MS Morgan Stanley

By Melissa Korn and Jennifer Levitz 

A family from China paid a college counselor $6.5 million for help securing a spot at Stanford University, according to a person familiar with the matter, and connected to the counselor via a Morgan Stanley financial adviser, according to that person and another individual with knowledge of the situation.

Morgan Stanley has since fired the Pasadena, Calif.,-based adviser, whom it identified as Michael Wu.

The involvement of Morgan Stanley illustrates how William "Rick" Singer, the Newport Beach, Calif., college consultant who has admitted to masterminding the college-admissions cheating scheme, infiltrated wealthy networks to pitch his services.

Morgan Stanley said it fired Mr. Wu for not cooperating with an internal investigation into the college-admissions matter. The company said it is cooperating with authorities. The scope of the firm's internal investigation couldn't be learned.

In a statement late Wednesday, Mr. Wu's lawyer indicated that his client had been misled by Mr. Singer about the purpose of the payment and said Mr. Wu was fired by Morgan Stanley while out of the country and attempting to cooperate with the internal investigation.

"Mr. Wu was introduced to Rick Singer through Morgan Stanley as a trusted source," said lawyer Raymond Aghaian.

The $6.5 million payment to the college counselor has been of particular interest since it was the highest payment cited by the U.S. Attorney's Office in Massachusetts when prosecutors announced the admissions-fraud case in March. The family who made the payment hasn't been charged in the case.

Chinese families were among Mr. Singer's alleged top clients. Another Chinese family paid him $1.2 million for help getting a young woman into Yale University, connecting with Mr. Singer through an employee at Oppenheimer & Co.'s Summa Group.

Prominent financial firms helped give Mr. Singer credibility by bringing him in to speak at employee and client events, or referring him to existing or potential clients. Affluent families rely on the firms for guidance not only on managing wealth, but also on related issues like college planning and philanthropy.

Morgan Stanley's website previously listed Mr. Wu as being a managing director and international client adviser.

Mr. Aghaian said Mr. Singer falsely told Mr. Wu the payment would go to Stanford -- for salaries, special athletic programs, scholarships for the needy and more. "Singer made such statements as he knew Mr. Wu would not engage in wrongdoing," the lawyer said. "Singer also stated that admission to the university was not guaranteed."

Mr. Singer's lawyer didn't immediately reply to a request for comment.

Morgan Stanley has said it at one time included Mr. Singer's college-counseling business on its list of referral organizations. A person familiar with the referral arrangement said referrals could be passed to clients, and that Mr. Singer's company was off the list after 2015. Mr. Singer could have maintained contact with some Morgan Stanley employees after he was no longer an official referral, the person said.

The Wall Street Journal couldn't immediately determine the relationship between Morgan Stanley and the family that allegedly paid the $6.5 million to Mr. Singer.

In the matter of the young woman admitted to Yale, Oppenheimer said an employee met her father socially and served as a translator, an activity outside her Oppenheimer job. During that activity, the firm said, the father sought a recommendation for a college counselor. Oppenheimer said the employee introduced the family to Mr. Singer. The firm said the family has never been a client of the firm. Mr. Singer was a board member of Summa's philanthropic foundation as recently as January, according to the charity's website.

Prosecutors have said their investigation into college admissions-fraud continues. They traveled to Los Angeles in April, according to a court filing. Assistant U.S. Attorney Eric Rosen said the government's evidence included emails referencing some parents who haven't been named, including "some who plotted with Singer and withdrew for a variety of reasons."

The young woman admitted to Stanford got in after her family paid Mr. Singer $6.5 million in 2017, according to the person familiar with the matter.

Mr. Rosen said in court in March that Mr. Singer brought an applicant to then-Stanford sailing coach and created a falsified sailing athletic profile for the prospective student.

"This candidate was ultimately accepted to Stanford partly due to the fact that she had fabricated sailing credentials," Mr. Rosen said.

After she was admitted, Mr. Rosen said, Mr. Singer paid the then-sailing coach $500,000 from his Key Worldwide Foundation charity, which was sent to the Stanford Sailing Program. A Stanford spokesman said the payment came months after the student was admitted, and the school received a total of $770,000 from the charity.

Stanford said last month that it had rescinded the admission of one student this spring after determining some material on that student's application was false. The student hadn't received recommendations from any athletic coaches and wasn't affiliated with the sailing team. It didn't name the individual. A Stanford spokesman declined to identify the student, citing federal privacy laws, or comment further on the case.

The school said it came across the student after conducting a review of people potentially tied to Mr. Singer's scheme. Stanford's former sailing coach, John Vandemoer, has pleaded guilty to racketeering conspiracy and admitted to taking bribes in exchange for giving athletic recommendations to two other applicants. Neither of those applicants attended the school. Mr. Vandemoer has been fired from Stanford.

Write to Melissa Korn at melissa.korn@wsj.com and Jennifer Levitz at jennifer.levitz@wsj.com

(END) Dow Jones Newswires

May 02, 2019 07:04 ET (11:04 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.