Former Pimco CEO charged in college admissions bribery scheme

Douglas Hodge allegedly paid hundreds of thousands of dollars to get two of his children admitted to the University of Southern California

Mar 12, 2019 @ 3:11 pm

By Ryan W. Neal

Former chief executive of Pacific Investment Management Co. Douglas Hodge was one of dozens charged Tuesday in criminal conspiracy to help win admission to elite universities.

According to an indictment filed by federal prosecutors, Mr. Hodge paid hundreds of thousands of dollars in bribes to get two of his children admitted to the University of Southern California as athletic recruits. The indictment alleges Mr. Hodge also sought to enlist a cooperating witness to help a third child gain admission to Georgetown.

Mr. Hodge retired from Pimco in November 2017 after 28 years with the firm. He served as CEO from 2014 to 2016, following the departures of Mohamed El-Erian and Bill Gross.

Mr. Hodge declined to comment when reached on his mobile phone. Pimco did not respond to a request for comment.

As reported by Bloomberg, investigators detailed a scandal that perverted much of the admissions process for America's elite colleges. Unlike most other SAT cheating cases, the scheme reached deep into the academy, implicating college officials who allegedly subverted the missions of the universities themselves.

(More: Click here to see the list of defendants and links to documents)

In all, the government said clients paid $25 million in bribes to coaches and college administrators from 2011 to 2018. In some cases, the bribes would be disguised as charitable contributions. An informant involved in the alleged crime said clients could also pay $15,000 to $75,000 to cheat on each standardized test — in some cases, getting a proctor to change wrong answers in the test center.

"And it works?" one client asked an informant, according to court papers.

"Every time," the informant replied, with a laugh.

An FBI informant said he told parents the alleged cheating and bribery amounted to a "side door" for wealthy parents at the most selective schools. The "front door" involved children getting in on their own merits, and the "back door" entailed making multimillion dollar donations, which was legal though far more expensive.

"Who we are — what we do is we help the wealthiest families in the U.S. get their kids into school," the informant told parents. "They want guarantees; they want to get this thing done."

The scandal, perhaps the largest ever in admissions, is certain to call into question the process by which top colleges fill highly competitive freshmen classes, while highlighting the extremes to which some wealthy parents will go to win entrance.

The charges were unsealed by prosecutors in California, Florida, Massachusetts, North Carolina and Texas. Prosecutors said 38 people were in custody, including celebrities Felicity Huffman and Lori Loughlin, who allegedly paid bribes to win admission for their children. Also accused is lawyer Gordon Caplan, co-chairman of the Willkie Farr & Gallagher law firm in New York.

Prosecutors accused the former women's soccer coach at Yale, the senior associate athletic director at the University of Southern California, the women's volleyball coach at Wake Forest University and the sailing coach at Stanford. A college prep school director is charged, as is the director of an exam-preparation company.

Two defendants are scheduled to plead guilty in Boston on Tuesday, including Stanford's sailing coach, John Vandemoer, and William Rick Singer, who ran a college admissions counseling company.

Representatives from Yale, Stanford, USC, Georgetown and UCLA didn't immediately return calls or emails seeking comment. Wake Forest and the University of Texas announced Tuesday it had suspended coaches.

"Integrity in admissions is vital to the academic and ethical standards of our university," the University of Texas said in a statement.

Additional reporting provided by Bloomberg News.

0
Comments

What do you think?

View comments

Upcoming event

Jul 09

Conference

Boston Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

How to battle sequence-of-returns risk

Retiring during the longest-running bull market in history can be scary, as some begin to wonder when the good times will end.

Tony Robbins loses role with RIA amid charges of sexual misconduct

String of allegations costs the self-help guru his gig as chief of investor psychology at Creative Planning.

SEC sets June 5 date for vote on Regulation Best Interest

Commission adds new item to agenda: Interpretation of broker guidance that qualifies as advice

House passes SECURE retirement bill with massive bipartisan support

The measure allows small employers to band together to offer plans and raises the RMD age. Another provision eases use of annuities in 401(k)s, which critics say goes too far

10 IBDs with the most annuity revenue

Here are the independent broker-dealers that brought in the most annuity revenue last year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print