“The future of white-collar crime will be more complex. Investigators will need to stay on top of new financial products, and understand how they work in order to follow the money.”
Suzanne Lynch, Professor of Practice in Economic Crime at Utica University
The term ‘white-collar crime’ dates back to 1939, when sociologist Edwin Sutherland used it to describe crimes committed by those who used their already high social status to illegitimately boost their personal power and wealth.
Since then, ideas around WCC have evolved to include perpetrators from all socioeconomic levels, with the underlying crimes growing in complexity. But plenty of white-collar crimes of the first order still exist in today’s society, as illustrated by recent cases of college admissions fraud.
The average acceptance rate for colleges in the United States is around 70 percent, according to US News & World Report (Nov. 2021), but it’s much lower for more prestigious institutions. Stanford and Harvard, for example, each only admitted 5 percent of applicants in 2020; those who did gain acceptance on average had high SAT scores (1500 out of 1600) and graduated in the top 10 percent of their high school class.
But college admissions fraud takes place when perpetrators seek to gain acceptance for themselves, or their children, through illegitimate means.
The line between crime and non-crime here may seem blurry to the layperson: parents spend more than $400 million each year on independent education consultants who coach hopeful college applicants in ways that are inaccessible to the less wealthy. That is problematic, but it’s not necessarily criminal. College admissions fraud, on the other hand, is often a combination of several very serious crimes, including bribery, fraud, money laundering, and racketeering.
White-collar crime is, on the surface level, nonviolent, which sometimes lends it a false patina of benignity. But these are not victimless crimes. In college admissions fraud, students gaining fraudulent admission to universities take places away from those who would earn it honorably, depriving them of high-quality education and the lifetime earnings that go with it. Colleges that wittingly or unwittingly enable such scams diminish their institutional reputation, and the reputation of their graduates.
In 2019, the public saw just how widespread college admissions fraud is. To learn more about a major case of college admissions fraud, and how investigators are fighting back against modern cases of white-collar crime, read on.
Suzanne Lynch is a professor of practice in economic crime at Utica University. She holds a bachelor’s degree in criminal justice from Wayne State University and a master’s in economic crime management from Utica University. Lynch is also the director of the financial crime and compliance management programs at Utica University, and has previously served as the assistant executive director of The Economic Crime Institute.
Lynch has extensive experience in risk analysis, fraud control implementation, and investigations in the financial services industry. Formerly vice president for security and risk management at MasterCard Worldwide, she has held fraud management positions at Goldman Sachs and Comerica Bank.
Lynch has conducted numerous training sessions on fraud detection and investigations for both global law enforcement groups and financial institutions throughout the world. She is also responsible for a university partnership with the Association of Certified Anti Money Laundering Specialists (ACAMS) and CipherTrace, an investigation and software company in the field of financial investigations and bitcoin (cryptocurrency) forensics.
The largest case of college admissions fraud ever prosecuted by the US Justice Department was brought about by an investigation codenamed Operation Varsity Blues. In it, the FBI discovered that at least 33 parents of high school students conspired with other individuals to commit bribery and fraud that would facilitate their children’s admission to prestigious colleges and universities. These parents were not from middle-class families, trying to give their children a leg up; instead, many already enjoyed a great deal of wealth and fame.
This vast network of college admissions fraud dates back to 2011, but it only came to investigators’ attention in 2017, when a prep school guidance counselor noticed that a former student had been accepted to several universities as a top-ranked tennis player of African-American ancestry. The puzzling part was that, in reality, the former student wasn’t African-American, nor did they play tennis. The former student was, however, the child of a prominent member of the prep school’s board of directors and an informal client of a man named William Rick Singer.
Singer operated two firms: Key Worldwide Foundation, and the Edge College & Career Network. Investigators learned that between 2011 and 2018, Singer facilitated a scheme through both firms wherein he collected an estimated $25 million, part of which he used to enrich himself, and part of which he used for bribing college officials and inflating the college entrance exam scores of his clients’ children.
