Two businessmen sought to use their wealth to fraudulently secure spots for their children at elite US universities, a federal prosecutor said on Monday at the start of the first trial in the “Operation Varsity Blues” college admissions scandal.
Former casino executive Gamal Aziz and private equity firm founder John Wilson paid hundreds of thousands of dollars to secure spots for their children at the University of Southern California as “phoney” athletic recruits, Assistant US Attorney Leslie Wright told a federal jury in Boston.
She said they did so with the help of William “Rick” Singer, a California college admissions consultant who prosecutors have said masterminded a vast scheme to help wealthy clients get their children into top schools through fraud and bribery.
“It was a sprawling conspiracy that extended from coast to coast,” Ms Wright said in her opening statement. “None of these kids were getting recruited to play collegiate sports without the money.”
Both men deny wrongdoing, saying they believed the money was for donations to the universities, not bribes.
“Giving money to a school with a hope that it gets your kid in is not a crime,” Brian Kelly, Mr Aziz's lawyer, told jurors.
He said Mr Singer never told his client, a former Wynn Resorts executive, that his money would be used to bribe USC athletics officials. Mr Aziz trusted Mr Singer and “had no inkling Singer was a skilled con man,” Mr Kelly said.
The two men were charged over two years ago along with dozens of business executives and celebrities in a scandal that exposed the lengths wealthy parents would go to attain spots for their children at top schools as well as inequalities in higher education.
It was a sprawling conspiracy that extended from coast to coast
Assistant US Attorney Leslie Wright
Fifty-seven people have been charged in the probe since 2019, including actresses Lori Loughlin and Felicity Huffman, who were among 46 people who have since pleaded guilty.
Mr Aziz, also known as Gamal Abdelaziz, is the former president of Wynn's Macau subsidiary. Mr Wilson is a former Gap and Staples executive who founded Hyannis Port Capital.
Prosecutors say Mr Singer, through his college counselling business, The Key, offered not only legitimate services to parents worried about their children's college prospects but also the use of an illicit “side door” to secure them admission.
Mr Singer has not yet been sentenced after he pleaded guilty in 2019 to enabling cheating on college entrance exams and using bribery to secure the admission of students to colleges as fake athletic recruits.
While Mr Singer became a star government co-operating witness, prosecutors on Friday said they do not expect to call him to give evidence.
Prosecutors say Mr Aziz, 62, agreed in 2018 to pay $300,000 to secure his daughter's admission to USC as a basketball recruit by bribing an official.
They also allege Mr Wilson, 64, in 2014 paid $220,000 to have his son falsely designated a USC water polo recruit and later sought to pay another $1.5 million to fraudulently secure spots for his two daughters at Stanford and Harvard universities.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
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