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A Chinese billionaire’s Stanford bribe shows how the college admissions scandal makes both zero and complete sense

How much is too much for an elite US credential?

Students on the Stanford University campus walk down a pillared archway.
Tuition at Stanford is high enough without the expense of bribery.
Justin Sullivan

What has never made sense about the college admissions scandal is that seemingly smart businessmen couldn’t find a better return on their investment.

And we may now have found our least-savvy palm greaser.

Meet Chinese billionaire Tao Zhao, whose family reportedly funneled the largest check received by William “Rick” Singer, the admissions consultant at the center of the explosive case brought by federal prosecutors. The pharmaceutical executive’s daughter, Molly, earned a spot at Stanford University by casting herself as a recruit for the school’s sailing team, according to the Los Angeles Times, which broke the story, at a cost $6.5 million. There is “no indication” the young woman ever participated in competitive sailing.

Zhao was not charged in the first round of indictments — in fact, the $6.5 million figure isn’t mentioned in the actual charging documents; it was spoken in court. Courtroom bombs like that are just another indication there are more shoes to drop in this case, and it’s got Silicon Valley’s mega-rich on edge.

What the Zhao family did not fully appreciate is that there are cheaper so-called “side doors” to an elite institution like Stanford.

The special consideration given to “development cases” — in the parlance of high-end college admissions, that means the children of prominent donors — is well documented. Daniel Golden, an author who spoke with Stanford University officials as part of his book on these special admissions arrangements, told the Stanford Daily a few years ago that existing or potential donors could see the admissions benefit of something equivalent to hundreds of extra points on their SAT score.

And for how much? Well, there aren’t exactly how-to guides for quid pro quos, but the Palo Alto Patch reported that a $500,000 donation to the school was about the amount needed for an applicant to receive special consideration.

“The threshold to make a difference in admissions is very high given the incredible amount of money in this area,” Marci Reichelstein, a former Stanford admissions official, told the outlet.

This wouldn’t be the first time a wealthy person paid even bigger money. The father of presidential son-in-law Jared Kushner, now a senior adviser to Donald Trump, infamously pledged $2.5 million to Harvard just before Kushner’s acceptance to the school, a gift Golden speculates played a role in his admission.

That’s what has never made total sense about the college admissions scandal. It has always seemed like amateur, ham-handed behavior by some of the world’s most privileged and in-the-know people. College development offices welcome major gifts like these: Stanford, for instance, lists how much you must donate to qualify for various levels of “gift opportunities” on its website. Stanford has a $27 billion endowment, but the money drawn from that each year only covers about a fifth of the school’s expenses, which means it relies on income sources like gifts and tuition to run school operations.

That’s a long way of saying: $6.5 million stands out on a financial statement.

Which brings us back to the Zhao family: For far less than $6.5 million, a billionaire could’ve found a far more legal way to influence-peddle his way into good favor with one of America’s elite universities. After all, Singer’s other clients paid typically $250,000 for access to one of his side doors — about 26 times cheaper a rate.

But here’s another way to look at it: For the wealthiest people in the world, who retain their standing in the upper crust through credentials like elite schools, it is perhaps surprising that someone like Tao Zhao wouldn’t pay more.

After all, the $6.5 million reportedly offered by his family is only 0.4 percent of his total net worth, according to Forbes’ latest estimate. Zhao is the founder of Shandong Buchang Pharmaceuticals and one of the 200 richest people in China.

And the gift speaks to just how much value Chinese billionaires place on US credentials and social signifiers like a Stanford diploma. Alibaba founder Jack Ma has said that he was rejected by Harvard 10 times, but Chinese billionaires have long been known for their “love affair” with Ivy League schools.

“We work with many wealthy Chinese families who feel that sending a child to an elite Western university is a way of signaling status and prestige — yet ‘another luxury brand purchase,’” says college admissions consultant Paul Lowe. “For wealthy families seeking a safe haven for their assets — by one estimate more than $1 trillion in capital left China in 2015 — a US college education for a child can serve as a first step toward addressing capital flight, foreign investment, and even eventual emigration.”

When you look at it that way, a price tag of $6.5 million makes total sense.

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