Parents could face tax charges, big fines in admissions scam
BOSTON (AP) — A wide-ranging college admissions cheating scheme allowed wealthy parents not only to get their kids into sought-after schools but to write off the bribes on their taxes, federal authorities say.
Now some parents who are already facing possible prison time could be hit with additional criminal charges and stiff financial penalties, experts say.
And a slew of others who paid into the foundation that an admissions consultant used to mask the bribes, but haven't been charged in the scam, are also sure to face IRS scrutiny.
The IRS has "been known as the follow the money crowd since the days of Al Capone so they will be following those lists and that money very carefully," said Mark Matthews, a former deputy commissioner of the agency who's now an attorney at Caplin & Drysdale in Washington.
Consultant Rick Singer funneled millions of dollars from parents through his tax-exempt organization and then used it to pay coaches and other insiders to designate applicants as athletic recruits or cheat on entrance exams, prosecutors allege.
Among the 33 prominent parents charged in the case are Hollywood stars Lori Loughlin and Felicity Huffman, who haven't publicly commented on the case. The actresses and others – including Loughlin's fashion designer husband Mossimo Giannulli – are scheduled to make their initial appearances this week in Boston federal court.
The parents' bribes were disguised as "donations" to the Key Worldwide Foundation, which purported "to provide education that would normally be unattainable to underprivileged students, not only attainable but realistic."
Singer's foundation sent the parents letters thanking them for the donation that claimed "no goods or services were exchanged," allowing many of them to deduct the payments from their taxes as charitable contributions, prosecutors say.