United States v. Sidoo

468 F.Supp.3d 428

UNITED STATES of America, Plaintiff,

v.SIDOO et al., Defendants.

Criminal Action No. 19-10080-NMG

United States District Court, D. Massachusetts.

Signed June 23, 2020

Eric S. Rosen, Alexia R. De Vincentis, Justin D. O'Connell, Kristen A. Kearney, Stephen E. Frank, Leslie Wright, United States Attorney's Office, Boston, MA, Karin Michelle Bell, U.S. Attorney's Office, Worcester, MA, for Plaintiff.

David Z. Chesnoff, Pro Hac Vice, Richard A. Schonfeld, Pro Hac Vice, Chesnoff & Schonfeld, Las Vegas, NV, Martin G. Weinberg, Martin G. Weinberg, PC, Boston, MA, for Defendant David Sidoo.

David S. Schumacher, Hooper, Lundy & Bookman, P.C., Boston, MA, Jordan R.C. Kearney, Pro Hac Vice, Hooper, Lundy Bookman, P.C., San Francisco, CA, Patric Hooper, Pro Hac Vice, Hooper, Lundy & Bookman, PC, Los Angeles, CA, for Defendants Gregory Colburn, Amy Colburn.

Brian T. Kelly, Joshua C.H. Sharp, Lauren Maynard, Nixon Peabody LLP, Robert L. Sheketoff, Boston, MA, Donald J. Campbell, Campbell & Williams, Las Vegas, NV, for Defendant Gamal Abdelaziz.

Stephen H. Sutro, Pro Hac Vice, Duane Morris LLP, San Francisco, CA, Christian G. Kiely, David E. Meier, Melinda L. Thompson, Todd & Weld, Boston, MA, for Defendants Diane Blake, Todd Blake.

Chase A. Scolnick, Pro Hac Vice, Jennifer L. Keller, Pro Hac Vice, Reuben Camper Cahn, Pro Hac Vice, Keller/Anderle LLP, Irvine, CA, for Defendant I-Hsin Chen.

Mark E. Beck, Pro Hac Vice, Mark Beck Law, Pasadena, CA, Perry J. Viscounty, Allison S. Blanco, Pro Hac Vice, Latham & Watkins LLP, Costa Mesa, CA, Roman Martinez, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, Sean M. Berkowitz, Pro Hac Vice, Latham & Watkins LLP, Chicago, IL, George W. Vien, Joshua N. Ruby, Donnelly, Conroy & Gelhaar, LLP, William J. Trach, Latham & Watkins LLP, Boston, MA, for Defendant Mossimo Giannulli.

Melinda Haag, Pro Hac Vice, Walter Brown, Pro Hac Vice, Orrick, Herrington & Sutcliffe LLP, San Francisco, CA, Robin Linsenmayer, Pro Hac Vice, Orrick, Herrington & Sutcliffe LLP, Menlo Park, CA, for Defendant Manuel Henriquez.

Eoin P. Beirne, Mark E. Robinson, R. Robert Popeo, Cory S. Flashner, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, Boston, MA, for Defendant Elisabeth Kimmel.

David C. Scheper, Pro Hac Vice, Scheper Kim & Harris LLP, Los Angeles, CA, Perry J. Viscounty, Allison S. Blanco, Pro Hac Vice, Latham & Watkins LLP, Costa Mesa, CA, Roman Martinez, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, Sean M. Berkowitz, Pro Hac Vice, Latham & Watkins LLP, Chicago, IL, William J. Trach, Latham & Watkins LLP, Boston, MA, for Defendant Lori Loughlin.

Jack W. Pirozzolo, Sidley Austin LLP, Boston, MA, Joan M. Loughnane, Pro Hac Vice, Sidley Austin LLP, New York, NY, John C. Hueston, Pro Hac Vice, Hueston Hennigan, Newport Beach, CA, Marshall A. Camp, Pro Hac Vice, Hueston Hennigan LLP, Los Angeles, CA, for Defendant William McGlashan, Jr.

Allen J. Ruby, Pro Hac Vice, Jack P. DiCanio, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, CA, Michael K. Loucks, Skadden, Arps, Slate, Meagher & Flom LLP, Boston, MA, for Defendant Marci Palatella.

Andrew E. Tomback, Pro Hac Vice, White & Case LLP, New York, NY, Michael Kendall, Yakov Malkiel, White & Case, LLP, Boston, MA, for Defendant John Wilson.

Megan A. Siddall, Seth B. Orkand, Tracy A. Miner, Miner Orkand Siddall LLP, Boston, MA, for Defendant Homayoun Zadeh.

Matthew L. Schwartz, Pro Hac Vice, Sara K. Winik, Pro Hac Vice, Boies Schiller Flexner LLP, New York, NY, Nicholas C. Theodorou, Foley Hoag LLP, Martin G. Weinberg, Martin G. Weinberg, PC, Michael Pabian, Michael Pabian Law Office, LLC, Boston, MA, for Defendant Robert Zangrillo.

MEMORANDUM & ORDER

GORTON, J.

