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Business Executives Out After Being Charged in College Admissions Scam

Justice Department officials said at a news conference on Tuesday it was the biggest college admissions scandal it has ever prosecuted

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    Business Executives Out After Being Charged in College Admissions Scam
    David Paul Morris/Bloomberg via Getty Images
    In this Aug. 16, 2016, file photo, William ‘Bill’ McGlashan, founder and managing partner of TPG Growth LLC, speaks during a television interview in San Francisco, California.

    What to Know

    • Manuel Henriquez has resigned as CEO of Hercules Capital

    • TPG executive William McGlashan has been placed on indefinite leave at the private equity firm

    • The two were among 50 people charged in what investigators said was a $25 million bribery scam

    Manuel Henriquez has resigned as CEO of Hercules Capital and TPG executive William McGlashan has been placed on indefinite leave at the private equity firm after they were accused in a scam to help their children get into top colleges.

    The two were among 50 people charged in what investigators said was a $25 million bribery scam.

    Henriquez, 55, resigned as chairman and CEO of his California-based venture capital firm, according to a company statement, which did not mention the admissions scheme. He was arrested in New York on Tuesday and released on $500,000 bail. Hercules’ shares lost 8.9 percent after the arrest announcement, but were slightly higher on Wednesday.

    McGlashan, 55, was placed on indefinite leave, TPG said. He managed TPG Growth, which has invested in companies including Airbnb, Spotify and Uber, and led TPG’s Rise Fund, which is committed to investing for social and environmental good, according to the website.

    “As a result of the charges of personal misconduct against Bill McGlashan, we have placed Mr. McGlashan on indefinite administrative leave effective immediately,” TPG said in a statement. It said Jim Coulter, co-CEO of TPG, will be interim managing partner of TPG Growth and The Rise Fund. 

    The University of Southern California also reportedly fired two athletic department employees — senior associate athletic director Donna Heinel and water polo coach Jovan Vavic — for allegedly taking bribes of more than $1.3 million and $250,000, respectively, to help kids get in as athletic recruits.

    Other business executives charged included Agustin Huneeus, head of Huneeus vineyard in Napa Valley, California; Gordon Caplan, co-chairman of international law firm Willkie Farr; Douglas Hodge, a former CEO of Pimco; and Robert Zangrillo, CEO of Dragon Global, an investment company whose website says it’s managed more than $1 billion in companies that have over $500 billion in market value today. The enterprises did not immediately respond to CNBC requests for comment. 

    William Singer, CEO of the Key Worldwide Foundation who was identified as the leader of the scam, pleaded guilty to four charges Tuesday. Federal prosecutors said his business helped parents bribe college coaches to take their children without any athletic background and to help alter students’ answers on SAT and ACT exams.

    Prosecutors said Henriquez and his wife paid $400,000 in bribes to get their daughter into Georgetown and hired a cooperating witness to aid their other daughter with her standardized exam. The couple also allegedly bribed Georgetown’s head tennis coach to designate their daughter as an athletic recruit. They were each released on $500,000 bond.

    Hercules did not respond to CNBC request for comment.

    McGlashan was charged with working with a college prep company to create a fraudulent athletic profile for this son in order to be recruited as an athlete at USC. He also allegedly funneled $50,000 in bribes into the nonprofit arm of the company to have a cooperating witness correct his son’s wrong answers on the SAT exam, prosecutors said.

    Justice Department officials said at a news conference on Tuesday it was the biggest college admissions scandal it has ever prosecuted.

    This story first appeared on CNBC.com. More from CNBC: