The Department of Justice (DoJ) today unsealed indictments related to a year-long federal investigation of racketeering related to admissions to some of the most prestigious US colleges and universities: Stanford, UCLA, Wake Forest, Yale, Georgetown, University of Texas, University of San Diego, USC. The ringleader was a guy named William Rick Singer. There are two main elements to the alleged scam: (first) by bribing two test administrators the perpetrators could manipulate SAT and ACT scores for some students; and (second) that they colluded with coaches at the schools to prioritize them for athletic admissions slots even when some were not competitive athletes. At least $25 million dollars was paid by parents, over 40 indictments were announced, careers and reputations have been ruined.

So why is this relevant for a blog post about non-profits? Well, according to information released by the DoJ, the ringleader of the scam used two related entities – for-profit The Edge College & Career Network, LLC and non-profit Key Worldwide Foundation (KWF) – to receive payments from the parents of the student applicants and to make payments to the people within the colleges and universities who could manipulate the admissions. (See:

The KWF website describes their mission: “Since its founding in 2014, the Key Foundation, a 501(c)3 non-profit organization, has touched the lives of hundreds of students that would never have been exposed to what higher education could do for them. Many of these students have only known life on the streets, surrounded by the gang violence of the inner-city. The Key Foundation, directly or partnered with other organizations, have met these students where they live, to encourage them, and open doors for enriching opportunities beyond their wildest imaginations. More than just donating funds, the Key Foundation often donates the time of the very experts that coach and train some of the most affluent students in the world, to give the same opportunity to those that have none.”

To illustrate part of the scam, one of the points in the criminal information filing states: “In or about the spring and summer of 2018, the client paid SINGER approximately $1.2 million in multiple installments, including approximately $900,000 that was paid into one of the KWF charitable accounts.” Another line in the same document states: “On or about January 1, 2018, after Yale Applicant 1 was admitted to Yale, SINGER mailed the soccer coach a check for $400,000, drawn on one of the KWF charitable accounts.” The 501(c)3 organization was being used as a money-laundering vehicle to facilitate racketeering.

Not counting the perpetrators and the parents who hired them, there are numerous victims in this story: (1) the unwitting student applicants whose names and educational credentials are tarnished and who, if they are still enrolled, might be expelled; (2) anyone who contributed to the non-profit because of its ostensible mission; (3) the entities that received funds from the non-profit as cover for the scam, whose names are being dragged into the media coverage; (4) unwitting schools where applicants were placed based on the bad actions of people who misused their admissions authorities; (5) the businesses and employees of the parents who are publicly implicated in the racketeering scam; etc.

Certainly, federal law enforcement officers have greater capabilities to uncover scams of this nature, but there were also opportunities for due diligence by others. Two basic ones – among others:

  • The schools could have done investigations of people who had the power to influence the admissions process. In the publicly-available 2016 990 filing for KWF it lists an individual by name as the recipient of $825,000 in consulting revenue. At the time, he was the coach of the Georgetown University tennis team. Many of the applicants whose admission was facilitated by the scam never played competitive sports for the colleges and universities to which they were admitted. Could suspicious activities by the college officials have been discovered? Yes, if someone asked.
  • The entities that received funding from KWF could have done some research on the entity that was making grants to them. The 990 lists twelve such entities that collectively received over $850,000 that year. The KWF website also lists eight entities it calls “partners.” Could any of them have asked for more information about KWF, its source of donations, its programming, etc. – anything that might have tipped them off to a scam? Yes, if someone asked.

The non-profit world is about doing good and sometimes that coaxes us into leaving our guard down. That is when people like those involved in this scam creep in and take advantage. When the reputation of your organization is at stake, it pays to go the extra step with effective due diligence – ideally facilitated by an independent third party who does not have the conflicted incentive of wanting things to work out. Even with the best of intentions and the right outside resources, you won’t catch every scam. But the first step is being willing to ask the right questions and listen to what you hear back.