The government has charged defendants with conspiring with William "Rick" Singer ("Singer") to have their children fraudulently admitted to elite universities by, inter alia, fabricating applications, falsifying academic and athletic credentials, cheating on standardized tests, making payments to corrupt exam proctors and bribing university employees and athletic coaches. The defendants have moved to dismiss the indictment on a number of grounds, including that the indictment fails properly to allege (1) a single conspiracy; (2) mail and wire fraud and honest services mail and wire fraud and federal programs bribery and (3) a money laundering conspiracy.

This memorandum and order addresses the following motions to dismiss: (1) Defendants’ Motion to Dismiss Count One Insofar as it Alleges Conspiracy to Defraud Testing Companies of Property and Honest Services (Docket No. 1021); (2) Defendant William McGlashan's Motion to Dismiss Count Seven of the Fourth Superseding Indictment (Docket No. 1023); (3) Defendant I-Hsin "Joey" Chen's Motion to Dismiss Count Five of the Fourth Superseding Indictment (Docket No. 1026); (4) Defendants’ Motion to Dismiss Pursuant to Federal Rules of Criminal Procedure 8 and 12(b)(3)(B)(i), (iv), and (v) (Docket No. 1031); (5) Elisabeth Kimmel's Motion to Dismiss Pursuant to Federal Rules of Criminal Procedure 12(b)(1) and 12(b)(3)(B) (Docket No. 1035); (6) Defendants’ Motion to Dismiss (i) Count One Insofar as it Alleges Conspiracy to Commit Honest Services Fraud against the University of Southern California and Georgetown University and (ii) Count Two Alleging Conspiracy to Commit Federal Programs Bribery (Docket No. 1037); (7) Defendants’ Motion to Dismiss the Money Laundering Conspiracy (Count III) (Docket No. 1039); (8) Defendants’ Motion to Dismiss Count One Insofar as it Alleges Conspiracy to Defraud Universities of Property (Docket No. 1041); and (9) The Joint Motion of Amy and Gregory Colburn to Dismiss Second Superseding Indictment (Docket No. 341). For the following reasons, those motions will be denied.

I. Background

A. "Side door"

The Fourth Superseding Indictment ("the FSI") alleges that, beginning in 2007 and continuing through February, 2019, Singer orchestrated a scheme, which he referred to as the "side door" whereby he conspired with defendants (other than defendants Gregory and Amy Colburn and I-Hsin Chen) to fraudulently designate students as athletic recruits to bypass the traditional admissions process. In order to effectuate and conceal the scheme, Singer used two entities, the Edge College & Career Network, LLC ("The Key"), a for-profit college counseling and preparation business, and the Key Worldwide Foundation ("KWF"), a non-profit corporation.

In essence, the government alleges that the side-door operated as follows: Defendants would agree with Singer to begin the scheme and would make large payments to The Key and/or KWF, often $250,000 or more per student. Singer, in concert with defendants, would fabricate academic and athletic records for defendants’ children. He would then submit the falsified athletic application to the targeted university, at which point a corrupt university insider or coach would present the student as a legitimate athletic recruit to obtain admission for the student. In return, Singer would make payments, disguised as donations, from one of his entities to the corrupt insider or accounts at the university over which the insiders exercised control.

B. Test Cheating

In addition to the side-door scheme, the FSI alleges that Defendants William McGlashan, I-Hsin Chen, Marci Palatella, and Gregory and Amy Colburn (collectively, the "testing defendants") conspired with Rick Singer to fraudulently inflate their children's scores on the ACT and SAT college admissions exams.

As part of the test cheating scheme, the testing defendants allegedly paid Singer to hire individuals to pose as exam proctors (and secretly correct or provide exam answers) and to bribe exam administrators to allow the cheating to occur. Specifically, to achieve the desired high scores, the indictment alleges that Singer and the testing defendants paid (1) Mark Riddell, an allegedly corrupt test proctor, to provide or correct the student's answers on the tests (or take the tests himself) and (2) Igor Dvorskiy, a corrupt test site administrator who Singer bribed to allow test cheating to occur at a testing facility in West Hollywood, California.

Defendants allegedly participated in the test cheating scheme in several ways, including supplying Singer with copies of their children's photo identification to allow Singer to create false identifications for Riddell to take exams on the students’ behalf and obtaining testing accommodations at Singer's direction or by requesting that Singer and Riddell obtain specific scores for their children. The government maintains that Riddell often communicated directly with defendants to discuss the test answers and scores. In exchange for the services of Singer and Riddell, defendants paid up to $75,000 per student as a "donation" to KWF which Singer then used to pay Riddell and Dvorskiy.

C. The Indictment

Count One of the FSI charges the defendants with conspiracy to commit wire fraud and conspiracy to commit mail fraud. In brief, the government maintains that the defendants conspired to deprive universities and testing companies of (1) property in the form of admissions slots and accurate test scores and (2) the honest services of their coaches and administrators and test administrators, respectively.

Count Two of the FSI charges nine of the defendants with conspiring to commit federal programs bribery by bribing agents of the University of Southern California ("USC") in order to secure the admission of their children to that university.

Count Three of the FSI charges the defendants with conspiracy to commit money laundering in connection with payments made to KWF and The Key in furtherance of the admissions scheme.

Counts Four through Twelve charge defendants with substantive fraud and bribery and Count Thirteen charges just defendant Wilson with tax fraud.

II. Legal Standard on a Motion to Dismiss

The Federal Rules of Criminal Procedure provide that an indictment must contain "a plain, concise and definite...