Behind the Guilty Pleas in College Admissions Scandal

admit guilt in the sprawling case. Under their proposed deals, Laughlin will spend two months in prison and pay a one hundred fifty thousand dollar fine, and Giannuly will spend five months in prison and pay a two hundred fifty thousand dollar fine. Joining me is former federal prosecutor Robert Mintz, a partner mcarter and English. They put on such a fierce defense, challenging the prosecution again and again. Why throw

in the towel at this point? Lori Laughlin and her husband Massima genuinely have bought this tooth and nail from the moment that they were charged, and now after almost a year, they decided to change their minds and enter a guilty plate. They fought the government by challenging whether the prosecution should have been brought in Massachusetts rather than in California, where they're located. They also challenged the government that had named dozens of other parents in the same

charging document along with them. The only thing that tied all these parents together was the fact that they all had been involved with Mr. Singer, who was the mastermind, who ultimately cooperated with the government. But the last did that these defendants raised was they challenge the government over what they called out regious government misconduct, which was some discovery that the government was late in turning over. When that was denied, they changed their minds and decided to

plead guilty. They were facing trial in October, and the prosecutors had recorded conversations and emails. Did they see that there was too much evidence to explain away? The evidence against Lochlan E. G anuinely did appear to be overwhelming. The problems the defendants faced in this case is that they had some very damaging emails that they had sent

to various people. For example, Gia Newley had forwarded the two hundred thousand dollar invoice from Mr Singer, the scammed mastermind to his financial advisor and included a note saying, good news, my daughter is in SC. Bad is I had to work the system. There also was an email from Lori Loughlin to her daughter saying she shouldn't discuss the way she got into USC with her college guidance counselor.

And so it appeared that there was some damaging evidence which showed consciousness of guilt on the airport, and ultimately there was even a photograph of one of their daughters looking like she was on a rowing machine since she was being admitted to the school as a rower, when in fact she was not rowing at all. Ultimately, this is going to be very damaging evidence and likely difficult to overcome a trial. The strategy here with the defense was to try to see whether there was some way

to knock this case out prior to trial. They brought these charges against the government saying that there was government mis conduct. They tried to knock the case out in other ways by arguing that they shouldn't have been charged

along with dozens of other parents. But ultimately, when all those legal strategies did not pan out, I think that's why they changed their mind and decided to enter the plague, Bob, we often talked about Felicity Hoffman being a parent that right away said I'm guilty, I'm sorry, and took her medicine.

Are they still getting a sweetheart deal, a good deal even though they fought the system for a year twoth and nail as you say, well, there have been thirty seven parents charged in this overarching scheme, and to date, twenty four of them have pleaded guilty. As you mentioned, Felicity Huffman received two weeks in jail, was one of the first to step up and immediately acknowledge her guilt. The longest sentence so far that's been handed down was

nine months for former pimcos CEO Douglas Hides. So the range in terms of sentencing has really been from two weeks to nine months. This sentence here, which is two months for Lorie Laughlin and five months for a husband, kind of falls in the middle. But they did fight this charge for over a year. They did battle the government by filing multiple motions to try to get these charges dismissed or altered, and ultimately seen that they got the same type of deal that most of these parents

have been offered so far in this case. Doesn't that send the wrong message from prosecutors. Doesn't that send a message that you can keep fighting us every which way over and over again, but we'll still give you a good deal, rather than the message that you might expect, which is lead early and you'll get a good deal. Often the rule is that if you're going to get the best deal in a criminal case, that comes early on.

And if you put the government to its test, if you make them respond to motions, and if you fight them right up until the day of trial, usually the deal is not so attractive. And prosecutors do that because they try to get people to enter into these three deals early on. If everybody makes them do all the work to try to prepare for trial, it becomes an

overwhelming task for them. And they try to encourage people to come in early, and they try to encourage people to cooperate when cooperation is something that's on the table for them. Here though, they do have many, many parents who are charged in this case, and ultimately I think

they're looking forward please that send people to jail. That send the signal that even though most of these parents were very wealthy, most of these parents paid an awful lot of money to try to get their children to school. But they're not above the law that they have to pay fines in connection with these guilty please, and they

