Money Laundering Charges Added In College Admissions Scandal

EVANSTON, IL — The parents of a Northwestern University freshman who federal prosecutors said cheated on standardized tests as part of a nationwide college admissions fraud scheme were indicted Tuesday on new charges of conspiracy to commit money laundering.

Manuel Henriquez, 56, and Elizabeth Henriquez, 56, both of Atherton, California, already faced one count of conspiracy to commit mail and wire fraud and honest services mail and wire fraud as part of what federal investigators called "Operation Varsity Blues." Their daughters — a junior at Georgetown University and the Northwestern freshman — are among the few students implicated in the investigation who prosecutors suggested were clearly aware their parents were helping them cheat their way into prestigious colleges.

Prosecutors said the investigation uncovered a $25 million racketeering scheme involving bribes to college officials, cheating on tests and bogus athletic recruitment. A total of 50 people have been charged so far, including 33 parents, of which 16 face fresh money laundering indictments. Several, including the admitted ringleader and the proctor who "'gloated' with Elizabeth Henriquez and her daughter about the fact that they had cheated and gotten away with it" have already pleaded guilty.

After being charged with fraud, Mr. Henriquez stepped down as the head of Hercules Capital, the publicly traded venture-debt company he founded. He collected more than $8 million in 2017, according to Securities and Exchange Commission filings. His company quickly lost 10 percent of its value after the charges were announced.

The Henriquezes are accused of cheating on behalf of two daughters on four separate occasions. According to an affidavit from FBI forensic accountant Laura Smith, the couple paid close to half a million dollars for help cheating. Smith said the couple received a discount because Mr. Henriquez assisted the mastermind of the conspiracy, Niles West High School graduate Rick Singer, by using his influence at Northeastern University to get another student admitted.

The money laundering charge accuses the parents of "conspiring to launder the bribes and other payments in furtherance of the fraud by funneling them through Singer’s purported charity and his for-profit corporation," according to federal prosecutors.

About $100,000 of the purported bribes was connected to the Northwestern student, who traveled to Houston to take the ACT test with a corrupt proctor and to Hollywood to take the SAT subject tests, according to the FBI affidavit.

With the help of a proctor feeding her answers to certain question and instructing students to answer a few questions wrong to hide the cheating, the Henriquezes' younger daughter managed a 30 and a 33 on ACT tests and SAT scores between 720 and 770 of a maximum 800, it said.

The rest of her parents’ bribes went toward securing a spot at Georgetown for her older sister under the false pretenses she was a competitive tennis player, according to the FBI agent.

"At her best, she appears to have ranked 207th in Northern California in the under-12 girls division, with an overall win/loss record of 2-8," according to Smith. Despite that, former Georgetown tennis coach Gordon Ernst, who received nearly $3 million in bribes for taking part in the conspiracy, designated her as one of a dozen phony tennis recruits.

Coaches at the University of Southern California, the University of California at Los Angeles, Yale, Stanford and Wake Forest have also been charged in the scheme. No Northwestern administrators or coaches have been accused of wrongdoing in the scandal, and neither of the Henriquezes' daughters, nor any other college students, have been criminally charged.

Their parents' two conspiracy charges each carry a maximum sentence of 20 years in federal prison, but federal sentencing guidelines for first-time offenders mean they are more likely to wind up with probation rather than incarceration, provided they agree to plead guilty and promise to pay hefty fines.

After an initial court appearance April 3, the couple was released ahead of trial on a $500,000 bond with restrictions requiring them to turn in their passports and the 10 guns they keep at their home, according to the Washington Post. As of April 9, they had not yet entered a plea and an arraignment date had not been scheduled, according to federal prosecutors in Boston.

The Henriquezes' younger daughter remains listed as a student at Northwestern, the Daily Northwestern reported. University officials have declined to say whether the university has opened any investigations related to allegations of falsified admissions materials provided by current students.

Earlier: College Cheating Scandal: Northwestern Student's Parents Charged