Douglas Hodge, the former chief executive of bond giant Pacific Investment Management Co., is scheduled to be sentenced Friday for his role in the sprawling college-admissions cheating scandal that has ensnared more than 50 parents, coaches and others.
Federal prosecutors say Mr. Hodge paid a total of $850,000 to the
- company and charity of the scheme’s ringleader, William “Rick” Singer, as well as to
- Georgetown’s former tennis coach and
- a University of Southern California account controlled by an administrator who was also charged in the case. His tab was the largest of any parent charged.William “Rick” Singer used his network to recruit parents and coaches, often by word of mouth from clients who used his legitimate college-counseling services and through more formal referrals by financial advisers and others.
Mr. Hodge pleaded guilty in October to charges of fraud conspiracy and money-laundering conspiracy and admitted to working with Mr. Singer over the course of more than a decade to slot four children into colleges as purported athletic recruits, even when they weren’t competitive players. He was in talks with Mr. Singer about a fifth child as well.
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Mr. Hodge apologized for his behavior in a letter to the judge ahead of his sentencing. “I have made serious mistakes in judgment, and, in the process I have violated the law. For these actions, I take full responsibility and I am truly sorry,” he wrote.
Prosecutors have asked for Mr. Hodge to be sentenced to two years in prison, three years of supervised release, a $200,000 fine and 300 hours of community service.
Mr. Hodge’s attorneys have asked for a prison term at the low end of the sentencing guideline range, which the probation office determined was between zero and six months, as well as supervised release and community service. They also requested the sentence be split between home detention and incarceration.
Thirteen parents have been sentenced so far, by three different judges. The longest prison term handed down was six months, by the same judge overseeing Mr. Hodge’s case.
Years ago, Occidental College opted not to use admissions to chase money. The decision came with a cost.
One day in 2012, an admissions director at Occidental College got a surprising email. William “Rick” Singer proposed that the school reconsider an application from an academically challenged daughter of a wealthy family.
He wanted the school to overturn her rejection, and he suggested the parents would give the school money above and beyond tuition.
“Are you kidding?” an incredulous Mr. Singer wrote about her not being admitted. “We can create a win-win for both of us.”
Vince Cuseo, the admissions official at the small California liberal-arts school, gave a simple response: No.
Mr. Singer, the admitted mastermind of what federal prosecutors have called the largest admissions-cheating scandal in the country, had reason to be hopeful. He had made inroads into brand-name colleges and universities around the country scores of times, exploiting higher education’s focus on
Mr. Singer’s illegal operation has spawned criminal charges against 52 people, 29 of whom have pleaded guilty or plan to. It has also further highlighted the role of money in admissions, and the often wide gulf between high ideals of meritocracy and mercenary business practices.
Occidental, a small, private liberal-arts college in Los Angeles, has charted a different path. Two generations ago, it opted out of the chase for well-heeled students and put its money into scholarships for less well-off minorities.
Those decisions, however, have come at a cost. Occidental’s $434 million endowment is roughly $70 million smaller than what it might have been had the school prioritized prestige and wealth, according to Amos Himmelstein, the school’s vice president for planning and finance. While the school boasts beautiful beaux arts architecture and is building a new aquatic center, the infrastructure hasn’t kept up with improvements made by its peers, he says.
The question, Mr. Cuseo says, is at what price “are you willing to sell your soul”?
The once-booming age-old business model of higher education faces tremendous pressure due to demographic changes, disruptive technology and the tightest labor market in half a century.
As a result, colleges and universities face rising incentives to cut corners or outright lie to boost rankings. They are also under pressure to use legal backdoor strategies to attract affluent students and donations to boost bottom lines.
Mr. Singer exploited these forces to create what he called his side door strategy, in which he bribed college coaches to tag clients’ children as walk-on athletes even though they didn’t play the sport. He also rigged SAT and ACT scores.
Occidental has largely resisted these temptations. A turning point for the school came in the 1980s, as Los Angeles transformed into one of the nation’s most diverse cities. Occidental trustees, many local business owners themselves, felt there weren’t enough educated minorities to fill jobs. Occidental reworked its curriculum and enrollment practices to draw more black and Latino students, said Eric Newhall, a retired Occidental English professor who headed the school’s faculty council at the time.