ultimately have to serve time and jail. The amount of time and jail, you could argue is somewhat less than maybe perhaps another defendant in a similar case might have received. But here the government I think is looking at the overall charges, looking at the number of cases they have here, and trying to come up with some fair resolution that includes jail time for each of these defendants. And so

far that's what they've achieved. Why is j newly getting a much different sentence when they were obviously in this together. In entering their guilty, please, Lori Lock would admitted to a single kind of conspiracy to commit wire and mail fraud, while her husband, Mr Giannuly agreed to plead guilty not only to wire and mail fraud but also a charge of conspiracy to commit on its services fraud. That accounts for her sentence of two months and his agreed sentence

of five months. Ultimately, the government here believed that Mr Giannuly was more involved in these payments than his wife, and that's why we see this disparity in terms of the recommended sentences. But remember also that these are agreed upon sentences only between the defendants and the government. It's ultimately up to the judge as to what sentence will be handed down. In this case, the judge is reading the pre sentence reports. Do you think you will stick

to the plea deal in this case? Is there any way of telling with this judge? Well, with all cases, when a plea is entered, a judge makes clear that whatever deal that defendants have with the government, it's something that does not find the court of that the judge will not make up its mind until it reads the pre sentence report. But the judge is also mindful of the fact that in order to get these plea deals, it's important that defendants be able to rely upon the

government's recommendation with some degree of certainty. So here I think we can expect that the judge to ultimately follow the government's recommendation to sentence these defendants to the terms that were agreed upon by the government. What's one of the things that is unusual here is that typically the government will agree to a range of sentencing. In other words, the federal sentencing guidelines has ranges of months that apply

to a particular sentence based upon various factors. In this case, in order to entice these defendants to take this plea, the government is taking this somewhat unusual step of recommending a particular sentence of two months and five months as opposed to a range of sentencing. The government is also leaving open the defendant's ability to advance claims of ineffective assistance of council and prosecutorial misconduct. Is that unusual, Yes,

that is unusual. Usually the way plea deals read is that you enter your plea and you give up your right to challenge the sentence unless it's outside the agreed upon range that you have agreed to the government with. But in this case they've thrown that in. I think it really is more window dressing than it is any

real right for the defendants. The likelihood that there will be an ultimate finding of any kind of prosecutorial misconduct is remote, and it's even more remote that there could be some finding of ineffective assistance of counsel given the

lawyers who were involved in the case. So it really is something that the defendants are holding out there in case something might come up later in the case that shows that prosecutors acted in some way that was inappropriate, but it's unlikely, ultimately tat to have any real effect on the outcome of this case or the amount of

time that these two defendant servant jail. Is it possible that they will serve less time because of COVID nineteen, while it's possible that they could serve less time due to COVID nineteen, And it's possible that the judge could sentence them to something less than what they've agreed to

with the government. In this case, given the high degree of publicity and the fact that this had been fought out between the government and the defense for over a year, these are sentences that are, in the eyes of some people, on the low end of where these cases should have ended up. I think it's more likely than the judge will sentence them to exactly the amount of time that they've agreed to with the government and that they will

serve the full amount of that time. The COVID nineteen issue is obviously something that the parties are aware of going into this deal. So for the defense to then argue that because of COVID nineteen they should serve less time. Seems to be somewhat disingenuous, and I think it's unlikely just to weigh the court. As we get closer and closer to two trials that are scheduled for October and January,

is it likely that we'll see more plea deals. Well, that's certainly what the government is hoping for us here. Usually you see a bit of a domino effect as you see defendants begin to plead guilty. But each of these cases is somewhat different. Factually, the charges stem from paying off the mastermind of this case in order to get their children into school, some of them posing as athletes, some of them just making large contributions to this foundation

that were really disguised brides to Mr Singer. So each case is factually different. But on the other hand, there's certainly gonna be some defendants who are sitting out there looking at what's going on and saying, if Lori Laughlin and her husband are deciding to plead guilty, given all the money that they have, and given the high price legal talent that was representing them, maybe they should consider

doing the same, you know, Bob. Also, what might make some defendants want to plead is that they're going to be tried in groups, and that is a disadvantage for the defendants. Yeah, that is one of the key motions that was made early on in this case by all the defendants, the fact that they were indicted in groups and going to be tried with dozens of other parents

