Wealthy parents caught up in a $25 million college admissions cheating scandal dubbed “Operation Varsity Blues” got a tax write-off for bribes allegedly funneled through the same type of non-profit organization that allows individuals to avoid paying taxes on money they give to their church.
The 501(c)3 classification, the most common type of nonprofit in the United States, has been in Baptist news of late because of a Trump administration goal of repealing the “Johnson Amendment,” a provision in the tax code that prohibits pastors from endorsing candidates from the pulpit.
Arguments for leaving the Johnson Amendment intact include that its repeal would encourage political donors to shift their campaign contributions from Political Action Committees to a new kind of dark money. Currently political donations are not tax deductible, and there are limits on how much an individual can give to a candidate in an election or to political parties in a year.
Rick Singer
According to a federal indictment filed March 5 in Massachusetts, an entrepreneur and life coach named Rick Singer took in $25 million from anxious parents desiring to get their kids into prestigious schools.
Federal prosecutors say the resident of Newport Beach, California, recorded much of the money as tax-deductible donations to his charity, Key Worldwide Foundation, while actually using it to bribe coaches and insiders at test centers to get children of 50 parents including actresses Felicity Huffman and Lori Loughlin into some of the country’s most elite universities.
“The Key Worldwide Foundation endeavors to provide education that would normally be unattainable to underprivileged students, not only attainable but realistic,” the non-profit’s mission statement claims. “With programs that are designed to assist young people in everyday situations, and educational situations, we hope to open new avenues of educational access to students that would normally have no access to these programs. Our contributions to major athletic university programs may help to provide placement to students that may not have access under normal channels.”
Singer, 58, pleaded guilty this week to racketeering, money laundering, tax evasion and obstruction of justice for rigging applications to get underqualified children of wealthy and well-connected parents into the college of their choice.
The list of schools taken in by the scam include prestigious private colleges like Yale, Georgetown and Stanford. The scandal also reaches into the Bible Belt, with Wake Forest University volleyball coach Bill Ferguson named as one of a dozen defendants in athletic departments accused of taking money to influence the admission of a student who had previously been on a waitlist.
The indictment says in or about 2017 Singer directed $100,000 from one of the Key Worldwide Foundation charitable accounts to Ferguson in the form of a $10,000 check to the Wake Forest Deacon Club, $40,000 to Wake Forest Women’s Volleyball and a $50,000 check to a private volleyball camp that Ferguson controlled.
In exchange Ferguson allegedly agreed to designate the daughter of one of Singer’s clients as a recruit of the women’s volleyball team, thereby facilitating her entrance into Wake Forest, with an acceptance rate of 28 percent ranked the 71st hardest college to get into in America.
Founded in 1834 by the Baptist State Convention of North Carolina, Wake Forest severed ties with the statewide affiliate of the Southern Baptist Convention in 1996. At the time 24 of 36 trustees were North Carolina Baptists, and the state convention contributed $500,000 of the school’s $141 million budget.
The school’s Baptist heritage carried on with the opening of the Wake Forest University School of Divinity in 1999, established with gifts from Baptist churches as an intentionally ecumenical divinity school informed by a “progressive Baptist heritage.”
Led until 2010 by founding dean Bill Leonard, a well-known Baptist historian who writes for media outlets including Baptist News Global, Wake Forest Divinity School is one of 20 schools eligible for scholarships funded by the Cooperative Baptist Fellowship.
Nathan Hatch
Nathan Hatch, the son of a Presbyterian minister and former religion professor installed as president of Wake Forest University in 2005, said March 12 that Ferguson has been placed on administrative leave.
“The alleged conduct is in direct conflict with the values and integrity of Wake Forest and its athletics program,” Hatch said in a statement. “The university’s outside counsel is conducting an internal review, and Wake Forest has and will continue to cooperate fully with federal authorities as the legal process unfolds.”
On Wednesday Hatch added that the Justice Department considers Wake Forest to be a victim of fraud.
“In no way has it been suggested that the University was involved in the deceitful practices, nor were any employees, other than Ferguson, accused of wrongdoing,” he said.
“The integrity of our admissions process is intrinsic to our mission, and we believe the integrity of intercollegiate athletic competition is essential to the development of student-athletes and the support of our broader community,” the president said.
He said the university “is reviewing our practices related to admissions and athletics to ensure that we are in complete alignment with our values.”
Hatch said the student mentioned in the indictment was admitted and is currently enrolled at Wake Forest. “We have no reason to believe the student was aware of the alleged financial transaction,” he said.