Breaking Down the Investigation Into Harvard's Fencing Coach and a Peculiar Real Estate Deal
Unlike Yale University, Stanford University and several other “elite” universities, Harvard University has not been implicated in the FBI’s Operation Varsity Blues investigation. That remains true, but an unusual real estate transaction involving longtime Crimson fencing coach Peter Brand raises questions about the fidelity of Harvard’s admissions process for student athletes.
An odd real estate deal sparks concern
On Thursday, Harvard acknowledged that Brand allegedly engaged in conduct that bears more than a passing resemblance to the schemes uncovered in Operation Varsity Blues. Harvard has launched what it calls an “independent investigation” into a real estate transaction that took place in Needham, a suburb of Boston, back in 2016. That year, wealthy businessman Jie “Jack” Zhao purchased a home that was valued at $549,300 for $989,500—meaning Zhao paid 80% more for the house than it was worth. As reported by The Boston Globe’s Joshua Miller, Zhao never lived in the house. Seventeen months later, he sold it for $665,000, a loss of $324,000.
On paper, these transactions are difficult to reconcile. Granted, it’s not suspicious for a person with financial means to buy a house as an investment and not live in it. The buyer’s “investment” reflects the expectation that the house will be worth more at a later date and thus sold for a gain. This practice is sometimes called “flipping a house,” particularly when the sequence between buying and selling the house is done within months. However, it is strange for that person to buy a house at an inflated price, not live in it and then sell it for a massive loss only 17 months later. Such maneuvers do not seem linked to a desire for profit; if anything, losing money was foreseeable from the start.
Zhao’s transactions appear to make more sense when considering the identity of the person who sold him the house and who, in turn, reaped a considerable profit. That person is Brand. According to the Globe, Brand and his wife purchased a $1.3 million condominium in Cambridge a week after their house was sold to Zhao. The condo had been listed at $989,000, almost identical to the amount of money ($989,500) Brand had been paid by Zhao. Shortly thereafter, Zhao’s son, Edward, was admitted into Harvard as a student-athlete and member of the fencing team.
Zhao, who co-founded iTalk Global Communications in Virginia, is the father of two sons who have been Harvard fencers under Brand. Eric graduated last year while Edward is a sophomore.
Father of the Harvard fencer contends that no wrongdoing or improper conduct took place
Zhao insists that his real estate transactions in Needham are completely innocent and not evidence of any untoward attempt to influence Harvard’s admissions process.
In comments to the Globe, Zhao explained that his interest in buying Brand’s house arose spontaneously. During a dinner, Brand had causally mentioned that he found his commute from Needham to Harvard to be aggravating. While Needham is only about 15 miles from Harvard’s campus in Cambridge, during Boston rush hour—and especially during wintery conditions—the commute can take over an hour. Brand implied that living in Cambridge would be much easier for him, especially since his wife works there.
Zhao recalls suggesting to Brand that he buy the house in Needham. As he explains it to the Globe, Zhao asked Brand what he thought the house was worth and Brand then suggested a price. Zhao then looked at the house.
Zhao admits that he did not check the market value of the house. He also acknowledges that he didn’t engage in research and verification methods normally undertaken by prospective home buyers, such as having the house formally inspected and assessed. Nonetheless, Zhao felt that he was making a “good investment” by paying $989,500. He also found it appealing that he could make Brand’s “life better” by paying him for the house.
Zhao maintains the real estate deal was not a bribe for his son to be admitted into Harvard. To that end, he asks, “Why would I use my own name?” in the transactions. He asserts that if he thought the deal would spark any problems for his family, he wouldn’t want his name referenced.
Zhao also maintains that Edward possessed very strong academic credentials in applying to Harvard and was a skilled fencer, too. Edward’s page on Harvard’s athletics website is not currently available, but a Google cached version shows that he graduated from St. Albans—a top-rated private high school in Washington D.C.—where he was a national merit scholar and a member of the school’s cum laude society. Also, unlike many of the children who were beneficiaries of parents’ bribes in Operation Varsity Blues, Edward did not feign ability in his sport. He was selected to participate in fencing world cups and was a ranked player while in high school. Edward also didn’t quit the sport once he started college. He continues to fence for the Crimson in college tournaments. It’s safe to say that, unlike the “fake” tennis players and water polo players in Operation Varsity Blues, Edward is a legitimate member of the Crimson fencing team.
The Harvard controversy in the context of Operation Varsity Blues
It’s natural to link the Harvard controversy to Operation Varsity Blues. Both touch on an overarching theme of wealthy parents suspected of rigging the admissions process at elite universities. However, as explained below, there are important differences.
