Expelled student’s family paid $6.5 million in scandal to secure her admission to Stanford

May 1, 2019, 1:13 p.m.

The billionaire Chinese family of former Stanford sophomore Yusi Zhao paid $6.5 million — the largest known sum in the college admissions scandal uncovered by Operation Varsity Blues — to secure her admission to Stanford.

Yusi’s father, Tao Zhao, is the chairman and co-founder of multibillion-dollar pharmaceutical company Shandong Buchang, based in Heze, China.

Yusi was expelled after the University discovered that her application contained falsified sailing credentials linked to a $500,000 payment to the University’s sailing program. She moved out of her on-campus residence on March 30, according to sources familiar with the matter — three days before the University announced the expulsion in a press release on April 2.

Yusi did not respond to multiple requests for comment.

As of April 10, Yusi’s profile no longer appeared in the online directory StanfordWho. A cached version of the database listed her as a student as of March 27. University spokesperson Brad Hayward told The Daily that, while he could not confirm the reason for the profile’s disappearance, StanfordWho lists “current students and those on a leave of absence,” but not those who have elected not to have their directory information made public. University spokespeople said they are unable to confirm or deny whether Yusi is the expelled student due to the Family Educational Rights and Privacy Act of 1974.

News of the Zhao family’s payment comes as federal prosecutors are targeting additional parents in the scandal. So far, the second-highest known payment to scandal ringleader William Rick Singer was $1.2 million from another Chinese client, the family of Sherry Guo, who was admitted to Yale University in 2018 as a purported soccer recruit. Guo was expelled from Yale in March.

Guo’s attorney told the Wall Street Journal that Guo’s family believed the $1.2 million payment was for a legal donation. He suggests Singer exploited Chinese families’ lack of knowledge about the U.S. college admissions process.

“The amount alone shows that he was preying on the Chinese community,” Guo’s attorney told The New York Times, speaking to the Guo family’s payment.

Neither Yusi nor her parents have been charged in the scandal, and it is unclear whether they were aware that Singer’s college admissions scheme was illegal. It is also unclear whether Yusi was aware of her family’s activity with Singer.

Tao could not be reached for comment. Representatives from Fordham University, where Tao earned an MBA in 2002, wrote in an email to The Daily that Tao “has lost contact with [them] or has asked to be removed from [their] mailing list,” and that they were unable to reach him. Wellington College, the elite British boarding school Yusi attended, declined to connect The Daily with Tao.

Former Stanford sailing head coach John Vandemoer pleaded guilty to racketeering in collaboration with Singer’s fraudulent charity. Both Vandemoer and his attorney Robert Fisher declined to comment.

The transaction

The Los Angeles Times reported that Yusi’s parents allegedly met Singer through the Los Angeles-area branch of investment bank Morgan Stanley, and that the manager was said to have brought Singer into the office multiple times and “encouraged her financial advisors to offer his college consulting services to their clients.”

Morgan Stanley’s Los Angeles branch declined to comment on the matter to The Daily.

In a transcript of Vandemoer’s plea hearing, U.S. prosecutor Eric Rosen stated that Singer brought an applicant, now believed to be Yusi, to the head sailing coach in late December 2016 or early 2017. Singer had created a falsified sailing athletic profile for Yusi to make it appear as if she was a real sailor, even though she had no experience with competitive sailing. However, Yusi was not admitted as a recruited athlete.

According to Rosen, the admissions office will allow the coach to release a “pink envelope application” to recruits that coaches have screened, marking them as an athletics recruit. Rosen claims that receipt of a pink envelope application provides a “significant material benefit” to a student’s chances of admission, as the acceptance rate for pink envelope applicants is much higher than those not.

Vandemoer did not help the student’s application in any “material way,” Rosen said, meaning that the student did not receive pink envelope or recruited athlete status. However, he stated, the student was eventually accepted to Stanford “partly due to the fact that she had fabricated sailing credentials.”

Rosen declined to comment on the identity of the student or elaborate on their particular situation in an interview with The Daily. Elizabeth McCarthy, a public affairs specialist from his office, wrote in an email to The Daily that status as a non-U.S. citizen would not affect whether individuals would be listed in the affidavit or named in public hearings.

Singer’s Key Worldwide Foundation (KWF) charity sent $500,000 to Stanford Sailing, Rosen said, “to be designated at the discretion of [Vandemoer]” after her admission. University spokesperson E.J. Miranda confirmed in an email to The Daily that the $500,000 associated with the student was paid to Stanford Sailing months after she was admitted.

Stanford maintains the total amount of money received by the sailing program was $770,000 across three applicants, Miranda wrote. The other two students — one of which ultimately enrolled at Brown University and the other denied admission — were connected to payments of $110,000 in May 2018 and $160,000 later in the year in exchange for recruiting spots with the sailing team.

