Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Federal prosecutors are
Speaker 1: taking a hard line with the parents caught up in
Speaker 1: the college admission scandal. They're quickly wrapping up guilty please
Speaker 1: from thirteen parents who are looking to reduce their punishment
Speaker 1: and raising the stakes for sixteen parents who held out
Speaker 1: by indicting them and adding a money laundering charge to
Speaker 1: the conspiracy charge. Joining me is former federal prosecutor George
Speaker 1: Newhouse of Theodora Oranger. So, George, all the parents were
Speaker 1: arrested last month, most on a criminal complaints, So essentially
Speaker 1: a statement of facts and indictment is more serious. Does
Speaker 1: that suggest anything to you, Well, the reason they went
Speaker 1: with a criminal complaint, June, is that the an indictment
Speaker 1: takes a lot more time. It takes time to present
Speaker 1: it to the grand jury. They clearly had timing issues
Speaker 1: because of course they wanted to time the announcement of
Speaker 1: this big investigation within weeks of all the admissions occurring
Speaker 1: at all these elite schools, So that's why they went
Speaker 1: with a complaint. Then, of course what they do is
Speaker 1: they approach all of the defendants. And you said twenty
Speaker 1: nine or thirty, I mean there are probably another fifty
Speaker 1: or so in the winds, and presumably those investigations are continuing.
Speaker 1: So they go to the parents and they say, here's
Speaker 1: the deal. You complete to this, and if you don't,
Speaker 1: by the way, there are other charges out there. They
Speaker 1: could be looking at a charge of Jack Sprauds for
Speaker 1: contributing to this five o n C three not for
Speaker 1: profit charity that was not in any way involved in
Speaker 1: charitable activities. So the bottom line is it's a it's
Speaker 1: a pressure ploy. It is designed to induce quick turnaround,
Speaker 1: guilty please, and that is what makes the life simple
Speaker 1: for US attorneys. So money laundering charges, you automatically think
Speaker 1: about crime syndicates, asset for warfeiture. Is this a bit
Speaker 1: of prosecutorial overreach just to put pressure on these parents?
Speaker 1: An excellent question. June and I have criticized this the
Speaker 1: charging decisions that have been made. It is not money laundering,
Speaker 1: certainly not what Congress intended by money laundring, and of
Speaker 1: course the parents were all charged with conspiracy to commit
Speaker 1: RICO violations that the Racketeer, Influence and Corrupt Organizations Act
Speaker 1: passed in the sixties to combat actual racketeering. We're talking
Speaker 1: about organized crime, narcotics conspiracies, not people who engage in
Speaker 1: commercial fraud. So I think the case has been overcharged.
Speaker 1: But the reason that prosecutors like to do that is
Speaker 1: it puts tremendous pressure on the individuals to waive their
Speaker 1: constitutional rights and the plea guilty. You know, the question
Speaker 1: has been asked over and over about whether the parents
Speaker 1: will spend any time in prison, and at the beginning
Speaker 1: of this I thought no. But with all the publicity,
Speaker 1: there's pressure to make them an example. So is it
Speaker 1: possible that some of the these high powered, high profile
Speaker 1: parents will spend some time in prison? That really is
Speaker 1: the question. At this point can't be answered. But let's
Speaker 1: there's no question these are extremely serious charges. It is
Speaker 1: a high profile case, and as you correctly point out,
Speaker 1: it means that the attention of the nation is directed
Speaker 1: to what is going this court. The nice thing about
Speaker 1: federal judges, I will say, and it's true for them
Speaker 1: all over the country. They don't really respond to pressure
Speaker 1: because politics doesn't involve them. So I'm confident to the
Speaker 1: judges who render these decisions will base it upon the
Speaker 1: unique facts of this case. I think a lot of
Speaker 1: those parents are excellent candidates for straight probation. The judge
Speaker 1: will take into account the price they've already paid, the
Speaker 1: price with their children, the know the tremendous negative publicity,
Speaker 1: and the fact that most of these people take The
Speaker 1: former head of the New York law firm has already
Speaker 1: had lost his job. So there are many punishments and
Speaker 1: detriments that are imposed on people who sustained so many convictions.
Speaker 1: In prison is usually not the answer for these people.
Speaker 1: Let's turn to the students. Some of the students were
Speaker 1: in on the scheme. It said that most of them weren't.
Speaker 1: Could any of those students be charged with a crime. Well,
Speaker 1: at a great point, if the students were knowingly involved
Speaker 1: in the making of false statements and knew that bribes
Speaker 1: were being paid on their behalf, in theory they would
Speaker 1: have aiding and abetting complicity, they could be charged potentially
Speaker 1: in a conspiracy. But that's really I mean, that would
Speaker 1: be an example of overcharging that I think we're not
Speaker 1: going to see, so that's not going to happen. The
Speaker 1: prices students are paying as we're looking at what's occurring
Speaker 1: at the universities is that many of them are being
Speaker 1: expelled from university degrees being taken away. The colleges and
Speaker 1: universities which I think rightly feels that they're the victim
Speaker 1: in these schemes, are taking this very seriously. You mentioned
Speaker 1: the possible tax charges and a revised criminal complaint against
Speaker 1: two of their parents pleading guilty suggests that new line
Speaker 1: of inquiry as well as the prosecutors saying this investigation
Speaker 1: isn't over. So what might they be looking into now, George, Well, again,
Speaker 1: particularly to the people that are not quickly coming to
Speaker 1: terms and pleading guilty, they could be looking at a
Speaker 1: charge that's called a client conspiracy. It is a conspiracy
Speaker 1: to an impair and impede the functioning of the I
Speaker 1: R S and assessing taxes and collecting tax liabilities. And
Speaker 1: I can tell you one of the pet peeves of
Speaker 1: the I R S on the enforcement side are contributions
Speaker 1: to quote five oh one C three's that are not
Speaker 1: really charities and which give back value, and there is
Speaker 1: undoubtedly billions of dollars in illicit deductions taken. I mean,
Speaker 1: this particular foundation was ironically set up to quote serve
Speaker 1: the underserved children, which of course it did quite the opposite.
Speaker 1: But yes, this I expect could be a priority for
Speaker 1: the I R S and could result in further charges.
Speaker 1: What might the parents who do decide to go to trial?
Speaker 1: What might their defense be? Wow, I have no idea,
Speaker 1: because there are tapes. It's not so much I didn't
Speaker 1: do it. But the beautiful thing about capes and prosecutor's
Speaker 1: standpoint is there is no cross examining a tape recording.
Speaker 1: The words of the defendant are out there for everyone
Speaker 1: to hear, so there is no spin control. You'd have
Speaker 1: to be a high place politician in d C to
Speaker 1: be able to explain some of these statements, and of
Speaker 1: course then not credibly. So if they're on tape with Singer,
Speaker 1: which most of the early people are, they really have
Speaker 1: no choice. We'll have to leave it there, George. But
Speaker 1: more to come on this, that's for sure. And thanks
Speaker 1: so much. That's former federal prosecutor George Newhouse of Theodore Oranger.
Speaker 1: Thanks for listening to the Bloomberg Law podcast. You can
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Speaker 1: and on bloomberg dot com slash podcasts. I'm June Grasso.
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