LAW & EDUCATION
Operation Varsity Blue
By Arthur Katz, J.D.
On March 12, 2019, federal prosecutors charged 50 people in a series of related college admission schemes, labeled by the government “Operation Varsity Blue.” The schemes involved various activities by several individuals to assist high school students with wealthy parents obtain admission to highly selective colleges utilizing bribery, false statements and other improper means. Since that date, a seemingly never-ending stream of newspaper, magazine and Internet articles have been published concerning the college admissions process, and the parents involved in the scheme.
Much can be said about what occurred and whether it is a symbol of the times that we are in, as the parents involved did not seem to be concerned about the actions they were taking until they were caught. Gaming the college admission system for their children was the paramount objective and the colleges involved were uniformly remiss in having lax procedures in place - - which permitted the improper activities to occur.
Yet, the federal crimes that the participants were charged with had nothing to do with the college admissions process or bribery of college admissions officers, as such. The crimes that the government claimed were committed were (i) conspiracy to defraud the United States under Title 18 USC §371, (ii) mail fraud under Title 18 USC §1341, (iii) honest service mail fraud under Title 18 USC §1341 and §1346, (iv) wire fraud under Title 18 USC §1343, (v) honest service wire fraud under Title 18 USC §1343 and §1346, (vi) laundering of monetary instruments under Title 18 USC §1956, and (vii) engaging in a pattern of racketeering activity under Title 18 USC §1962, as defined in Title 18 §1961.
The above crimes are federal, not state, crimes (although most states have similar laws) and the states in which the acts were committed still may take action against the participants, as long as the participants are not charged with the same crimes. Moreover, the various colleges involved also may have claims against one or more of the participants based upon violation of fiduciary or other duties to the college, submitting an application for admission with falsified information, or other theories of liability, and the affected colleges may request students to leave.
What are the elements of these federal crimes?
First, each of these crimes involved the knowing commission of a fraudulent act. Thus, each of the involved parents needed to know that what they were doing was wrong. And, at least one parent, who under very unusual circumstances apparently paid over $1 million but did not know that what was being done was wrong, was not charged by the government.
Second, each of the charged crimes had other elements. A brief explanation of each is helpful:
• Section 371 is a general conspiracy statute and creates an offense when two or more people conspire to commit any offense against the United States or defraud the United States in any manner or for any purpose, including tax evasion
• Section 1341 provides that it is a crime to devise a scheme to defraud AND, in connection with such a scheme, use the U.S. postal service.
• Section 1343 provides that it is a crime to devise a scheme to defraud AND, in connection with such a scheme, use wire, radio or television (or other means of electronic transmission) in interstate commerce (i.e., transmission between two states).
• Section 1346 provides that a scheme to defraud, which includes a scheme to deprive another of the intangible right of honest service, is, itself, a crime. Honest service fraud is a relatively new crime, added by Congress in 1988. The attributes of honest service fraud, which are not defined by statute, are being defined by the courts, and are different depending upon whether the fraud is committed by public officials or in the private sector. Although it is believed by some prosecutors that the term means a lack of integrity or fundamental fairness, or dishonesty, the vagueness of the statute has had courts reaching for something more. Based upon the case law to date, it is not at all clear in my view that honest service fraud was committed by most of the people charged in Operation Varsity Blue.
• Section 1956 provides that it is a crime to conduct or attempt to conduct an unlawful activity using proceeds that were known to have been obtained from an unlawful activity.
• Section 1961 is a definitional provision that, among other things, defines “racketeering activity” as the commission of various crimes, including any of the crimes which are the subject of sections 1341, 1343 and 1956. The commission of any two racketeering activities within a 10-year period is deemed a “Pattern of Racketeering Activity” and a separate crime.
• Section 1962 provides that a pattern of racketeering activity with another element, such as receiving income from such activity or engaging in such activity in interstate commerce, is a crime.
A review of the foregoing alleged crimes shows a remarkable degree of overlap and duplication. This is not uncommon as each crime has its own penalty and the penalties can be additive, which entices participants to attempt to more rapidly settle the charges and agree to lesser counts of a criminal complaint and, thus, a lesser penalty.
Lastly, the list of offenses which have been charged to date may not be complete, and may, in time, include lying to the FBI while under oath and other federal offenses.
Thus, the question becomes whether the attempt made by the affected parents to gain admission to a highly competitive college for their child may have been worth the resulting penalty. I suspect that Operation Varsity Blue has only disclosed the tip of this activity, and that parents still will consider the odds of being caught when determining whether to engage in attempting to game the college admission system. #