KWF’s payments were made as “donations” to the sailing program, as Singer orchestrated the largest college admissions scandal ever prosecuted by the U.S. Department of Justice. The scandal involves more than 50 people, including four Stanford affiliates and 11 Bay Area parents.

The Department of Education began a probe into Stanford to see if the University violated federal laws governing student financial aid programs in late March, weeks after details of the admissions scandal was made public. In light of the scandal, Stanford revised its athletic recruitment policy to require background checks from a Stanford Athletics executive for “a second, higher-level verification of the athletic credentials of recruited student-athletes.”

One of Singer’s attorneys, Donald Heller, declined to comment. Singer could not be reached.

Academic pursuits

A declared East Asian Studies major, Yusi was a member of Stanford’s Forum for American-Chinese Exchange (FACES), and had planned to attend Stanford’s Bing Overseas Studies Program’s inaugural Hong Kong program in fall 2019. Shortly after her expulsion, she served as a delegate from April 3 to 7 to the Global Governance Forum, hosted by the Princeton U.S.-China Coalition (PUCC).

The conference’s website describes her as “interested primarily on China’s international educational policy” and “especially intrigued by the rural urban education inequality in China.”

“She hopes to be involved in the Chinese government in the future and is willing to learn more about the Sino-U.S. relationship,” it added.

In an email to The Daily on April 22, conference co-director Jack Allen praised Yusi’s participation.

“Our delegates are chosen through a rigorous selection process, which involves a written application, essay and interview,” he wrote. “Yusi was one of our fantastic 27 delegates. She participated in small-group discussions with experts on the U.S.-China relationship — asking some excellent questions — and did a wonderful job on her final policy presentation, where she presented on an issue she had researched in the U.S.-China relationship.”

In an email to The Daily on May 3, Allen wrote that PUCC was not aware of Yusi’s expulsion at the time of the conference.

Zhaos’ business dealings

Tao’s father, Buchang Zhao, who co-founded Shandong Buchang with his son, was implicated in a separate bribery scandal in July 2007. Buchang was named among the executives of eight drug companies that bribed Zheng Xiaoyu, former head of the of the State Food & Drug Administration in China.

In his confession to the Chinese Communist Party, Zheng admitted to accepting $850,000 in bribes from the drug companies. Zheng was sentenced to death for corruption and dereliction of duty and was executed on July 10, 2007.

The Panama Papers and the Paradise Papers — troves of millions of documents which described improprieties involving offshore financial entities — provide some detail on transactions involving the Zhaos, including a financial entity registered in Bermuda to Xiaohong Zhao. Xiaohong is Zhao Tao’s wife, according to multiple Chinese publications.

Another entry lists Zhao Tao as a shareholder of China Dream Capital, which is described on its website as a “boutique investment bank.” The organization’s website also states that it advised a transaction involving Chinese environmental energy company BCCY and Sequoia Capital, the prominent venture capital firm headquartered in Menlo Park.

China Daily, the English-language newspaper of the Chinese Communist Party, published a detailed profile of Tao in 2016, describing his business successes.

“The current Zhao Tao is not merely a business in Jilin, but also a ‘name card’ that publicizes Jilin here and there,” it stated, referring to the northern Chinese province in which a Shandong Buchang subsidiary is headquartered, according to Bloomberg.  

This article has been updated to reflect that Xiaohong Zhao is Zhao Tao’s wife. This article has been updated to reflect that PUCC was unaware of Yusi’s expulsion at the time of the conference. The headline has been corrected to reflect the fact that Yusi’s family, not Yusi, paid $6.5 million to secure her admission to Stanford. The Daily regrets this error.

Contact Charlie Curnin at ccurnin ‘at’ stanford.edu, Julia Ingram at jmingram ‘at’ stanford.edu, Elena Shao at eshao98‘ at’ stanford.edu and Holden Foreman at hs4man21 ‘at’ stanford.edu.

Charlie Curnin '22 is the editor-in-chief of The Stanford Daily. Contact him at eic 'at' stanforddaily.com.Julia Ingram ’21 was The Daily's Volume 256 editor-in-chief. She is a New York City native majoring in English literature and working toward a career in news reporting. Contact her at jingram ‘at’ stanforddaily.com.Elena Shao '21 is from Suwanee, Georgia. At The Daily, she is a Managing Editor for News. Outside, she's studying political science. She also enjoys learning foreign languages and is hoping to pursue a career as an investigative and data journalist. Contact her at eshao98 'at' stanford.edu.Holden Foreman '21 was the Vol. 258-59 chief technology officer. Holden was president and editor-in-chief in Vol. 257, executive editor (vice president) in Vol. 256, managing editor of news in Vol. 254 and student business director in Vol. 255.

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