College admissions scandal takes down another CEO

BY Lance LambertAugust 31, 2021, 2:00 AM
The Trojan statue at the center of the USC campus for the first day of in-person classes, as seen in August 2021 in Los Angeles, CA. (Al Seib—Los Angeles Times/Getty Images)
The Trojan statue at the center of the USC campus in L.A., on the first day of in-person classes in August 2021. (Al Seib—Los Angeles Times/Getty Images)

Rick Singer’s sales pitch to rich parents of academically weak high schoolers was straightforward: Pay him a hefty fee, and he’d use his “side door” to get their youngster into an elite university. It actually worked…well, until the Feds started sniffing around.

In 2019, the scheme came crashing down when federal prosecutors announced charges against dozens of parents. The list included big names like actresses Felicity Huffman and Lori Loughlin. Turns out, the Feds had flipped Singer. Not only did he give them names and records, but he agreed to wear a wiretap. The scheme was coined the “college admissions scandal” and even got its own must-watch Netflix documentary: Operation Varsity Blues: The College Admissions Scandal.

Last week, prosecutors scored another guilty plea resulting from the scandal: Marci Palatella, the CEO of International Beverage, a California liquor distributor, admitted guilt. Prosecutors say Palatella spent $500,000 to get her son into the University of Southern California as a football recruit, despite the fact that her son had no plans to ever play for the Trojans.

According to the Justice Department, Palatella pleaded guilty to charges of “conspiracy to commit mail and wire fraud and honest services mail and wire fraud; conspiracy to commit federal programs bribery; conspiracy to commit money laundering.”

She will have to pay a $250,000 fine and spend six weeks behind bars. After that, Palatella will undergo two years of supervised release and must fulfill 500 hours of community service.

The college admissions scandal has now netted 33 guilty pleas, according to the Associated Press. The list includes other executives, such as former Pimco CEO Douglas Hodge.

See how the schools you’re considering fared in Fortune’s rankings of the best executive, full-time, and online MBA programs.