USC defeats fraud suit from parents in admissions scandal case

A Los Angeles judge has dismissed claims against the University of Southern California by parents who were implicated in the "Varsity Blues" college admissions scandal.

Judge Holly J. Fujie ruled Tuesday that the plaintiffs should reasonably have known that the school didn't factor donations from parents into its admission decisions, noting that they made inquiries after the father in this case was criminally indicted.

"Although plaintiffs assert that their inquiry 'did not uncover that USC had lied about its admissions practices,' the fact that they were investigating the charges and scrutinizing USC's admissions practices demonstrates that plaintiffs were objectively aware of potential impropriety concerning their son's admission in 2019," Fujie said, quoting from an amended complaint.

Robert E. Dugdale and Nary Kim of Kendall Brill & Kelly LLP of Los Angeles appeared on behalf of USC. The plaintiffs were represented by Jay L. Bhimani of Dechert LLP in Los Angeles and sole practitioner William Charles Tanenbaum of Beverly Hills.

The parents alleged the school led them to believe that a donation would ethically improve their son's chances of admission, claiming fraud and intentional misrepresentation against USC.

Plaintiff John B. Wilson, a former executive at Staples and the Gap, was found guilty of fraud in 2021 in connection with a $100,000 donation his family made to USC through college admission consultant William "Rick" Singer. Wilson was sentenced to one year of probation, including six months of home confinement, after the 1st Circuit Court of Appeals affirmed the charge in 2023. The appeals court overturned convictions of honest services fraud, mail fraud and bribery.

Wilson and his wife, Leslie Q. Wilson, sued USC in September 2024, claiming that the school falsely represented to them that the donation would ethically improve their son Johnny's chances of admission. Wilson et al. v. University of Southern California, 24STCV24447 (L.A. Super. Ct., filed Sept. 20, 2024).

The plaintiffs "were led to believe their $100,000 donation was a legitimate contribution to USC Athletics by multiple high ranking university officials, only to be later accused of bribery," the complaint claimed. "Despite these false charges, USC shamelessly retained the donation, exposing a disturbing pattern of deceit and exploitation."

In a demurrer filed in November, the university argued that the Wilsons had no reason to believe the donation was legitimate. It also argued that the Wilsons could not have become aware of Singer's illegal activities any later than 2019, when USC publicly decried the scheme and Wilson was arrested.

Fujie sustained the demurrer with leave to amend on some causes of action in February, modifying an initial tentative ruling that allowed some fraud claims to move forward.

A tentative ruling issued Tuesday granted the university's demurrer a second time, this time without leave to amend - prompting argument from Bhimani and Tanenbaum at the hearing.

Bhimani said there was no allegation in Wilson's criminal indictment that he paid USC officials directly, only that he had made payments to Singer.

"This case, Your Honor, is the opposite of bribery," Bhimani said.

Pressed by Fujie to clarify, he continued: "It's the opposite of bribery, because the allegation is that USC's conduct, their intentional tort, which is fraud, was to seek to make representation with the intent to induce plaintiff's reliance on that representation to get money from plaintiffs. It's not the other way around, which is Mr. Wilson is not alleged to have gone to USC to pay USC for some action."

"Well, it's sort of induced bribery, is what you're saying," Fujie replied. "It's not the opposite of bribery."

In response, Dugdale reiterated that the Varsity Blues indictments in 2019, and the Wilsons' subsequent inquiry into the school's consideration of donations for admission decisions, demonstrate that they had adequate reason to believe their payments to Singer were improper early enough to bar their claims under statute of limitations.

"They had three years to bring their case," Dugdale said. "It wasn't impossible, or they weren't prevented from discovering facts they could have used to bring their claim."

Fujie said she would adopt her tentative ruling in full, dismissing the claims without leave to amend.