Silicon Valley CEO resigns amidst college corruption scandal

The head of a Silicon Valley hedge fund, trapped in a massive corruption scandal at universities, is pulling out.

Manuel Henriquez will be replaced as CEO and Chairman of Hercules Capital in Palo Alto. Henriquez was arrested in New York and released on bail of $ 500,000 after a brief court appearance in Manhattan federal court on Tuesday.

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Shares of the hedge fund plunged 9% at the announcement of Henriquez's arrest Tuesday. Hercules said Wednesday that Henriquez will still occupy a seat on the board of directors and will act as adviser.

According to federal authorities, Henriquez and his wife Elizabeth participated in four cheating maneuvers during a college entrance examination for their two daughters. Part of this ploy was to bribe Gordon Ernst, the head coach of tennis in Georgetown "to nominate their eldest daughter as a tennis rookie to facilitate his admission to Georgetown," reads in the article. ; affidavit.

In the fall of 2015, the affidavit indicates that a paid supervisor "sat side by side with the girl during [SAT] and provided him answers to the questions of the examination. Subsequently, he "jubilated" with Elizabeth and her daughter "on the fact that they had cheated and escaped. "

The affidavit indicates that the girl's request to Georgetown falsely stated that she was playing at the "tennis club" 20 hours a week in high school and that she was among the top 50 players in the United States Tennis Association. According to the USTA recordings, she has not participated in any USTA tournament as a high school student and "at her best level, she appears to be ranked 207th in Northern California among girls from under 12, with a record of wins / losses of 2-8. "

Fifty people, including Hollywood stars Felicity Huffman and Lori Loughlin, were charged with the scheme in which wealthy parents would have bought university coaches and other insiders to have their children go to some of the most popular schools. selective country.

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Federal authorities have described this as the biggest scam in college admissions ever pursued by the US Department of Justice, with parents being accused of paying about $ 25 million in jail time. wine.

At least nine sports coaches and 33 parents, many of whom are prominent in the fields of law, finance, fashion, food and beverages and other fields, have been charged. Dozens of people, including Huffman, the star of "Desperate Housewives" on ABC, were arrested around noon.

"These parents constitute a catalog of riches and privileges," said American lawyer Andrew Lelling in announcing the results of a fraud and conspiracy operation called Operation Varsity Blues.

Coaches have worked in schools such as Yale, Stanford, Georgetown, Wake Forest, the University of Texas, the University of Southern California and the University of California at Los Angeles. A former Yale football coach pleaded guilty and helped build a case against others.

Two other people charged – the Stanford coach and the admissions consultant at the center of the system – pleaded guilty Tuesday in Boston. Others appeared in court and were released on bail.

The central figure of the project has been identified as the admissions consultant William "Rick" Singer, founder of the Edge College & Career Network in Newport Beach, California. He pleaded guilty.

Singer's lawyer, Donald Heller, said his client had the intention to cooperate fully with prosecutors. He is "full of remorse and contrite and he wants to move forward in his life".

Prosecutors said the parents had paid a lot of money to Singer from 2011 last month in order to bribe coaches and administrators to falsely give their kids a look of renowned sportspeople in order to increase their chances to be accepted. The consultant also hired members of the jury to pass the college entrance exams and paid the insiders of the exam centers to correct the students' responses.

Some parents have spent hundreds of thousands of dollars and others up to $ 6.5 million to guarantee the admission of their children, officials said.

SFGATE writer, Katie Dowd, contributed to this report.