sent the Colburns an SAT admission ticket that allowed their son to take the test on March 10, 2018, at the West Hollywood Test Center rather than at a high school in Palo Alto, according to the complaint. The test was scheduled with Riddell, who served as a proctor.
The West Hollywood site — a private college preparatory school — was one of two test locations in the country that Singer said he "controlled," according to the complaint. At those locations, he was able to bribe the test administrators to allow individualized test taking, with Riddell as the proctor.
In December 2017, Gregory Colburn, who is a radiation oncologist with ties to O'Connor Hospital in San Jose and the VA Palo Alto Health Care System, gave $25,000 to Key Worldwide Foundation, which was made by a transferred stock valued at $24,443.50 and a check of $547.45 with "charitable foundation" written in the memo.
Singer, in his recorded phone call with Gregory Colburn in 2018, sought to confirm the fraud, saying, "What I'm not telling the IRS is that ... (Mark Riddell) took the test for (your son)," to which Colburn replied, "No, I got that."
Singer continued, "But what I am telling them is that your payment essentially went to our foundation to help underserved kids," to which Colburn replied: "Right. Okay."
Menlo Park resident Marjorie Klapper, co-owner of a Palo Alto jewelry business, allegedly reached out to Singer in March 2017 after hearing that the daughter of another client made plans with him to take the ACT in Los Angeles.
When she asked if her son could also take the test under the same arrangement, Singer told her, "It is not a definite as there (is) a financial consideration to take it here. They will only do with a donation," according to the complaint.
Arrangements were made to have Klapper's son take the ACT on Oct. 28, 2017, in West Hollywood with Riddell as the test proctor. In early November, Klapper made a $15,000 donation to Key Worldwide Foundation.
The boy received a score of 30 out of 36 points on the ACT. Klapper emailed Singer a copy of the score that November, noting: "Omg. I guess he's not testing again."
Singer replied, "Yep he is brilliant."
Menlo Park resident Peter Jan "P.J." Sartorio, president and co-founder of food companies PJ's Organics and Nate's, is accused of paying $15,000 in cash to have Riddell serve as the proctor for his daughter and correct her answers in June 2017. Sartorio had withdrawn the $15,000 through three transactions between June 16 and 20.
Sartorio's daughter scored 27 out of 36, which put her in the 86th percentile, according to the complaint. This placed her in a better position in comparison to her previous scores of 900 and 960 out of 1600, which she earned through the PSAT, positioning her in the 42nd and 51st percentile, respectively, for her grade level.
In his recorded conversation with Sartorio about the payment, Singer said, "You won't show up on my books because you paid cash, essentially, for her to take the test with (Mark Riddell)."
"Right," Sartorio responded, later adding: "There is nothing on my end that shows that your company ... received any cash payments. ... Anything that was done verbally, that was verbal and there's no record. There's nothing."
Atherton couple Elizabeth and Manuel Henriquez allegedly participated in the exam cheating schemes four separate times for their two daughters in 2015, 2016 and 2017. The couple is also accused of involvement in an athletic recruitment fraud in which they allegedly bribed Georgetown University head tennis coach Gordon Ernst to list their older daughter as a tennis recruit, though records from the United States Tennis Association showed she didn't play in USTA tournaments as a high school student. Ernst allegedly received $950,000 from the Key Worldwide Foundation between Sept. 11, 2015 and Nov. 30, 2016, according to the federal complaint.
The test-taking fraud entailed the Henriquezes allegedly paying $25,000 to have Riddell serve as the test proctor at a private school in Belmont for their older daughter's SAT exam and providing her with correct answers. She received a score of 1900 out of 2400 possible points, up by 320 points from her previous score on the same test. She was ultimately offered admission to Georgetown in spring 2016.
In May 2016, the Henriquez Family Trust paid $400,000 to Key Worldwide Foundation, the complaint states.
The Atherton couple's younger daughter took her ACT in Houston, Texas — the second test center that Singer says he controlled — in October 2016. In 2017, a third party took three SAT subject tests and the ACT test on the daughter's behalf in West Hollywood, the complaint states.
In lieu of payment in 2016, Manuel Henriquez agreed to use his influence at his alma mater, Northeastern University in Boston, to help Singer secure admission for an applicant to the school. The Henriquezes allegedly paid between $25,000 and $30,000 for the third-party test taking in 2017.
Manuel Henriquez stepped down Wednesday as CEO of venture capital and private equity firm Hercules Capital in Palo Alto, the company announced in a press release.
A transcript of the Henriquezes' 2018 call with Singer showed the couple trying to make sure the arrangements were not traceable.
"Why did (my daughter) do the test there (Houston)? So we gotta get into that story," Manuel Henriquez said.
"Lemme go into that," Singer said, before telling the Henriquezes that no one would find out. "In my books, it doesn't show that there was any money paid for (Mark Riddell) helping (your daughter) do the test. Okay? Because we did the deal with (the Northeastern applicant)."
"So there's no paper trail of money?" Elizabeth Henriquez asked.
