While high-profile white collar crimes like Bernie Madoff's $65 billion Ponzi scheme grab headlines, thousands of smaller crimes are being committed each day in offices across America. In an effort to raise awareness of the consequences of white collar crime at all levels and the importance of ethical business behavior, Wake Forest University's Schools of Business hosted a panel discussion on March 26 entitled "Finding the Way Back: Impacts of White Collar Crime."
According to statistics presented by Neil Weinberg, co-author of a book on the MCI WorldCom accounting scandal, fraud costs around $994 billion a year with half of American companies experiencing the effects. Two former executives, who were convicted of white collar crimes and served time in prison for their offenses, talked about their experiences and how they came to land in federal prison. A fourth panelist, Tom Golden, a retired partner from PricewaterhouseCoopers, shared his expertise in forensic accounting investigations.
One of the panelists, Diann Cattani, embezzled $500,000 while working for a consulting firm and was sentenced to 18 months in federal prison. In her current position, she reinforces the need to implement internal controls in companies of all sizes to prevent such crimes from taking place. Her advice to students: "As you go out into management positions, it's important to hold people accountable. Don't assume employees are behaving ethically, because even trustworthy people behave differently in extreme situations." She also is the co-author of the book, "Taking the Harder Right."
Also on the panel was Justin Paperny, author of the book, "Lessons from Prison." In his former career as a securities broker for Bear Stearns/UBS, Paperny was involved in a Ponzi scheme and served just over one year in prison after pleading guilty to violating securities laws. "Knowing right from wrong isn't enough to defeat temptation," he said. "From the first day of my job, I never understood my profession. My senior broker taught me how to lie and cheat so that we could line our own pockets. I was afraid to say no to him because I was a people-pleaser. If you're afraid to say no to people, they're going to own you." "When people see panelists who were convicted of white collar crimes and hear their stories, they are able to identify with them," said the panel moderator Kelly Pope, visiting professor of accountancy at Wake Forest University. "They're not CEOs of Fortune 500 companies. They're friends of your parents, they're your co-workers, they're your neighbors, they're ordinary people who made mistakes."
MBA student Karishma Damani agreed. "There's a difference learning from people who have gone through experiences rather than just talking about them theoretically. I know that when I've started my career, I'll remember sitting in this room hearing first-hand what it's like to have to walk into prison and knowing that when you walk out nothing is ever the same again."
Pope pointed out the importance of focusing on ethics in the nation's business schools. "These are the kinds of topics that we should be discussing on college campuses today," she said. "We see a lot of ethical lapses in the market place, and discussing some of the issues that other people have faced in their corporate life can shape students' future decisions when they are in the business world." While some would argue that ethics cannot be taught, it is important to give students examples of what to do and what not to do, Pope said. "Sometimes we only hear about the high-level crimes and we don't see anything about the lower-level white collar crimes, but there are a lot of those," she said. "In addition, there are things that might be legal, but they're not necessarily ethical. So we want to raise important points to leave on the hearts and minds of students."
Our August issue cover story features Steve Baker, CSO at State Street Corporation. Also in August, how did a Guidewell Security team member save a life? And learn how digital technology and IoT devices can combat both physical and cyberattacks.