that they had absolutely no contact with whatsoever. The government theory behind that case was because the common mastermind, William Singer, was the one who brought them all together, that they could use him as a cooperating witness in one trial against all of the parents. The prosecution here was trying to avoid having Mr Singer testify over and over again

in repeated trial. During each trial, he would likely give testimony that was slightly different from the trial before, and that would be of defense lawyers ammunition to try to attack his credibility. So they were indicted in groups, and there's two large groups who are still set to go to trial in this case. That does place the defendants in a bit of a disadvantage because there's something to argue that because one parent might be guilty, then they

all might be guilty. That's called prejudice will spill over something. Defense lawyers try to argue against all the time. Usually, if there's a reason for the judge to uphold the way the government has charged the case, he'll go along with prosecutors and allow these parents to be tried in groups. If that continues to be the case, if the judge does not agree to separate these trials out into individual cases, that makes it more likely that the parents will ultimately

plead guilty. Why do you think the prosecutors never indicted any of the students here? I mean, in some of these cases, the students had to have known that they don't row, and they're applying to school as rowing stars. Why aren't the kids being indicted as well? Well, that's a good question. A lot of people who looked at this case have asked the question why none of the students were charged, or frankly, why none of the schools

were charged. I think what went on here on the side of the prosecutors was that they made a discretionary call that, even though there might have been evidence to charge the students, that ultimately these were kids who were being guided by their and their parents were the ones

who were paying the money. The parents were the ones who were having the conversations with Miter Singer and with others and who were guiding their children, and they just made the discretionary call that they were just going to charge their parents and not charge the students. They also have to know that if they charge the students, it was going to be increasingly difficult to get people to plead guilty. In these cases, the parents would likely fall

on the sword in order to protect their kids. Then that's exactly what we're seeing happening here. Thanks Bob. That's Robert Mints, a partner of Carter in English Virus, close to a turning point in its legal battle over the weed killer round up. According to Bloomberg sources, Buyer has reached verbal agreements to resolve a substantial portion of an estimated one thousand cancer lawsuits over use of its roundup.

The company denies that roundup or glipa state causes cancer, a position backed by the Environmental Protection Agency, but altogether, juries from three trials ordered the company to pay a combined two point four billion dollars and damages. Judges later slashed those awards to one million. The deals which have yet to be signed, to cover and estimated fifty thousand to eighty five thousand suits. They're part of a ten

billion dollar plan to end the costly legal battle. Joining me is Eric Gordon, a professor at the Raw School of Business at the University of Michigan. Eric, why settle now after battling this for two years? Well, buyer would like to settle and get it behind it because it's been a big weight on the stock price of buyer.

Buyer stock price has gone down something like one third since they bought Monsanto, So the CEO, who was the person who actually did them on Santo o'deal probably wishes he didn't would like to just put it behind him, move on, get the uncertainty off the back of the stock price. How much certainty is there when this covers reportedly an estimated fifty thousand to eighty five thousand cases out of a total of hundred and twenty five thousand,

So it seems like there's still a lot of uncertainty there. Yeah, I think the settle that they're going to have to do something about most of the rest of the cases. Although if they knock out the big cases, meaning the cases that are being handled by the big gun plaintiffs lawyers um and all, they have left is the cases that are being run by the lesser known, lesser sort

plaintiffs lawyers. It'll be easier to settle those those remaining cases because those are countries just don't have the resources, and I think they will jump on trying to get their cases settled too. So there are a handful of lawyers that are holding out. Do lawyers who hold out fair better or worse? You know, the lawyers who hold out not going to do any better than the rest of the lawyers because any settlement is going to include all of them. Belayers made it clear that it's motivations

for settling is to get this behind them. They're the ones who hold out. Might at most get a better deal for everybody, um, but what they might get is just a delay. And given the uncertainty about COVID, the delay might mean a worse deal for all of the plaintiffs. So let's talk a little bit about COVID before we go on. Buyer backed out of some of the deals

due to COVID nineteen. How did that play in. Well, that's put a little bit of fear into some of the plaintiffs, bar not all of them, but the COVID UH COVID has changed everything. Now the prospect is paying out the reported eight billion dollars of cash is less and less attractive to buyer. I mean, there's no companies have been scrambling within CBM or Boeing companies and scrambling

