White Collar Crime

2 'Varsity Blues' convictions overturned, partly based on faulty honest-services fraud theory

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Hedge fund founder John Wilson arrives at federal court with his wife, Leslie, in April 2019 to face charges in a nationwide college admissions bribery scandal in Boston. Photo by Charles Krupa/The Associated Press.

The 1st U.S. Circuit Court of Appeals at Boston on Wednesday overturned mail and wire fraud convictions of two fathers accused of paying bribes to gain admission to top colleges for their children.

The appeals court overturned the entire conviction for former casino executive Gamal Abdelaziz and all but a tax conviction for hedge fund founder John Wilson.

Law360, Reuters and the New York Times have coverage of the May 10 opinion. How Appealing provided a link.

“The victory in the appellate court was striking because Mr. Wilson and Mr. Abdelaziz were the first to take their chances in front of a jury,” the New York Times reports. “Dozens of other wealthy parents, including some celebrities, pleaded guilty, making it seem as if the prosecutions were ironclad. The investigation became a symbol of how wealthy, prestige-obsessed parents had turned elite universities into brand-name commodities.”

Abdelaziz and Wilson had argued that they thought that they were acting legitimately when they made payments to university accounts to secure admission for their children as athletic recruits.

The government contended that Abdelaziz and Wilson participated in a conspiracy with college admissions consultant Rick Singer, the figure at the center of the college admissions scandal known as “Varsity Blues.” Singer has pleaded guilty to conspiracy charges for his work on behalf of various clients.

The government also claimed that Abdelaziz and Wilson conspired to deprive universities of the honest services of their employees and of property in the form of admissions slots.

The 1st Circuit ruled that:

  • The honest-services theory is invalid ad a matter of law under the 2010 U.S. Supreme Court decision in Skilling v. United States. In the cases against Abdelaziz and Wilson, the money paid to universities—the alleged victims of the bribery scheme—was not the kind of traditional bribe that can be prosecuted under Skilling, the appeals court said.
  • Jurors should not have been instructed that admissions slots are university property. The issue is relevant because federal law bans the use of mail and wires for schemes to obtain money or property based on false representations. The appeals court stressed, however, that it was not holding that admissions slots can never be property. Resolution of the property question would need more details.
  • The government failed to prove that Abdelaziz or Wilson agreed to participate in the overarching conspiracy, and this prejudiced them because the government introduced evidence about wrongdoing by other parents.

The 1st Circuit ruled in two combined cases: United States v. Abdelaziz and United States v. Wilson. Judge Sandra Lynch wrote the opinion.

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