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After 30+ guilty pleas in the college admissions scandal Operation Varsity Blues, two parents became the first to take their case to trial.
GUILTY PLEA OR TRIAL? OPERATION VARSITY BLUES
INTRODUCTION
After more than 30 guilty pleas in the college admissions scandal dubbed “Operation Varsity Blues,” two parents became the first to ask a jury to decide the case at trial.
In a federal criminal trial, prosecutors must prove their case beyond a reasonable doubt to a unanimous jury. The standards are very high. One holdout juror can derail a verdict and cause a mistrial. Still, prosecutors win most federal criminal cases both at trial or by guilty plea.
In Operation Varsity Blues, the latest parent to plead guilty among the 30+ guilty pleas is Marci Palatella, the CEO of International Beverage, a California liquor distributor. Prosecutors say Palatella spent $500,000 to get her son into the University of Southern California as a football recruit, even though he had no plans to play for USC.
According to the Department of Justice (DOJ), Palatella’s indictment charged her with conspiracy to commit mail and wire fraud and honest services mail and wire fraud; conspiracy to commit federal programs bribery; and conspiracy to commit money laundering.
In August, Palatella pleaded guilty to one count of conspiracy to commit honest services mail fraud. She will have to pay a $250,000 fine and spend six weeks in federal prison. Palatella’s sentence also includes two years of supervised release and 500 hours of community service.
The college admissions scandal has now netted 33 guilty pleas. So far, the punishment for parents who have pleaded guilty ranges from probation to nine months behind bars. Until last week, none of the 57 defendants had gone to trial.
Now, the first trial is underway in federal court in Boston. Two parents — former casino executive Gamal Abdelaziz and former Staples and Gap Inc. executive John Wilson — are exercising their rights to a jury trial under the 6th Amendment of the U.S. Constitution.
Prosecutors charge Abdelaziz and Wilson for illegally paying hundreds of thousands of dollars to get their kids into the University of Southern California (USC) by falsely presenting them as athletic recruits.
BACKGROUND
In 2019, prosecutors made national and international headlines when they charged dozens of parents, athletic coaches, and others in Operation Varsity Blues.
Gamal Abdelaziz and John Wilson are among 57 people the US Attorney’s Officer charged, and they are the first parents to stand trial. Operation Varsity Blues is an FBI investigation into a network negotiating for coveted spots to attend U.S. universities in exchange for payments to gatekeepers to get around the normal admission process.
As discussed before on our Prison Professors blog, the trial penalty is a genuine concern for defendants who take a white-collar criminal case to trial against the federal government. The trial penalty refers to the difference between the prison sentence available in a plea offer before trial versus a defendant’s sentence after trial. According to the National Association of Criminal Defense Lawyers, “this penalty is now so severe and pervasive that it has virtually eliminated the constitutional right to a trial.”
Against the backdrop of 30 guilty pleas from parents accused in Operation Varsity Blues, a set of defendants deciding to test the government’s allegations in a jury trial is a significant development.
Click here for a detailed blog post about the trial penalty.
Some legal observers think Abdelaziz and Wilson have a real chance at trial. “I’m not shocked that they went to trial,” Ashwin Ram, a law partner at Steptoe & Johnson, told Yahoo News. “And frankly, they have a real shot, just like anybody who stands before a jury has a real shot, of having a jury, or a single juror holdout, or maybe of convincing the jury that they were defrauded.”
TO PLEAD GUILTY OR GO TO TRIAL
Taking a guilty plea versus going to trial is a difficult decision to have to make. Statistics show that the vast majority (97%) of federal criminal defendants end up taking a guilty plea.
After negotiations between prosecutors and defense counsel – a process referred to as plea bargaining – both sides may reach an agreement as to the sentence or possible sentence range for a criminal defendant. In federal cases, that agreement is conditional, subject to the approval of a federal judge. The defendant usually has charges reduced and expects to receive a lighter sentence in exchange for pleading guilty.
Trial juries are unpredictable and criminal trials can be very taxing ordeals. Entering a guilty plea avoids the uncertainty of a trial. Pleading guilty, especially in high profile matters, keeps unwanted media attention to a minimum.
Going to trial is expensive and taxing, and there is also the trial penalty, as we discuss here (The Trial Penalty).
However, a guilty plea is a full-blown criminal conviction with all the attendant consequences to a person’s professional and personal lives, not to mention the loss of freedom. When prosecutors refuse to deal in good faith, some criminal defendants decide to try their case to a jury.
THE CHARGES IN OPERATION VARSITY BLUES
The indictments against dozens of parents involved in the college admissions scandal charge them with “conspiring to commit fraud and money laundering in connection with a scheme to use bribery to cheat on college entrance exams and to facilitate their children’s admission to selective colleges and universities as purported athletic recruits.”
