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We started a podcast a number of years ago to go over a few scandalous, or noteworthy, frauds that we had observed over the past year. These schemes may not have been enacted by a fraudster during the year, but they certainly came to light during that calendar year. We noticed it was one of the most listened to and downloaded podcasts. Since then, it’s grown into a regular feature.

January’s podcast is December’s Facebook Live recording during which ACFE President and CEO Bruce Dorris, J.D., CFE, CPA, and Fraud Magazine Associate Editor Emily Primeaux, CFE, unveiled the most scandalous fraud schemes of 2019. Each story that was selected went through a rigorous vetting process, both internally and with the ACFE’s Advisory Council. The article is available in its entirety on Fraud-Magazine.com.

Below is an excerpt from the full transcript of the discussion, which you can download in PDF form or listen to at the bottom of this post.

Emily: Why don't you kick us off with our list of five?

Bruce: Sure. The most scandalous one, at least this is in my opinion, others may have it — we have that top five list — but one that really stands out is the college admissions scandal here in 2019: Operation Varsity Blues, as it was labeled by the Department of Justice in the U.S. This one came to light in March of 2019. As of now, 51 people were alleged to participate in this particular fraud. What happened, there was an individual named Rick Singer out in California, in the Los Angeles area, had a group called The Edge College & Career Network and also had a nonprofit named Key Worldwide Foundation.

What he would do is, using his connections, either through certain universities here in the U.S. or college exam admission takers… For those who need to get into an exam in the United States, there are certain, or rather to get into a college in the United States, there are certain exams that need to be taken. What Rick Singer would do is set up for those to either be changed and altered or having just a surrogate test taker come in on certain ones. Now, obviously he didn't do that for free. What he would do is going to some very lucrative and well-known individuals, primarily in the U.S. Many people know who Lori Loughlin is.

Emily: Aunt Becky!

Bruce: Aunt Becky from “Full House” in the late 1980s, 1990s and still acting even up until this fraud was uncovered back in March of 2019. Other actors and actresses, as well, and then a lot of business people who were fairly high ranking, former CEO of PIMCO, and others within the West Coast and East Coast of the United States and some very, very high organizations and businesses in those companies. What was really egregious about this, it wasn't just the fact that they would go in and take those exams. That alone is pretty pronounced, but it was just how the parents were involved with this. You've read it, Emily, you wrote the story about it.

You've got Rick Singer going to these universities, using that connection because a lot of the folks, it was over 30 that were just the parents of the 50 who were involved with this. Not only people within Rick Singer's organization, but also coaches at these very prestigious universities throughout the United States. University of Southern California is the one that really came to light because of the Hollywood connections to it, but even here in Austin, Texas, at the University of Texas at Austin, the tennis coach was brought down in this particular scam as well.

It's interesting the way it came about. There is no honor amongst thieves.

The Justice Department was investigating a guy name Morrie Tobin in Los Angeles for some securities-related fraud. As part of that investigation, he brought to light how he was approached by the soccer coach at Yale, and then recorded a conversation there about how much it would cost in order to be recruited by this prestigious university in order to move up in the application process because a lot of these teams have a certain amount of applicants that they can take and in this case, a certain number of people who went to the highest bidder. I don't know what your take on this one is, Emily, but this one to me is the most scandalous fraud of 2019.

Emily: The fraud scheme aside, the parents really did a disservice to their children. It really impacts also a lot of students in America who could have had those spots, who were left out of universities, or missed out on opportunities because of this elaborate scheme. You have money changing hands. You have celebrities involved, and then you have the unnamed, the faceless students who probably missed out on pretty impressive opportunities because of this scheme. It really is, like you said, probably at the top of when it comes to egregious acts.

Bruce: That's a great point that you have there. You got a child who has worked virtually their entire life at this point, like, "I really want to go to this very elite school." Come from a disadvantaged background, and they really worked to get there, only to have that spot because there's only so few at that [level], that because of somebody donating half a billion dollars, or whatever, or half a million dollars to this foundation in order to get their kid in. Pretty scandalous in my opinion. It looks like it is in yours as well.

Emily: Yes, it is.