Elite prep faculty Horace Mann accused of pay-to-play admissions rip-off in whistleblower lawsuit
- Horace Mann College, a high prep faculty, lets dad and mom purchase their children spots, a lawsuit says.
- The swimsuit was filed by a former assistant to a businessman who made a $1 million pledge.
- It accuses the mum or dad, Qi Tom Chen, his corporations, and Horace Mann of dishonest on their taxes.
The unique New York Metropolis prep faculty Horace Mann accepted a $1 million pledge from a tech businessman in trade for giving his kids a leg-up within the admissions course of, a brand new lawsuit claims.
The case, filed by a former worker of tech firm Lake 5 Media, accuses its proprietor Qi Tom Chen of dishonest on his taxes for years, writing off tons of of hundreds of {dollars} of private outlays as enterprise bills.
It additionally goes after Horace Mann, which boasts a 10.4% acceptance price for kindergarteners and locations greater than half of its graduating seniors at super-selective colleges like Harvard, Columbia, and the College of Chicago. The lawsuit claims Chen employed a advisor who brokered a gathering with Horace Mann’s head of college the place a dodgy deal was struck.
“On account of that assembly, Mr. Chen made 1,000,000 greenback pledge to Horace Mann in trade for preferential admissions therapy for his kids,” the swimsuit claimed.
The lawsuit was confidentially filed in late 2020 by Daniel Hayward, a former assistant at Lake 5 Media, Chen’s media-monitoring expertise agency. The case was quietly unsealed in Could after the New York Lawyer Normal declined to commit its assets to the case.
Ed Adler, a spokesman for Horace Mann, stated the claims are bogus and protested that the varsity was collateral injury in a dispute between others.
“The matter does not contain Horace Mann, and there has by no means been a quid professional quo for presents on the faculty,” he stated.
The case is at an early stage and will ultimately be dismissed. But when Hayward proves that Chen, his corporations or Horace Mann cheated on their taxes, he would stand to gather a share of any again taxes paid to the state.
Wine, music classes, and funds to a “sexual paramour” had been allegedly written off
Based on the lawsuit, Lake 5 Media reported to the IRS that it paid $550,000 in 2018 to an entity referred to as CTBS Everblue LLC, principally for “lease.” In actuality, Hayward claims, Chen used the Everblue entity to buy greater than $22,000 of wine for his personal private consumption and to pay for music and martial-arts classes for his children, amongst different issues.
“Over the previous 10 years, Mr. Chen has spent huge quantities of Lake 5’s and Everblue’s cash on international holidays; enhancements to his residence; wine; cars; assist for his sexual paramour; and even a surrogacy contract,” the lawsuit claims.
As for Horace Mann, the swimsuit claims, funds acquired for admissions slots ought to have been reported to the IRS as “unrelated enterprise earnings,” which is taxable.
Eric Rosen, a former federal prosecutor who labored on the “Varsity Blues” pay-to-play circumstances, stated the case towards Horace Mann may activate how express the supposed deal between Chen and the varsity was. Merely hoping {that a} donation will curry favor is not unlawful, he stated.
“It is all gonna come all the way down to whether or not they can get discovery to indicate there was some settlement between the mum or dad and the headmaster,” stated Rosen, now with the legislation agency Freedman Normand Friedland.
Steve Mintz, a lawyer for Chen, declined to remark.
Hayward was confused, then involved, when Insider contacted him after the lawsuit’s existence was made public in Could. “I did not need to have a difficulty with Horace Mann,” he stated. “I am gonna yell at that lawyer.”
His lawyer, David Abrams, declined to remark.
