After “Operation Varsity Blues,” universities must reevaluate compliance

By: and | March 18, 2019
Tenley Armstrong and Henry Gimenez

Revelations from the Justice Department’s recent “Operation Varsity Blues” admissions investigation—and resulting indictments—have rocked the college landscape. In its wake, all institutions of higher education should assess the implications of the scandal and reevaluate the compliance measures in place to prevent similar conduct on their campuses.

How should institutions view the indictment?

This scandal is a wake-up call for all institutions to refine and perfect their compliance and internal review processes. Regardless of involvement in Operation Varsity Blues, all colleges and universities are now on notice regarding these admissions schemes and must heed the warnings forecast by the indictment and complaint.

What are the criminal and civil implications?

The charges resulting from Operation Varsity Blues are limit-pushing, and their ultimate success is unknown. This indictments and complaints, along with the recent and ongoing college basketball prosecutions, is consistent with the Justice Department’s increasing interest in criminalizing unethical behavior associated with college admissions and athletics. The recent trajectory makes it easy to envision how prosecutors could find elements of bribery in common admission fact patterns.

Many institutions have generous donors who hope their children will matriculate, and their status as the child of a donor tips the admissions scales in their favor. These situations will be examined with more scrutiny for evidence of the quid pro quo needed for indictment. Similarly, egregious conduct of university employees, like that alleged in Operation Varsity Blues, may become the basis for federal prosecutions imposing vicarious liability on their employers.

Does this conduct run afoul of NCAA Regulations?

NCAA compliance consequences are easier to envision. The conduct alleged in the indictment is a violation of Bylaw 11.3—additional income outside an institutional salary—and institutions can be held responsible for an employee’s violation of this bylaw, even in situations where the employee acted covertly and in contradiction to the institution’s rules education.

Even more troubling is the risk of a failure to monitor charge under Bylaw 2.8.1. The NCAA has made clear in its Division I Enforcement Guidelines that “[a]n institution’s obligation to monitor extends beyond its athletics compliance office.” Allegations like the ones here imply a measurable disconnect between the institutions’ admissions and athletics compliance offices.

Students who were fraudulently identified as prospective student-athletes were granted preferential treatment in the admissions process without any significant follow-up before or after enrollment from athletics compliance. The presence of this type of disconnect also signals to the NCAA that the institution’s failure to monitor may extend to the wider athletics department, attracting unwanted scrutiny.

What changes should institutions implement going forward to avoid criminal and civil exposure?

A likely refrain from the institutions involved—and it’s a reasonable one—is that the behavior at the center of Operation Varsity Blues was limited to a few rogue employees and is not reflective of the overall culture of the institution.

Institutions watching this debacle may be tempted to throw up their hands and question how they can prevent the covert actions of the hundreds of employees involved in admissions and athletics. This frustration is understandable, but nonetheless institutions should implement steps to avoid a situation which would be—at best—a public relations nightmare.

Corporations have long dealt with bribery among “rogue employees” and have learned how to implement safeguards that prevent their exposure under the Foreign Corrupt Practices Act, Sarbanes Oxley, and other anti-bribery and anti-money laundering laws. Institutions can use the corporate roadmap as a guide here.

Every institution should identify the areas and personnel at risk for bribery and develop a plan to properly educate and perform regular due diligence on that risk. Education should extend to all employees involved in admissions and athletics and include reinforcement of the importance of their existing compliance policies. Any deviations from those policies should be promptly investigated, disclosed, and remedied.

Compliance should also be a factor in those employees’ evaluations. While an institution cannot prevent all instances of unethical behavior by its employees, it can curry favor with law enforcement by showing vigilance and a culture of compliance.

Tenley Armstrong is a partner in the White Collar Criminal Defense and Corporate Investigations practice group at Lightfoot, Franklin & White LLC. Henry Gimenez is a partner with Lightfoot, Franklin & White and heads its NCAA Compliance and Investigations practice.