Newport Beach at Center of Controversy (Again) with College Admissions Fraud Case

Newport Beach is in the news, again, for reasons civic boosters would prefer not to be, again.

And the newest scandal involves high school-age students, again.

This time, we’re not talking about the wannabe Nazis of Newport-Mesa high schools nor the asshats who Nazi’d up Newport Harbor High School over the weekend but the $25 million admissions fraud scandal involving Newport Beach-based Edge College & Career Network–or “The Key” as the hepcats call it.

William “Rick” Singer set up the for-profit college admissions consulting firm as well as the fake Key Worldwide Foundation charity organization that funneled bribes from the likes of CEOs, real-estate investors and actresses Felicity Huffman and Lori Loughlin and her husband Mossimo Guinnulli to win their children admissions to USC, UCLA, Yale, Stanford and Georgetown, according to the U.S. Attorney in Boston.

Singer is alleged to have built phony athletic profiles for students before buying off college coaches to gain admissions for the incoming freshmen, according to an FBI affidavit that further accuses the 58-year-old former Newport Beach resident of being paid between $15,000 and $75,000 to have a front take admissions tests for the students of wealthy parents.

That has resulted in the federal fraud arrests of Singer, Loughlin, her fashion-designer husband Giannulli, Huffman (but not her husband, actor William H. Macy), nine coaches at USC, Yale, Stanford, Wake Forest and Georgetown, two exam administrators, one exam proctor, one college administrator and other alleged organizers of the operation.

Giannulli founded the Mossimo clothing line on Balboa Island a year before graduating from USC in 1987. The brand was acquired by the Iconix Brand Group of New York in 2006. Claimed to be worth $800 million, Giannulli lives with Loughlin in a 7,000-square-foot Beverly Hills home.

According to court documents, Giannulli submitted to USC’s admissions offices photos of his daughters with Loughlin–Olivia Jade and Bella–on rowing machines. That was after he and his wife allegedly paid $500,000 to have their two daughters attend the university by way of the school’s crew team, even though neither was an athlete.

Loughlin was secretly recorded by the FBI on a phone call openly discussing the scheme, allege the same court documents that accuse her and about 40 others of conspiracy to commit mail and wire fraud.

Among those also charged are such locals as: Douglas Hodge, 61, a Laguna Beach resident who is the former CEO of Newport Beach investment management company PIMCO; I-Hin “Joey” Chen, 64, of Newport Beach and a provider of warehousing and related services for the shipping industry; Robert Flaxman, 62, of Laguna Beach and the founder and CEO of real estate development firm Crown Realty & Development; and Michelle Janavs, 48, of Newport Coast and a former executive of a large food manufacturer.

Facing a federal rap for racketeering conspiracy is Donna Heinel, 57, of Long Beach and the senior associate athletic director at USC.

Wanda M. Austin, USC’s president, sent this email to students today:

“The federal government has alleged that USC is a victim in a scheme perpetrated against the university by a long-time athletics department employee, one current coach and three former coaching staff, who were allegedly involved in a college admissions scheme and have been charged by the government on multiple charges. At this time, we have no reason to believe that Admissions employees or senior administrators were aware of the scheme or took part in any wrongdoing—and we believe the government concurs in that assessment.”