Operation Varsity Blues was a 10-month investigation conducted by the Justice Department. The investigation uncovered a multi-step fraudulent scheme that ensured children of the privileged would be admitted into highly-selective universities. As previously detailed on SI, the architect of the scheme was Rick Singer, who ran the for-profit college counseling company Edge College & Career Network and was CEO of the non-profit Key Worldwide Foundation. Singer has reached a cooperation deal with federal prosecutors in Boston. He has pleaded guilty to charges of obstruction of justice, racketeering conspiracy, money laundering conspiracy and conspiracy to defraud the United States.
Using a network of accomplices and falsified paperwork, Singer ensured that children of his clients would score substantively higher on the SAT or ACT tests than they would on their own accord. Some students would receive the answers, while others would have other persons—skilled exam ringers—pose as them and take the tests.
As a second phase of the fraud, Singer facilitated bribes to college coaches, who would, in turn, peddle their influence with admissions offices to ensure that clients’ children would be offered admissions. These coaches were employed by Yale, Stanford, Georgetown, the University of Southern California, Wake Forest and other universities with very low admit rates. Clients’ children would be admitted as “athletic recruits” to such sports as sailing, tennis, water polo, soccer and golf. Singer went so far as to invent fictitious athletic profiles of the would-be student-athletes, including staged photos and made-up athletic awards.
Last month, federal charges were brought against 50 persons in the U.S. District Court for the District of Massachusetts. Defendants include prominent college coaches and celebrities, such as award-winning actresses Felicity Huffman and Lori Loughlin. They are all accused of illegally scheming the college admissions process in ways that culminated in the bribing of coaches.
The coaches face federal racketeering conspiracy charges, meaning they are accused of taking bribes and kickbacks as part of a fraudulent moneymaking scheme. As to the parents, they face conspiracy to commit mail fraud and honest services mail fraud charges. They are accused of using phone calls, emails, texts and bank transactions to advance a bribery scheme. Many were caught on FBI wiretaps. On Friday, one of the parents, New York attorney Gordon Caplan, released a statement saying that he is ashamed of his behavior and that he intends to enter a guilty plea.
The government’s theory of criminal conduct stems from the Honest Services Wire Act. It makes it illegal for an employer to be deprived of its intangible right to employees providing “honest services.” In the college basketball corruption prosecutions, various sneaker and other sports professionals have been accused of depriving schools of the right to their coaches’ honest services. That is because elite basketball recruits were paid (bribed) to attend schools where they would be ineligible to play. Thus, the schools awarded scholarships and financial aid to students who were ineligible to receive them. With Operation Varsity Blues, the parents and coaches allegedly schemed through bribes and self-dealings to wrongfully manipulate schools’ admissions processes and deprive those schools of the honest services of administrators and coaches.
The fact-pattern involving Brand and Zhao is distinguishable in certain ways from the coaches and parents who are accused in Operation Varsity Blues. For one, Zhao’s son appears to have been a strong student. He is also an accomplished fencer who intended to continue his fencing in college. As an active member of the Crimson fencing team, Zhao has followed through on his intentions. For another, there is no evidence at this time suggesting any form of academic fraud, be it exam-rigging or similar acts. Likewise, there are no links between Zhao and Singer, or to any “bribe”, at least to the extent that word refers to a direct cash payment for a guarantee of admissions.
It’s also not instantly clear how Brand could have manipulated the Harvard admissions process or whether any intrusions would have made a difference. Claudine Gay, the dean of the Faculty of Arts and Sciences at Harvard, issued a statement to faculty in which she explained the Harvard admissions process and its procedural checks:
First, the applications of all recruited student athletes are reviewed by the full admissions committee and decisions are made through a vote of the entire committee. The committee has approximately 40 members. Second, all recruited student athletes must be interviewed by an admissions officer or alumni interviewer.
Assuming Gay’s description of the system is accurate and assuming exceptions to it aren’t made, Brand would have needed to impermissibly influence multiple, perhaps even dozens, of persons on the admissions committee in order to secure a spot for Edward Zhao. Although that is possible, it would mean there was a conspiracy on the admissions committee and most likely a paper trail or digital trail to that effect.
The absence of Harvard from the list of schools accused in Operation Varsity Blues is perhaps a reflection of the multiple admissions checks as detailed by Gay.
The structural limitations of Harvard’s “independent” investigation
While Harvard describes its investigation as “independent”, such a word is something of a misnomer. Investigators will presumably include Harvard employees, outside persons paid by Harvard and persons with familial or alumni ties to the school. That arrangement does not automatically disqualify the investigators as biased or unreliable. However, it reinforces that the investigators’ interests are aligned with those of the school and in protecting the school’s name and brand. To the extent the interests of the school diverge with those of Brand or Zhao, attorneys for Brand and Zhao would be inclined to raise questions about the investigator’s potential conflicts.
