Greed-to-Grief, No. 20

People will do anything for their kids

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Sometimes people just have a stretch of time in their lives when they are really, really busy. Gordon Caplan was the co-chair of Willke, Farr & Gallagher, one of the most prestigious law firms in the world. In 2018, he was named Dealmaker of the Year by The American Lawyer Magazine. In early 2019, he was sent to prison.

Gordon Caplan

Caplan did many things right in his career and life. A graduate of Cornell and then Fordham Law School, he worked his way to the top of the legal world as a “deal guy,” not a paper pusher. Like most, he wanted the best things for his family, especially his daughter.

Caplan wanted to see his daughter go to a prestigious college like he did. Only problem was that her ACT scores were not strong enough in Caplan’s opinion. No way she was going to get into a top school he thought, so Caplan took matters into his own hands.

Caplan worked with college-admissions “counselor” Rick Singer. Singer posed as a legitimate counselor who could help your child put his or her best foot forward when writing college essays and submitting applications. College counseling is a serious and big-money business, but Singer made it even bigger money.

Rick Singer, Varsity Blues Mastermind

Singer worked for a few dozen wealthy families and steered their children to places like USC and Yale. But he didn’t do it by editing essays; he did it by bribing coaches and officials at the colleges to advocate for admission of a student.

Once Singer’s scheme was detected and he was in the jaws of the FBI, he needed to implicate others to reduce his expected prison sentence.

The FBI transcripts of the recorded phone calls between Caplan and Singer are a case study in arrogance. In addition to bribing college officials, Singer also offered test-taking services. The basic contours of the deal were that Caplan would pay Singer $75,000 to have one of Caplan’s testing experts take the ACT in place of Caplan’s daughter.

Singer had control over a testing center in California, where the lead proctor was on his payroll, and Singer’s test-taking expert would fly in and take the test.

The FBI patiently collected evidence, including recorded phone conversations before arresting dozens of people at once in Operation Varsity Blues.

The conversations between Singer and Caplan went something like this:

Singer: Well, what kind of score are you looking for?

Caplan: I think 32 is a good number.

Singer: Our test taker knows how to get the right number of correct questions, but it depends on the test curve that day, so I can guarantee it will be between 31 and 33.

(A score of 32 is at the 97th percentile on the ACT.)

Colleges use the SAT and ACT tests for admissions decisions

All three of Caplan’s requests to the ACT Board to allow his daughter to take the test in California were denied, since she lived in the New York area. But the fourth request – gotta give this guy a gold star for persistence – was approved, and unknown to Caplan, it was approved at the direction of the FBI.

Caplan was guilty and, to his credit, he took full responsibility for his actions in front of the judge. He was only sentenced to one month in prison, but the damage to his career and life were far worse.

Caplan, and a few dozen other wealthy and famous people, were ensnared in what became known as the Varsity Blues scandal. Singer was sentenced to 42 months in prison for masterminding the fraud.

Caplan’s law license was suspended, and he left the top of the legal world in disgrace.

Never mind the damage to his family.

Key Takeaways

  • Caplan and others caught in the Varsity Blues scandal served relatively light prison sentences and paid small fines. Will such leniency encourage more of this behavior in the future?

  • Caplan’s daughter was unaware of the pay-for-the-test-score deal Caplan had with Singer. She did go on to be successful at college, without the help of her father.

  • In some of Singer’s schemes, parents made “donations” to Singer’s foundation. Singer then used the money to pay off college officials. There was no such pretense with Caplan; he paid a stranger to impersonate his daughter on a national exam. Seriously?

Things I think about

The bodies of more than 200 climbers are frozen into the snow of Mt. Everest.

Fortune’s Formula
The story of the Kelly Formula, still in use today at casinos and Wall Street.

The Seven Deadly Stupidities
Learn from the failures of others. Written by….. me.

Fooled by Randomness
The first in Caleb’s series and the “Black Swan” book. All his books are excellent.

Launch Key
Weekly newsletter full of wisdom on how to launch a business.

The Four
The hidden DNA of Amazon, Facebook, Apple, and Google

Black Jack Strategy Card
Same strategy used by the pros

Fooled by Randomness
The hidden power of chance in life and markets.

The Black Edge
Inside information and the quest to bring down SAC Capital

See the full reading list here.