On February 7, a federal judge in Boston issued the most severe verdict yet to a parent involved in Operation Varsity Blues, the college admissions scandal that surfaced last year. Douglas Hodge, former CEO of global investment giant Pimco, was sentenced to nine months in prison for paying in excess of $850,000 over more than a decade to get four of his children admitted to elite universities. On five occasions over an 11-year span, Hodge engaged scandal mastermind Rick Singer to falsify records in an effort to get his children recruited to university athletic programs, paying bribes to get two of his kids into USC and two others into Georgetown. He was unsuccessful on his attempt to get his fifth child into Loyola Marymount.
Hodge pleaded guilty in October to conspiracy to commit mail wire fraud, honest service mail and wire fraud, and conspiracy to commit money laundering. The prosecution had pursued a two-year sentence, but the judge settled on nine months.
We previously wrote on this bombshell and the role internal audit can play in helping to identify and respond to similar events at colleges and universities across the country. In the instances perpetrated by Hodge and Singer, for example, the universities could have had better controls in place to detect athletic scholarships that were granted based on falsified records.
Don’t dismiss the importance of an independent evaluation of core business processes that could pose a risk to your university. Now would probably be a good time to evaluate your processes and controls to ensure you have adequate mitigants in place to prevent risks from impacting your reputation in enrollment, athletics and admissions.
Contact Schneider Downs at [email protected] with any questions you have about higher education risk assessments, compliance reviews, and process and control optimization.
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