19 Jun All Fun and Games Until Somebody Loses an Eye
On March 12, the “Varsity Blues” scandal hit the headlines, and gossips across America leaped at the fresh meat. That’s the day we learned about a group of 1%ers who paid anywhere from $15,000 to $6.5 million to cheat their kids’ way into some of the most prestigious colleges in America. The Department of Justice indicted 50 people, including actresses Felicity Huffman and Lori Loughlin. Those who pled guilty right away are starting to receive sentences. Those who claimed innocence got rewarded with additional money laundering charges.
The parents worked with a private college counselor named Rick Singer. In some cases, they paid him $15,000 or more for crooked proctors to doctor their kids’ SAT tests. In others, they paid up to $6.5 million for him to bribe complicit coaches to tag the children as athletic recruits. Of course, nobody put “bribe” on the memo line of the check. Instead, they made “donations” to Singer’s “charity,” the Key Worldwide Foundation. That way, they got to deduct the bribes as charitable gifts! But now the chickens are coming home to roost . . . and the IRS is there to collect, too.
Prosecutors have piled up 3 million pages of evidence, including over a million pages of emails, 4,500 wiretapped phone conversations, extensive bank records, and cooperation agreements from Singer and half a dozen of his henchman. (When you conspire with a guy named “Singer,” don’t be shocked when he sings like a canary when the you-know-what hits the fan.) Deciding whether or not to plead sounds like some sort of one-question IQ test. Still, just 22 of the original 50 defendants have taken that easier way out.
Actresses Huffman and Loughlin have attracted the biggest headlines. Huffman represents the man-up end of the spectrum — she copped a tearful plea almost immediately to mail fraud charges for paying $15,000 to doctor her daughter’s SAT scores. Since the dollar amount in her case was at the low end of the scale prosecutors have recommended a relatively light sentence: four months in a place that looks nothing like Wisteria Lane, 12 months of supervised release, a $20,000 fine, and additional restitution.
Loughlin and her husband, fashion designer Mossimo Gianulli, represent the opposite end of the spectrum. The couple dropped $500,000 to get their bratty daughters into a school they clearly don’t even want to attend. Loughlin swiped left on a deal that would have included two years in a fuller house, and now faces up to 40 with the extra money laundering charge. Us magazine — everyone’s go-to source for breaking legal news — reports that the IRS is eyeing the couple’s tax returns like a hungry bear eyeing a particularly fat fish.
It looks like parents can count on paying back the taxes they avoided by deducting whatever they paid Singer. Real estate mogul Bruce Isackson pled guilty to paying (and deducting) $600,000 in bribes to pass his daughters off as athletes. The charges included one count of conspiracy to defraud the IRS. Prosecutors are recommending he spend 37-45 months occupying a 6’x8′ parcel of federal property and pay $139,509 in restitution. That figure just happens to equal the exact amount of tax he saved by writing off the bogus “gifts.”
Singer reports that he collected a total of $25 million to help 761 families open “side doors” to schools for their kids. That means we can probably expect more names to be named. Hopefully yours won’t make the list! The good news is, while we can’t help you get your kids into the Ivy League, we can help you make the most of tax breaks for paying the bill. So call us for a plan before you pack up the car to move them in, and see how much we can help you save!