Distillery owner charged in US college admissions scandal

13th March, 2019 by Melita Kiely

Kentucky distillery owner Marci Palatella is among dozens of people who have been charged in a US-wide college admissions cheating and recruitment scandal.

Preservation-Distillery-Bourbon

The Preservation Distillery is located in Bardstown, Kentucky, US

Palatella is CEO of the Preservation Distillery in Kentucky, which became the 38th member of the Kentucky Distillers’ Association in 2018.

Residing in Hillsborough, California, Palatella is accused of allegedly taking part in both the college entrance exam cheating scheme and the athletic recruitment scheme, including by conspiring to bribe University of Southern California’s (USC) Donna Heinel, the senior associate athletic director at the college, to take on her son as a football recruit in order to help his admission to USC.

A number of the individuals listed in the indictment used “the façade of a charitable organisation to conceal the nature and source of the bribe payments”.

Palatella is charged with felony conspiracy to commit mail fraud and honest services mail fraud.

The authorities have gained information with the help of two confidential, cooperating witnesses CW-1 and CW-2. Both have been working with the government investigation in a bid to receive more lenient sentences.

Palatella is alleged to have paid CW-1 and Heinel approximately US$500,000 to secure her son’s admission to USC.

Hollywood celebrities, including Desperate Housewives actress Felicity Huffman, Full House, Fuller House actress Lori Loughlin, and her designer husband Mossimo Giannuli were also among those charged over the admissions scheme.

Exams cheating

On or about 27 February 2017, after her son was granted extended time for the SAT, Palatella sent an email to her son’s school explaining he would be “taking his SAT test at [the West Hollywood Test Center] in Los Angeles on March 11 and 12, 2017”. She explained it was because they were taking him to visit schools in the area that weekend, and his outside college advisor had recommended he take his test there.

On or about 7 March that same year, Palatella transferred US$75,000 to one of the KWF (Key Worldwide Foundation) charitable accounts.

A few days later on 10 March, CW-2 allegedly flew from Tampa to Los Angeles for Palatella’s son’s SAT exam. CW-2 purported to invigilate the exam the following day, and returned to Tampa on or about 12 March.

Palatella’s son received a score of 1410 out of 1600 on the SAT.

The indictment document then continues to explain that at or about the same time that Palatella “made arrangements with CW-1 to facilitate cheating on her son’s college entrance exams”, she also inquired about the college recruitment scheme.

An email exchange on or about 13 March 2016 claims Palatella asked CW-1 for advice on how to “position” her son for college applications. CW-1 reportedly responded with: “Are you willing to make a contribution of several hundred thousand as a donation to get him in as a participant in someone’s program?” Palatella allegedly replied: “Money, for the right environment, yes. But he can never know.”

CW-1 then provided Palatella with a price list, which he described as “the number it would take to get admitted even with the fudging of the scores”.

Heinel presented Palatella’s son to the USC subcommittee for athletic admissions on 16 November 2017, “falsely describing him as a long snapper”, the document detailed.

Heinel emailed CW-1 a conditional acceptance letter for Palatella’s son on or about 30 November 2017, which he forwarded to Palatella.

‘It was worth every cent’

On or about the following day, Palatella posted a US$100,000 check, payable to the USC Women’s Athletic Board, with a note that said: “Our son…is beyond thrilled at the prospect of attending USC as a freshman this fall.”

On or about 24 October 2018, CW-1 called Palatella from Boston at the direction of law enforcement agents and told her that the IRS (Internal Revenue Service) was conducting an audit of KWS.

Transcripts from a consensually recorded call show CW-1 tell Palatella that “essentially what I want to do is make sure that our stories are the same” regarding her payments to KWF for US$75,000 for “CW-2 taking the test for [your son], which we know happened at [the West Hollywood Test Center]” and “the additional money, the 400k-plus, was – that we get through Donna – to help [your son] get into USC, through football”. The pair agreed to say the payments were “essentially for helping – going to our foundation to help underserved kids”.

On or about 10 January 2019, Palatella called CW-1 to tell him about a “disturbing call” she had from a neighbour who she had told in confidence about a US$200,000 payment to CW-1 to secure a place for her son at USC. The indictment document claims the actual amount was in fact two-and-a-half times that amount, US$500,000.

It continued to explain that the neighbour reportedly told Palatella’s son his parents “basically paid off to get in”. It added that Palatella told CW-1 she and her spouse “laugh every day” about how grateful they were for CW-1’s services, and told him: “We’re like, it was worth very cent”.

The Spirits Business has contacted the Preservation Distillery for comment.

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