The school emerged as one of the nation’s most racially and socioeconomically integrated private schools, long before many universities were prioritizing diversity.
One concern across the school quickly arose: If it turned away wealthy white students, who would pay the bills? The question divided the school, said Mary Weismantel, a young professor at Occidental in the 1980s who now teaches at Northwestern University.
Today, Occidental is 49% nonwhite and attracts fewer wealthy students than the vast majority of its peers. It also boasts one of the highest percentage of poor and working-class students receiving Pell Grants and has one of the highest rates of economic mobility of its peers, according to Harvard economist Raj Chetty and Occidental.
But financial stress has followed. In 1995 Occidental’s endowment ranked 120th in the nation. By last year it was 208th.
The school has lost ground partly because of its commitment to enroll poor and working-class students who need grants. Occidental’s need-blind enrollment program climbed from 11% of the budget in the mid-1980s to 24% by 1993. That December, then-President John Slaughter said the increase in financial spending “has escaped the boundaries of reasonableness,” according to an alumni publication.
The school eventually had to dip into its endowment to pay the bills. And today, while it maintains a strong reputation and a middling $434 million endowment, it still faces underlying fiscal issues. In September, Moody’s Investors Service revised the outlook on Occidental’s $84 million in debt outstanding to negative from stable, citing the school’s “commitment to affordability” and lagging fundraising.
These headwinds mean dormitories are cramped and nearly half are without air conditioning. The steel lawn-irrigation system installed in the 1930s is thoroughly rusted out. The campus is pretty and tranquil, but amenities pale when compared with those offered elsewhere: lazy rivers, palatial fitness centers, climbing gyms, high-tech libraries and swanky apartment-style dorms.
“Does that influence incoming freshman? I think it does,” said one prominent alumni, who has been active in fundraising. “The sad reality is that colleges that have leveraged white wealthy students have really prospered.”
Unlike other schools, it doesn’t heavily prioritize athletes or legacies in admissions.
Occidental fields 21 varsity teams but offers little credit in the admissions process for athletic prowess, according to school officials. The idea isn’t to be the best but to stay competitive, said Mr. Cuseo, now the vice president for enrollment and dean of admissions. In 2017 the school had to cancel the last four games of the football season because there weren’t enough healthy players. The team has since rebuilt.
In September, a study analyzing admission data at Harvard showed 43% of white students are either athletes, legacies or were children of donors or faculty. A similar count at Occidental was 18%, school spokesman Jim Tranquada said.
Occidental also resists gaming the rankings. Perhaps the most widespread strategy to manufacture an appearance of selectivity is lowering the bar for applicants in order to attract more. That generates more rejections, making a school appear more selective. Occidental hasn’t done this.
“There are a lot of things you can do that are pretty simple, and I’ve been in faculty meetings where it’s been discussed,” said Occidental Professor John McCormack. “But it’s just not who we are.”
In 2004, Mr. Singer assembled an advisory board for his then company CollegeSource, which at the time had a legitimate division. The board included five prominent higher-education figures, including Ted Mitchell, then president of Occidental.
Mr. Mitchell, who left Occidental in 2005, has said he was an unpaid adviser to Mr. Singer’s venture 15 years ago to provide counseling to low-income students.
The prominent Occidental alumnus who also knew Mr. Singer recalls hearing Mr. Singer call Occidental “dumb” for having what he portrayed as too thick of a wall between admissions and fundraising departments.
Mr. Cuseo says he has never felt pressure to take any of the students if they don’t meet school standards. Five years ago, the development office recommended he look at an applicant whose prominent and widely known name made his “eyes kind of open up,” he says.
Yet, “it was pretty darn clear that the student didn’t deserve to be admitted to Occidental,” he says. The school rejected the teen.
Mr. Cuseo said the email from Mr. Singer in 2012 was extremely unusual. An upset Mr. Singer requested a meeting to discuss helping his client’s child “find her way to becoming a student at Occidental” after she had been rejected. Mr. Singer also criticized Occidental’s admission policies.
“You are off base,” Mr. Cuseo replied.