"There's no paper trail of money. Okay? 'Cause remember we did that? And you helped?"
"Right," Manuel Hernandez said.
Supposed star athletes
Hillsborough resident Marci Palatella, CEO of liquor distributor International Beverage, allegedly also took advantage of both The Key's schemes to falsify a student's athletic records as well as arrange for test cheating.
She is charged with conspiring to ensure her son became a football recruit in his application to the University of Southern California.
Palatella reached out to Singer seeking tips on ways to "position" her son in his college applications, the complaint states. Singer had provided her with a price list that showed "the number it would take to get admitted even with the fudging of the scores." Through emails, she described that the boy had played football but took a year off and wasn't necessarily "the team's star but a good solid player" with plans to continue participating in the sport the following year.
Singer worked with Laura Janke, a former assistant coach of women's soccer at USC, to create a false profile of Palatella's son that inaccurately called him an active player of his high school football team who assisted his team in winning local and state championships in 2015 and 2017, the complaint states.
In November 2017, the profile was leveraged by Donna Heinel, USC's senior associate athletic director, who sent it to a university subcommittee for athletic admissions and later in the month sent Singer an email indicating Palatella's son gained conditional acceptance. Palatella sent Heinel a $100,000 check made out to the USC Women's Athletic Board and also wired $400,000 to the foundation on April 1, 2018.
She allegedly paid $75,000 for her son to take the SAT in West Hollywood on March 12 with Riddell, wiring the money to one of the foundation's accounts on March 7, according to the Department of Justice document.
In September 2015, Hillsborough resident Bruce Isackson, president of commercial real estate firm WP Investments in Woodside, and wife Davina allegedly worked with Singer to create a false profile for their older daughter to gain admission to USC as a recruited soccer player through Janke, the complaint document states. Though that admission fell through due to a "clerical error," former USC women's head soccer coach Ali Khosroshanin sent the allegedly false profile to Jorge Salcedo, head coach of the University of California, Los Angeles's head coach of men's soccer. In June 2016, the Isacksons daughter was given provisional admission for that fall. The following month, the couple transferred 2,150 shares of Facebook stock valued at $251,249 to the foundation.
The Isacksons allegedly continued to engage in both the cheating and athlete-recruitment scheme with their younger daughter beginning in January 2017. The girl secured admission to USC as a rowing recruit after Janke created a profile for her that included false honors as a member of the Redwood Scullers, a sport where she had no experience, the complaint states.
On April 20, 2018, Isackson transferred shares of stock valued at $249,420 to the foundation, $50,000 of which was set aside for Heinel, the USC athletic director.
In August 2018, the couple allegedly called Singer to help their third child get into college through false college entrance exam scores, a call that was intercepted by a court-authorized wiretap.
Bruce Isackson and Singer met in person in December after a phone call earlier in the day between Davina Isackson and Singer about the supposed IRS audit. Bruce Isackson admitted to being nervous that their fraud would be uncovered.
"I am so paranoid about this f------ thing you were talking about," Bruce Isackson said. "I mean, I can't imagine they'd go to the trouble of tapping my phone — but would they tap someone like your phones?"
Later in the conversation, Isackson imagined what would happen should the IRS audit discover the fraud.
"If they get into the meat and potatoes, is this gonna be this — be the front page story with 'Everyone from Kleiner Perkins do whatever getting these kids into school'? ... 'Look what's going on behind the schemes,'" Isackson said.
"And then, you now, the embarrassment to everyone in the community. It would just be — Yeah. Ugh," Isackson said.
The real-estate investor then told Singer that, should the couple arrange exam cheating for their third child, "I think we'll definitely pay cash this time, and not ... run it through the other way."
Facing the court
The Henriquezes appeared before a judge in the U.S. Southern District of New York with their attorney Jeffrey Brown on Tuesday when they were each released on $500,000 bond and restricted to travel within the continental U.S., with a 48-hour notice to be filed for any travel outside the Northern District of California. They also agreed to surrender travel documents and have no contact with other defendants in the case, except each other.
No federal court records for Davina Isackson were available online as of Wednesday afternoon.
The other Bay Area residents with Midpeninsula ties made their initial court appearance on the case before U.S. Magistrate Judge Joseph Spero in San Francisco on Tuesday. They were advised of their rights and charges alongside a court-provided attorney, Jodi Linker of the Federal Public Defender's Office, with the exception of Palatella, who was represented by Camilo Artiga-Purcell.
They were each released after posting varying amounts: Amy and Gregory Colburn, each on $500,000 bond; Marjorie Klapper on $250,000 bond; Sartorio on $100,000 bond; Palatella on $1 million bond; and Bruce Isackson on $2 million bond.
The eight defendants are scheduled to appear in federal court in Boston, Massachusetts on March 29.
If convicted, all nine defendants face a sentence of up to 20 years in prison, three years of supervised release a fine of $250,000 or double the amount of the gross gain or loss, according to federal prosecutors.
The Weekly's requests for comment from the families were not returned.
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