A major Silicon Valley venture capital firm broke ties with its founder after he informed partners that the mastermind of the sweeping college admissions scandal helped get his son into college.
Chris Schaepe was removed from his post as a founding partner at Lightspeed Venture Partners, a firm that boasts having $6 billion invested in companies and a successful track record funding technology start-ups, a spokeswoman for the firm confirmed to The Times. Schaepe was pushed out after he told partners recently of a “personal matter” that they worried could “interfere with firm operations,” the spokeswoman said.
Schaepe has not been charged in the ongoing federal investigation into the college admissions scheme. His personal spokeswoman acknowledged that Schaepe hired William “Rick” Singer, who has admitted using bribes and rigged test scores to sneak kids into top-tier universities, but said Schaepe’s dealings with Singer were completely aboveboard.
“The Schaepes were deeply disturbed that the person they had trusted to guide them through the college application process was engaged in inappropriate acts,” Ellen Davis said. “Like countless other families, they believed that his services and his foundation were all aboveboard, and were shocked by his deception.”
Schaepe’s departure added to the fallout from the scam. Fifty people have been charged in the case, including dozens of parents, several college athletic coaches, school administrators and others who allegedly were on Singer’s illicit payroll. Singer pleaded guilty to conspiring to commit racketeering, money laundering and other charges in a plea deal with prosecutors.
The investigation is ongoing as investigators continue to review records subpoenaed from universities, high schools and families who hired Singer in search of others who may have crossed legal lines. The nearly three dozen parents already charged must soon decide whether to plead guilty in deals with prosecutors that could win them some leniency at sentencing or fight their cases in court.
Hundreds of parents are thought to have hired Singer, although most are believed to have paid for legitimate services such as test preparation and assistance writing college admission essays. As the breadth of the scandal has grown, some parents have come forward to say publicly that they retained Singer but did not take part in any of the fraud.
Neither Schaepe nor his son is named in the federal charges. But an unnamed father and son discussed in court papers bear close similarities to the two. Additionally, one source with knowledge of Schaepe’s situation said the two unnamed people are Schaepe and his son.
The father and son’s alleged dealings with Singer are detailed in a criminal complaint against Michael Center, the former men’s tennis coach at the University of Texas at Austin, who was fired after being charged with taking bribes from Singer.
In the complaint, federal authorities alleged that in 2015 Singer paid Center $100,000 “as a bribe” and, in exchange, Center designated an unnamed applicant as a recruit to the university’s tennis team, even though the teen did not play the sport competitively.
The teen is identified in the complaint as “Applicant 1” and a resident of Los Altos Hills. Public records show Schaepe has a house in the wealthy Silicon Valley town.
In February 2015, according to the complaint, the student’s father transferred stocks valued at more than $455,000 to a charitable foundation Singer controlled and which he has admitted using to pay bribes to coaches and college administrators at several universities.
Days after the father made the donation, Center emailed the man to notify him that the university would be sending his son a letter announcing its intent to award him a type of scholarship under which the school pays the costs of an athlete's books as part of the recruitment process, the complaint said.
The scholarship was formally awarded to the boy in April and the family accepted it, sending the school a letter announcing the teen’s intent to play tennis when he enrolled, according to the complaint. He was then added to the tennis team roster as a recruited athlete, the complaint said.
In the weeks that followed, the applicant’s father made two more stock transfers to Singer’s foundation that totaled more than $175,000, according to the complaint.
The con alleged in the complaint mirrors arrangements Singer has said he made with coaches and administration officials at Yale, USC, Stanford and other highly sought universities, in which students were falsely presented as talented athletes and given slots the schools set aside for students playing sports. Singer has also admitted he worked with other accomplices to rig students’ scores on college admission exams.
The source close to Schaepe said he adamantly denies any wrongdoing and believed his payments to the foundation were legitimate donations meant to help disadvantaged youths.
Schaepe and his wife, the source said, hired Singer in 2014 to help their son navigate the difficult college admissions process and identify schools where he could find a role similar to the ones he had in high school as the manager of the basketball and football teams.
After identifying the University of Texas at Austin as a good fit for the teen, Singer simply “introduced” Schaepe to someone in the athletic department who indicated they could help arrange for Schaepe’s son to be the basketball team’s manager, said the source, who did not know the identity of the person.
When that contact was fired from the university, Singer put Schaepe in touch with a second person who worked with the school’s tennis team, the source said. After the boy was admitted to the university, he became the basketball team’s manager, the source said.
In a photo Singer posted to a blog he ran as part of his college consulting business, Schaepe’s son is pictured with NBA star Kevin Durant, who attended the University of Texas. A note attached to the photo says, “Hey Rick, I wanted to thank you personally for all your help getting me into the University of Texas in Austin, and for helping me secure a managers position with the UT basketball team.”
Davis, Schaepe’s spokeswoman, said the family sent Singer the photo, but denied the son or either of his parents wrote the note.
Schaepe’s ouster from Lightspeed is certain to make waves in the insular, cutthroat world of venture capital in Silicon Valley, where firms rise or fall on their ability to identify and invest in start-up companies that go on to be successful.
Lightspeed has maintained a spot among the elite players in the business with a long track record of successful bets. Schaepe and his co-founders started the firm in 2000, soliciting money from investors with an eye toward establishing an early stake in enterprise software. Their investments made millions on companies such as AppDynamics and Fusion-io. Some of the firm’s biggest wins have been in consumer companies — Lightspeed famously wrote Snap Inc. its first check and was an early investor in e-commerce giant Stitch Fix.
Pushing out a partner, especially one who founded the firm, is a rare and drastic move in Silicon Valley. The swift decision by Lightspeed’s other partners to show Schaepe the door, even though he has not been charged with a crime in the college admissions scandal, came as the firm is still working to rebuild its reputation after coming under fire in 2017 for failing to take decisive action against a member of the firm who was accused of sexual harassment by several women who founded companies in Lightspeed’s portfolio.
While Lightspeed took a hard-line stance with Schaepe, another venture capital firm, Kleiner Perkins, did not when one of its partners acknowledged working with Singer.
John Doerr, the chairman at Kleiner Perkins, has said publicly that he hired Singer but denied paying for anything other than legitimate help with the college admissions process. He has remained in his role at the firm.