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College admissions scandal: USC says legal action against Loughlin, Giannulli is possible

The University of Southern California told lawyers for actress Lori Loughlin and her husband, fashion designer Mossimo Giannulli, that legal action against the couple is possible, according to a new defense filing.

But an assertion of conflict of interest involving the couple's law firm, considered "completely speculative" by an attorney for Loughlin and Giannulli, was revealed in a letter responding to the government's motion for a hearing regarding possible conflicts of interest in the case.

Loughlin and Giannulli are among dozens of wealthy parents who have been accused of using their means to game the competitive college admissions system.

Prosecutors say the couple paid $500,000 to a fake charity to get their two daughters accepted into the school, falsely designating them as crew team recruits.

Loughlin and Giannulli have both pleaded not guilty to charges of conspiracy to commit fraud and conspiracy to commit money laundering. Each of the charges is punishable by up to 20 years in prison.

The letter responding to the government's motion came in May from attorney William J. Trach with the law firm Latham & Watkins. The firm represents Loughlin and Giannulli in their federal case in the college admissions scandal but also represents the university in an unrelated matter.

"USC has suggested that Latham's representation of Ms. Loughlin and Mr. Giannulli may conflict with USC's interests in possible future civil litigation with these individuals," Trach wrote. "But any such future civil litigation is completely speculative, Latham is not proposing to represent Ms. Loughlin or Mr. Giannulli in any such civil litigation, USC has never articulated how Latham's representation of the defendants in this case would bear on any such civil litigation."

The letter also says the concern that either party may seek to overturn a conviction by claiming ineffective counsel is not realistic.

Trach noted in the letter, "Having carefully reviewed the applicable ethical rules and precedent in light of the substance and scope of our representations, our firm has concluded that there is no current or foreseeable conflict of interest, and that we have taken appropriate steps to avoid any such conflict of interest arising in the course of the case."

He writes that both Loughlin and Giannulli have co-counsel who can represent them if they need to cross-examine a university employee.

CNN has reached out to the University of Southern California and attorneys for Loughlin and Giannulli for comment.

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