Specifically, these parents allegedly conspired with William “Rick” Singer and others to bribe SAT and ACT exam administrators to allow a test taker to take college entrance exams in place of students secretly or to correct the students’ answers after they had taken the exam. The parent-defendants also conspired to bribe university athletic coaches and administrators to facilitate the admission of students to elite universities as purported athletic recruits.
In addition, the indictments specifically charge some defendants with “conspiring to launder the bribes and other payments in furtherance of the fraud by funneling them through Singer’s purported charity and his for-profit corporation, and transferring money into the United States from outside the United States, to promote the fraud scheme.”
ABDELAZIZ’S & WILSON’S SPECIFIC CHARGES
At their trial, Abdelaziz and Wilson face two charges:
- one count of conspiracy to commit mail and wire fraud and honest services mail and wire fraud and
- one count of conspiracy to commit money laundering.
The charge of conspiracy to commit mail and wire fraud and honest services mail and wire fraud provides a maximum sentence of 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
The charge of conspiracy to commit money laundering provides for a maximum sentence of 20 years in prison, three years of supervised release, and a fine of $500,000 or twice the value of the property involved in the money laundering.
As in all federal criminal cases, their sentences, if any, will be imposed by the federal district court trial judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Prosecutors say that Abdelaziz paid $300,000 to the sham charity run by the scheme’s mastermind — admissions consultant Rick Singer — to get his daughter into USC as a basketball recruit.
As for Wilson, who heads a Massachusetts private equity firm, prosecutors say he paid $220,000 to have his son designated as a USC water polo recruit and an additional $1 million to buy his twin daughters’ ways into Harvard and Stanford.
ABDELAZIZ’S & WILSON’S DEFENSES
A criminal defendant does not have the burden of proof in a criminal case. The typical strategy is to sow enough doubt with at least one jury member so that prosecutors cannot get a unanimous verdict.
Defense attorneys for Abdelaziz and Wilson argue that the parents believed their payments were legitimate donations and that USC’s treatment of their kids was routine for wealthy parents. USC was, in fact, okay with granting preferential admissions treatment in exchange for donations.
Moreover, according to court documents, Abdelaziz and Wilson maintain that they did not know Singer submitted false information about their children.
Moreover, they argue that USC is not a fraud victim, given its standard practice of rewarding large donors by giving their kids preferential admissions treatment.
In response to these arguments about USC’s admissions policies for the children of large donors, prosecutors accuse the defense of trying to turn the case into a trial on USC’s admissions policies to divert attention from their own fraudulent conduct. To some extent, the trial judge agrees. The judge advised defense counsel that he will not allow the trial to become all about USC. The defense can introduce evidence that USC admitted unqualified students whose parents made significant donations, with one caveat: defendants have to show that they were aware of it when they paid the alleged bribes.
Defense attorneys will have to contend with evidence about their clients’ incomes, wealth, spending, or lifestyles, which they believe will unfairly prejudice the jury. The judge will allow this evidence because it could show that the parents were motivated to have their children admitted to elite universities to maintain or improve their status in the community.
KEY WITNESS?
Rick Singer, the admission scheme’s mastermind who began cooperating with the FBI in 2018 and recorded his phone calls with parents, pleaded guilty in 2019. While he could be a key witness for the government, prosecutors have not yet confirmed whether they will call him to take the stand at this trial.
New reporting indicates that defense counsel has notes in which Singer claims investigators told him to lie and goad parents to incriminate themselves. That could be explosive evidence at trial. In the notes found on Singer’s phone in 2018, he wrote that FBI agents instructed him to tell the parents that the payments were “bribes.” The agents deny pressuring Singer to lie. Putting a critical witness on the stand usually presents the defense team with a golden opportunity to attack their credibility in front of the jury. On the other hand, not calling Singer to insulate him from attack also could have its downside. Singer’s absence could help create doubts for some jury members.
Opening statements took place on September 13, and the trial is ongoing.
CONCLUSION
The choice of whether to plead guilty or exercise the right to a jury trial in a white-collar criminal case is a difficult one.
After 30+ defendants pleaded guilty in Operation Varsity Blues, two parents are on trial. Abdelaziz and Wilson are the very first defendants to go to trial. What are their chances at trial? Hard to know.
Going to trial in a federal white-collar criminal case is generally considered a bold move but one that could be well rewarded. On the other hand, federal white-collar criminal defendants face strong headwinds, and the potential to get stuck with the trial penalty is real.
We do not know what plea offers Gamal Abdelaziz John Wilson received before trial. Still, the trial penalty strongly suggests there would be a substantial difference between the prison sentence available in a plea offer before trial versus a defendant’s sentence after trial.
Follow our blog at Prison Professors for ongoing updates on all developments in the trial.