to get their hands on cash. So the value of getting the cases behind them versus having to shovel out eight billions dollars starting to look less attractive to buyer. So there's some pressure on both sides to get this settle. Reportedly, Buyer used the threat of bankruptcy in settlement talks. Is that something that companies often do. Yes, companies often do it in the in these mass sport things. Um, we saw it in a story you and I have talked

about a bunch the New Farmer case involving the opioid crisis. Um. If if you go into bankruptcy, uh, then all of these claims are unsecured claims, which in a human's language means they get paid at the at the back of the line with all of the other trade vendors and everybody else, and there might not be much for them. So it's a pretty it's a pretty scary threat. Although I'm not sure anybody really thinks Buyer would put Monsanto

into bankruptcy, But if they did, it changes everything. The range of settlements is so wide, from a few million to a few thousand. How do the settlements get worked out moments? Is it whose lawyer is better, or is it whose claim is better? It's a little of each. Unfortunately, part of it doesn't depend on how feared your lawyer is. So some members of the plaintiff's bar are are intensely feared. Uh, they probably get a little bit more for their clients.

But they also will be looking at the individual cases. And we're looking at two things, the severity of the injury suffered by the plaintiffs, and to how strong is the evidence that the plaintiffs injury was substantially caused by round up. So in some cases you have a groundskeeper who hangs in using roundup for thirty years, Well, that case seems a little stronger, assuming you buy the idea

that round up is timeful. Case of somebody using it for thirty years seems stronger than somebody who puts it in their backyard, you know, once a year for the last five years. Let's talk a little bit about Ken Feinberg, who is a renowned mediator. What was his role in this? So Ken plays the role of an honest broker. When you're trying to settle a case, each side poses and postures and rattles sabers, and the other side discounts half

of what they say. Having a neutral mediator who is well respected, nobody who's better respected at this than Ken Feinberg, who can say things to both sides and and they will listen and they will believe it is very valuable. Think of the things he's been in June, you know, most recently the Boeing seven seven MAX, the Penn States and Dusky Sex and O v W g M with the ignition switched all the way back to the BP

deep Water. So he knows how to deal with cases that are very complicated, cases that involve a lot of emotion. So he's the right guy. I'm also curious about the transparency here. The estimate is that there are at least a hundred and twenty five thousand claims. That's more than twice the amount of cases Buyer has previously disclosed. So

why this lack of disclosure of all these cases? Well, the fifty two thousand number, which appeared to I think in the April April of this year quarterly statement that buyer files, Um, what are the cases, according to buyer are cases that have actually been filed in US courts. How you get from fifty two thousand to two or two and a half times that number is by making an s in that of all of the cases that have not been filed but that could be filed or

will be filed at some point in the future. Some buyer's point of view as well, we don't really know how to estimate that number. That's a guess. Uh sure it's going to be more than fifty two thousands. But the number we know for sure is is the number that has actually been filed. In the Bloomberg story, did it refer to some lawyers not filing cases under an agreement with buyer? Yeah, Timlow had a good story, Jeffiel, We had a good story that I saw in the terminal.

So apparently there is an agreement, and this is not uncommon, an agreement that while settlement is going on, everybody who had not everybody, but you know, the people who agree to this, don't just keep wasting your money and our money filing lawsuits. If there's a settlement, you will be included in it, but you don't have to go to the expensive filing the lawsuit. We don't have to go to the expense of answering it. That will need to

actually more money on the table for settlement. So it's not a bad IDEA Buyer is still going forward with appeals of early cases. It lost. Is that usual in a settlement like this, Well, they can't abandon their appeals. Um. They have to show the other side that if there is no settlement, um, we are going to put you through the appeals process every time you win a case. So that's part of buyer showing its strength uh to

the plaintiff's attorneys. So that's part of the everybody kind of posturing to show the other side the consequences of not reaching a settlement. So Buyer has set aside reportedly ten billion dollars for this altogether eight billion for these current cases and two billion for future With all these ifs and cases outstanding and lawyers nuts uddling, is it possible that Buyer won't be able to come in at that number. It is possible. It's possible that the number

won't make sense to both sides. It's possible that when you split eight billion dollars or ten billion dollars amongst all of the cases, that there are too many cases that will get too little money to get those people to agree to a settlement. And then they would say, well, pious,

