When the insular Silicon Valley venture capital world found out this week that over a dozen local wealthy parents got caught bribing their way into colleges like the University of Southern California, their first reaction was to throw their head back in laughter: They paid $200,000 to get their kid into USC and UCLA, of all places?
Hollywood celebrities including actresses Felicity Huffman and Lori Loughlin have received the bulk of the national headlines. But like all of the world’s great concentrations of power, Silicon Valley is home to rich people comfortable with the idea that normal rules do not apply to them.
An FBI investigation called Operation Varsity Blues ensnared 50 people in schemes to bribe their way into schools like Stanford and Yale to the tune of millions of dollars in the “largest college admissions scam ever prosecuted by the Department of Justice.”
The scheme touched powerful people everywhere from Hollywood to Las Vegas and Miami to, of course, Silicon Valley.
The most prominent Silicon Valley figures to be charged is Bill McGlashan, the founder and managing partner at the venture capital firm TPG Growth. McGlashan is famous for jackpot investments in companies including Uber and Airbnb. Authorities allege that McGlashan paid to have his son admitted to USC as a football recruit even though his kid’s school had no football team.
McGlashan resigned his post at TPG Growth on Thursday.
McGlashan was, up until this week, most famous for advocating ethical investing with an eye for social impact. He’s an absolute star in the Justice Department’s indictments. In one phone conversation captured on tape, an FBI informant is talking with Agustin Hunees, a Napa Valley vineyard owner who was also charged with bribery.
“The whole world is scamming the system,” the informant told Hunees.
“I know your system well,” Hunees said.
After discussing exactly how to fake his own child’s way into university, Hunees turned to the subject of his neighbor, McGlashan.
“Is Bill McGlashen doing any of this shit?,” Hunees asked. “Is he just talking a clean game with me and helping his kid or not? ’Cause he makes me feel guilty.”
The FBI informant said during the recorded call that McGlashen entered into the entire scheme without his son being aware. “He has not been as forthcoming,” the informant said. “With you, and with his own kid, which is—he wants it that way.”
Stanford University, the academic heart of Silicon Valley, sits at the center of the scandal because athletic coaches were allegedly taking bribes in order to give seats to freshman children of rich parents. Stanford University’s head sailing coach, John Vandemoer, was fired this week by the school.
According to the indictment Vandemoer, took financial contributions to the sailing program from an intermediary in exchange for agreeing to recommend two prospective students for admission. Vandemoer has pleaded guilty to racketeering conspiracy charges.
The scandal gets even more bona fide Silicon Valley: Bruce and Davina Isackson are charged with paying $250,000 in Facebook shares to get their daughter into UCLA. Bruce is a Silicon Valley real estate developer in Woodside, California. Manuel Henriquez, a venture capitalist running the firm Hercules Capital, allegedly took part in the scheme as well, alongside his wife Elizabeth.
Hercules said it would replace Henriquez as its CEO, though he’ll remain on the hedge fund’s board and serve as an adviser.
A slate of other Northern California rich folks are accused of involvement in the bribery scheme as well.
Authorities say investor Todd Blake and retail executive Diane Blake also bribed their daughter’s way into USC. Marci Palatella, a liquor distribution executive in Silicon Valley, allegedly paid another price for her son to cheat on his college entry exam and be recruited to USC’s football team. Palo Alto oncologist Gregory Colburn and his wife Amy Colburn stand accused of paying to have someone take their son’s SAT exam. Menlo Park’s Marjorie Klapper, who owns a jewelry business, allegedly did the same thing. Another Menlo Park local Peter Jan Sartorio, president of an organic food company, is accused of paying to cheat on his daughter’s exams.
“For every student admitted through fraud, an honest, genuinely talented student was rejected,” said Andrew Lelling, the U.S. attorney in Massachusetts. “We’re not talking about donating a building. We’re talking about deception and fraud.”
Let that be a lesson for all you hyper-wealthy parents out there. If you’re going to bribe a school to let your kid can get, do it the old fashioned and legal way: Buy the school a damn building.
If you work or live in Silicon Valley and know more about abuses of money and power, Gizmodo would like to know: Email firstname.lastname@example.org.