Further, any attorneys hired by the school to assist in the investigation would be subject to professional rules of ethics governing attorneys. Even though Harvard would nominally label those attorneys “independent”, they would have a professional duty to vigorously advocate for their client’s interests—that is, Harvard’s interests.
Second, independent investigations are structurally limited. As private citizens, the investigators lack subpoena powers. As a result, they can’t legally compel that witnesses turn over evidence, be it texts or emails, or provide testimony. This restriction can reduce the scope of evidence gathered and thus provide an incomplete depiction of events. Similarly, any witnesses who choose to speak with investigators will not do so under oath. They are thus not obligated to tell the truth upon threat of criminal perjury charges.
Goals of Harvard’s investigation
With those two design caveats acknowledged, Harvard’s investigation will likely focus on several points.
First, and as reported by Scott Jaschik of Inside Higher Ed, Harvard will assess whether Brand violated the school’s conflict-of-interest policy. The policy requires that employees “avoid situations or activities that could interfere with their unencumbered exercise of judgment in the best interests of Harvard University.” It further requires that employees report any possible conflicts. A failure to report can constitute grounds for disciplinary action or termination.
It is safe to assume that Brand will comply with any interview requests by Harvard investigators. A refusal to do so would likely lead to his termination. In an interview, Brand and his attorneys would need to explain why he felt that the real estate dealings weren’t apparently not worth mentioning to either his direct superior, who is presumably Harvard athletic director Bob Scalise, or the university’s office of the general counsel. Given that Brand is in his 20th season at Harvard, he is, or should be, fully aware of university rules.
Second, Harvard will determine whether Brand made any attempts to influence the admissions process and, if so, whether those attempts materially altered the university’s admission decision on Edward Zhao. As noted above, Zhao appears to have been a legitimate candidate, both academically and athletically, for admissions into Harvard. However, Harvard is one of the most selective schools in the world. The university routinely rejects applications from outstanding high school seniors, including class valedictorians. For the class of 2022, the university accepted only 4.6% of applicants. Harvard will evaluate whether Brand might have helped Zhao just enough to put him over the top with the admissions committee.
Third, if Harvard concludes that Brand attempted to influence the admissions process, the university will know that he had discussions with other persons at the school and presumably with members of the admissions committee. As noted above, Harvard admissions is hardly conducted in a vacuum. According to Gay, there is a 40-person admissions committee that considers each applicant and votes on them. If Brand engaged in wrongdoing that procured the acceptance of an applicant, he could not have acted alone.
Fourth, Harvard will evaluate the believability of Zhao’s explanation of innocence. Zhao says that he wanted to make the life of Brand better by buying his house for $989,500. It’s fair to ask if Zhao routinely tries to make lives of others better by paying them well-above-market prices for their assets. If not, an investigator might ask, what specific reasons made Brand a select beneficiary of Zhao’s generosity?
Zhao is also a sophisticated and, by all accounts, successful business person. In his business dealings, he presumably conducts extensive research and valuations before authorizing expenditures. His company, iTalkBB, boasts of being the “No.1 telecom company in both the overseas Chinese market and the overseas Korean market all over the globe” and having “over 30 iTalkBB retail stores have spread across the U.S., Canada, Australia, Singapore, etc., with more than 1.2 million iTalkBB users located around the world.”
Yet with the house purchase from Brand, Zhao curiously says he refrained from due diligence—he didn’t check the market value and he didn’t have the house formally inspected or assessed. Even if Zhao paid in cash and thus wasn’t obligated to conduct steps required by a mortgage company, it is curious why Zhao was so willing to hand over nearly a $1 million for a vastly overpriced house that it doesn’t seem he wanted. Harvard will want to know if Zhao had engaged in “purposeful ignorance” or “hear no evil, see no evil.”
According to the Globe, the two Zhao brothers say they didn’t know their father purchased Brand’s house. There is no indication at this time to believe that the brother who is currently enrolled at Harvard, Edward Zhao, has engaged in wrongdoing. However, the investigation will certainly explore that topic.
Thus far, schools implicated by Operation Varsity Blues have not expelled enrolled students whose parents had bribed coaches. As I previously explained, these students may have violated university honor codes and academic rules. Yale, however, rescinded the admissions of an admitted student whose application had allegedly been aided by former women’s head soccer coach Rudy Meredith.
Lastly, expect the Justice Department to take notice of the Harvard controversy. While Brand, Zhao and perhaps even Harvard officials might contend that a real estate deal is substantively different from the overt “bribes” uncovered in Operation Varsity Blues, any distinction could become one without a difference if the real estate deal was, functionally, a bribe. Both types of transactions—a direct payment and an inflated real estate purchase—would have conferred economic value for an unlawful purpose.
SI will keep you updated on college admissions scandals.
Michael McCann is SI’s legal analyst and Associate Dean of the University of New Hampshire School of Law.