Singer—who eventually pled guilty to racketeering, money laundering, conspiracy to defraud the US government, and obstruction of justice—confessed to having facilitated college admissions fraud for more than 750 families. Some of those families included wealthy investors, like Gamal Aziz of Wynn Resorts Development, and family TV stars, like Lori Loughlin of Full House.
Operation Varsity Blues found instances of college admissions fraud in several different forms: acquiring false disability reports for applicants, resulting in more favorable conditions for entrance examinations; having experts take entrance examinations for applicants under false identification; and fabricating sports credentials for applicants to enhance their applications.
Singer had several accomplices, ranging from the parents who paid him millions to the coaches at universities who facilitated fake sports credentials to the heads of educational consulting firms who pretended to be students during college entrance exams.
In March of 2019, federal prosecutors unsealed a criminal complaint charging 50 people in the college admissions scandal with fraud. By April, 16 of the original 33 parents were also charged with conspiracy to commit money laundering. For his actions, Singer was sentenced to 15 months in federal prison; celebrities like Lori Loughlin were sentenced to as little as two months.
Notably, the original 204-page affidavit supporting those criminal charges was signed by an FBI special agent who had graduated from Utica University’s Economic Crime Investigation program (now called Fraud & Financial Crime).
“In the cases of the college admissions fraud scandal, the defendants were charged with honest services fraud, among other criminal violations, due to the bribery of various university employees and the fraudulent taking of entrance exams in order to facilitate their children’s admission into high-status universities,” Lynch says. “The victims here are the genuine applicants who were denied admission and defrauded of honest services because of the bribery.”
Modern white-collar crime touches every socioeconomic class. Today’s white-collar criminals manipulate markets, falsify financial information, defraud public funds, steal intellectual property, and deceive consumers—all to enrich and empower themselves.
What connects these crimes, from an investigator’s point of view, is that they are often primarily financial in nature; to trace them down, investigators need to be experts at following the trail of funding as it bobs and weaves from legitimate to illegitimate sources and back.
“Understanding the sophistication of financial investigations will always be a challenge,” Lynch says. “There are new fraud scenarios that constantly surprise us. However, transaction detection technology, in financial services and in audit departments, has become more sophisticated in identifying potential anomalies in money movement, withdrawals, and deposits.”
In Operation Varsity Blues, the initial tip-off came from an informer, via the guidance counselor at the prep school who noticed irregularities regarding past students. But from there investigators had to connect the dots, first from person to person, then from financial transaction to financial transaction, and finally into a deeper dive that included data outside of just account information and transaction history.
“The tactics of investigators have changed because the different payment methods available in the marketplace to hide the proceeds of crime has increased,” Lynch says. “Today, there are more methods of money movement to hide the true intent in the theft of goods and or services.”
One new and growing area of financial crime investigation is cryptocurrency forensics. On one hand, the vast majority of blockchain transactions are transparent, offering a roadmap for the analyst who is capable of following the complex trail of digital bits; on the other hand, malicious entities have learned methods of at least temporarily obscuring their tracks.
To this end, Utica University has partnered with CipherTrace, a company specializing in financial investigations and cryptocurrency forensics, to offer students specialized training and experience with real cases of modern white-collar crime.
“The future of white-collar crime will be more complex,” Lynch says. “Investigators will need to stay on top of new financial products, and understand how they work, in order to follow the money.”
Matt Zbrog is a writer and freelancer who has been living abroad since 2016. His nonfiction has been published by Euromaidan Press, Cirrus Gallery, and Our Thursday. Both his writing and his experience abroad are shaped by seeking out alternative lifestyles and counterculture movements, especially in developing nations. You can follow his travels through Eastern Europe and Central Asia on Instagram at @weirdviewmirror. He’s recently finished his second novel, and is in no hurry to publish it.