you've got to put in more money. And buyer could say, all right, we're putting another billion dollars or another two billion dollars, as I could say, never mind, because for another billion dollars we can litigate every one of these cases forever. So the eight billion or the ten billion dollar may not be found, but it's a clear signal of the range. It's a clear signal to plaintiffs when

this gets split up, don't be expecting twenty billion dollars. Now, why settle If you're going to keep round up on the market, it's going to continue to be sold without safe d warnings. That is the weirdest part of the settlement stories On the plaintiff side, If you're really worried about people getting cancer, and you really believe that round up causes the cancer, why would you agree to a settlement along the lines of yeah, keep selling it without

the warning. Our complaint is that it's unsafe. Our complaint is that you failed to warn people. But as long as you pay us, we're okay with you continuing to do that. From the buyer side, it seems like, well, if they exercise that right and keep selling it without a warning, seems us if they're asking for another whole batch of new cases from people making the same claims. So that part of the rumored settlement thing is a

real head scratcher from both points of view. You talked about how the CEO, you know, the company wants to put this behind them, and the stock has gone down so much. Explain what's been happening with the c go through this. So the CEO has had some ups and downs. Um, he is the Uh, he's the architect of this acquisition. Uh. It was a big acquisition, over sixty billion dollars. Widely concerned, who have considered you've been a failure? Um, people wonder

how could you have bought all of these liabilities? Didn't you do due diligence? Well, June, of course they did due diligence. They took on the risk. They just didn't expect it to blow up like this. So this has not been good for him. He's been under a lot of pressure recently, it's eased a little bit. Um. The company as a whole buyer has done reasonably well. Uh

Monsanto has done reasonably well other than this litigation. But the stock price bumped up um when the stories ran this week about the potential settlement, and the rumors are that the CEO, gentleman named Herman, has regained more support of the equivalent of his board of directors by telling them that he is committed to settling these cases. Does this put his strategy of pairing pharmaceuticals, consumer health, and

agriculture to the test. It does put it to the test, although if you look at it from an investment point of view, you can you can tell two stories. One is these are all good areas. Agriculture isn't going away. We need improvements in agriculture globally. Consumer health good field, pharmaceuticals also a good field. Three good lines of business. The question about the strategy is, if you're an investor,

do you need all three of them in the same company? Well, couldn't you just buy shares of a farmer company and then shares in a different consumer health company and shares it a different cultural company um and and get the same results. And if you're actually not industry and agriculture, then you would just buy Farma and the Summer help. So, uh, all three of them are good areas to be in

going forward. But his strategy brings up the constant strategy question of the scope of the firm, the constant investor question of wait a minute, wait a minute, unlock the value. Break these things up, because we can always put them back together by the way we construct our portfolio by buying stock in three different companies. But some of us just want to be in Parma and we would value your farming division, we would value it higher if it's

stood alone. So that question will continue to haunt the CEO and Eric, whose approvals are needed at the company and in the courts for these deals to go through, for the settlement to go through. So that's a tricky question because at the courts you have the the federal level, there is the big multi district litigation proceeding going on in California in front of Jocabra, and then they're also

are state courts. The suits we've seen have been in California and are sort of gathered under California's version of multi disciation to speeding. But there there are cases all over in different states, so the mechanics of this settlement will will not be easy. This is true in all of these mass torts types of things. The mechanics are difficult and will take some time. So it will probably see if there is a settlement. Progress is an announcement

of a settlement in principle. I'm emphasizing in principle because then there's still a lot of hard work to put together the details. And finally, does this settlement remind you of any other mass towards settlements in the past where it's sort of it seems a lot of piecemeal stuff.

The most recent one I can think of is the opioid settlements, where the opio settlement or non solment, where you have states, you have cities, you have counties filing suits, you have private people filing suits, lots of different moving parts, including people who don't talk to each other. Because the city of Chicago had anything to do with the state of Arizona typically not. So that's the other recent one where the mechanics of blocking that down very very difficult.

Thanks Eric, that's Eric Gordon, a professor at the Raw School of Business at the University of Michigan. And that's it for this edition of Bloomberg Law. Remember you can always get the latest legal news by going to our Bloomberg Law Podcast. You can find them on iTunes, SoundCloud, or Bloomberg dot com slash podcast Slash Law. I'm Jude Grosso. Thanks so much for listening, and remember to tune to the Blomberg Law Show weeknights. Attend them Eastern