Celebs, CEOs implicated in $25 million college admissions cheating scam: Prosecutors

Hollywood actresses Felicity Huffman and Lori Loughlin are among 50 wealthy people whom prosecutors allege paid to get their children into elite colleges.
10:39 | 03/13/19

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Transcript for Celebs, CEOs implicated in $25 million college admissions cheating scam: Prosecutors
once? Reporter: Is it a possible case of life imitating art? You know the team can use new batting helmets? Are you asking for a bribe? I've got my checkbook. Reporter: Felicity Huffman's character bribing her son's baseball coach in an episode of "Desperate housewives." Now the actress is one of dozens of parents embroiled in the largest cheating scam ever prosecuted. The FBI uncovered what we believe is a rigged system. We may have, well, he may have embellished, lied a bit on our application. Reporter: Also indicted. Lori Laughlin, the star of "Full house", and her husband worth millions. We believe everyone here had a role in fostering corruption and greed that created an uneven playing field for students trying to get into these schools the right way, through hard work, good grades and community service. Reporter: Bombshell allegations, implicating 33 rich and powerful parents, who are collectively accused of doling out over $25 million to this man, William Rick singer, who helped their kids get into some of the most elite colleges from Harvard to Yale to Georgetown. The odd also been stacked against them. Reporter: Dubbed operation varsity blues, the FBI saying the investigation uncovered widespread bribes to exam officials to cheat on standardized tests and paying off coaches, even staging photos for students who never even played the sport. In one example, the head women's soccer coach at Yale in exchange for $400,000 accepted an applicant for the Yale women's team despite the fact that the applicant didn't even play soccer. These are a catalog of wealth and privilege. For every student admitted through fraud, a talented student was rejected. Reporter: This Twitter user saying I've been holding my daughter's hand through frustration and tears while she's been working her tail off. Quote, while so many wealthy students have their parents essentially buy their way into these schools and rarely experience the same skepticism. For felicity Huffman it started police arresting her at her Hollywood hills home, accused of paying $15,000 to get her oldest daughter a better score on the S.A.T.S. Sh had to appear before the judge. Her husband, William Macy in the front row. They posted a bond of $250,000. The judge stating that she has an estate worth $20 million. Reporter: Laughlin is currently in Canada and has a warrant for her arrest upon her return to the U.S. Charged with the same felony as Huffman, conspiracy to commit mail fraud. Her husband, appearing in federal court in Los Angeles today. You know Oprah once said the worst thing somebody can have happen to them is public humiliation. And that's what's happening to these two families right now. Reporter: Is that part of the message the justice department is sending? 100%. Reporter: The couple allegedly paid $500,000 in bribes in order to get their two daughters, Isabella and Olivia, admitted into the university of southern California, as recruits for the school's crew team, despite the fact that neither participated in the sport. And an e-mailed photo of Isabella on a stationary rowing machine. If you have a kid who didn't get in and Lori Laughlin's did get in, you're not feeling too good right now. Reporter: Usc says it's conducting an internal investigation, releasing a statement saying in part, usc has not been accused of any wrongdoing and will continue to cooperate fully with the government's investigation. 19-year-old Olivia is a social media influencer who's known as Olivia jade to her 2 million subscribers. She created a stir on her comments over heading to college last summer. I do want the experience of like game days, partying. I don't really care about school, as you guys well know. Reporter: Olivia ended up apologizing to her followers, saying she is grateful for her education. The scheme, prosecutors say, involved more than just parents. They uncovered it with the help of three people. Singer, somebody who used to be a prep director for this kind of testing, and you've got the former coach of a Yale soccer team. Reporter: Investigators say singer funneled bribes through "The key". This enabled parents to mask the true nature of the payment and take the tax write off at the end of the year. It's a shell corporation in a lot of cases where they're trying to launder money, funnel money or use it as bribe payments. The fact that they used it to allow tax deductions for these families, these parents, it almost adds insult to injury. Reporter: Singer pled guilty racketeering conspiracy, conspiracy to defraud the U.S. And obstruction of justice. We know he's pled guilty, and that's dangerous for everyone else involved. And some would say why would prosecutors make a deal with the guy who's the, at the top of the pyramid? The answer may be the prosecutors don't believe he's the top of the pyramid. Maybe it's the parents who are the more culpable ones here. Reporter: According to his bio, singer is a father and coach with residences in Sacramento and Newport beach, California where the key is based. In 2014, he published a book titled "Getting in", gaining admission to the college of your choice. But the doj says singer was actually a criminal mastermind who created a meticulously curated sham to privileged and powerful. He was calibrate being fake credentials to appear realistic and not so impressive as to invite suspicion or additional scrutiny. Reporter: It was a year-long investigation that started with a tip from a completely separate case. Normally, when you see bribes that involve hundreds of thousands of dollars if not millions of dollars, that means it's usually a bribe in furtherance of something that's worth a lot more than that. It's staggering to think there's parents that would pay that much to get their kids into a university. Reporter: Many admitted through false pretenses are still enrolled. But investigators say the students themselves are not charged with any crimes. You will see instances where it's important to parents that the child not know this occurred. In that kind of instance, the student would take the exam and someone working four singer would come in afterward, correct enough of the answers, submit the exam. Reporter: Huffman and William H. Macy, who was not charged, allegedly agreed to the plan that involved arranging to get their daughter extra time to take the S.A.T. When her daughter's high school arranged to proctor the exam, Huffman allegedly e-mailing singer. Ruh,ro! Looks like my daughter's high school wants to have their own proctor. She went on to score a 1420, a 400-point improvement. They declined to repeat the scheme for their younger daughter. Lori Laughlin is in more legal jeopardy than felicity Huffman because she allegedly did it twice and paid $500,000. Felicity Huffman did it once. And for $15,000. The amount of money matters. This is not a case where parents were acting in the best interest of their children. They flaunted their wealth, sparing no expense, to set their children up with the best education money could buy. The deck is wildly stacked against middle class and working class kids. They don't have S.A.T. Prep. They may have one counselor for every thousand kids. Reporter: They're actively looking for coaches and parents that may be actively involved. The schools themselves are not targets. Many taking action swiftly firing coaches involved in the scam. Some schools including usc, university of Texas and Yale say they're victims in the scam. I think the real victims are people who should have gotten in the school who didn't, whose families struggle hard to save money and get their kids to the best college they could. And there's this belief that I got to do whatever I can for my kid. And I get that. Part of what we're trying to shift are parenting who think, yeah I have to do what's best for my kids but I have a responsibility to other people's kids. Reporter: Prosecutors say they're sending a message that elite education shouldn't be an entitlement. It's something that's earned, fair and square. There can be no separate college admission system for the wealthy and they'll add that there will not be a separate criminal justice system either.

This transcript has been automatically generated and may not be 100% accurate.

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