Detroit Mayor’s Affair Costs City $9 Million! Choice and Consequences – Ethics Speaker Chuck Gallagher Comments

January 27, 2008

Lies and deception!

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Detroit Mayor Kwame Kilpatrick and his chief of staff, Christine Beatty five years ago were having an affair. The lies and deception that followed cost the City of Detroit more than $9 million dollars, and cost former police officers their career.

But, every choice has a consequence. As a business ethics speaker (www.chuckgallagher.com), I share that sentiment with audiences nation wide. You can run but you cannot hide – from the truth. It is said that you reap what you sow. Most of the people who find themselves facing consequences they did not anticipate – assume that if they are not caught or can cover up the truth – what is hidden will stay that way forever. That is further from the truth. Funny, but “truth” has a way of sneaking to the surface.

A story by Paul Anger of the Detroit Free Press exemplifies this as it relates to Mayor Kilpatrick’s actions (segments of the story are reprinted here):

In October, the city paid a whopping settlement to three victims — former Deputy Police Chief Gary Brown and former officers Harold Nelthrope and Walt Harris. A jury had decided that Brown and Nelthrope were punished unfairly by the mayor for doing their jobs, for what they knew or might find out about the mayor. After vowing to appeal the jury’s whistle-blower verdict, the mayor abruptly gave up and settled with all three. And the city had to scrounge up the settlement money.

Actions yield consequences: The mayors actions – lies and deceptions – designed to keep his affair secret ultimately had a price. I’m sure the officers in question, while receiving compensation for their loss, would rather have had a normal career where they would have been rewarded for doing their job, rather than living through a “hell” imposed by an out of control mayor.

Kudos to the Detroit Free Press as they report:

In the wake of that, the Free Press set out to find the truth. Why would the mayor and the city grind through years of legal battles over the officers, only to lose so badly? Why, after all those years, and his initial what he called “blown away” reaction to the verdict, did Kilpatrick finally agree to settle? Were there any documents, beyond he-said, she-said, they-said, that would answer the questions?

We knew that some Beatty text messages from 2002 and 2003 had been subpoenaed but never showed up in court. We knew the city fought to block them. So we started down two paths — we went to court to get all documents related to the settlement, and listened to what sources were telling us.

Some of the most skilled people I’ve worked with in 40-plus years in journalism went after the answers: Herschel Fink, one of the nation’s foremost First Amendment lawyers, and reporters Jim Schaefer and M.L. Elrick. They’re still chasing the truth, in court and out, and the mayor and the city are still fighting to contain the damage.

The reports of misconduct – lies and deception go deep in Detroit. Last Thursday, the Free Press revealed that Kilpatrick and his chief of staff, Christine Beatty, lied under oath at the trial that led to the payouts. The newspaper obtained text messages from Beatty’s city-issued pager, showing they gave false testimony when they denied having an affair that might have been exposed by the police probe. The two face potential perjury charges.

Every choice has a consequence! Wonder now if the Mayor feel that the affair was worth the potential ramifications of his actions? Remember Scooter Libby was convicted and sentenced to prison for perjury. (Of course in Libby’s case he did have a friend in high places). Wonder how Mayor Kilpatrick will feel about potential prison if it is determined that his lies and deceptions were criminal?

Columnist Ron Dzwonkowski wrote these comments: “You just never know, I guess, which of the hidden character defects in all of us is going to surface and mess with destiny. The very ego that made Kilpatrick so confident he could be mayor at a very young age also seems to have convinced him he could do as he pleased and get away with it. Sometimes, it’s not good to win too much; you get to feeling you can’t lose, and that’s when you’re most vulnerable.”

That, I must admit, is one of the most astute paragraphs I’ve ever read as it pertains to those whose choices cross the line and who ultimately pay the price. Which hidden character defect will surface and mess with destiny? More times than not, as I address groups on white collar crime, it comes to the surface that those who commit those crimes are not “criminals” in the sense most people perceive, but rather, that hidden character defect surfaces and reeks havoc.

The thought of believing that you could do as you please and get away with it…well that’s the key. Though I am not proud of the fact, but as a white collar criminal, I, too, had a big ego and felt that I would not get caught. I had it all figured out. But just as Dzwonkowski said, “it’s not good to win too much; you get to feeling you can’t lose, and that’s when you’re most vulnerable.” Just when you think you can lose is the very time when the consequences start to come into place. And, most of the time, we don’t like the consequences that follow.

Questions: What consequences should Kilpatrick experience as a result of his lies and deceit? Do you feel that the shame, if any, of this public exposure is consequence enough? Since Kilpatrick was elected at age 31 making him Detroit’s youngest mayor – should there be an age limit for mayoral qualification?

The details reported by freep.com are contained in the link provided. City Funds Link


Business Ethics Gone Awry! Certified Financial Planner Indicted – White Collar Crime Speaker Chuck Gallagher Comments

January 27, 2008

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Wonder what Jennifer Wilkov was thinking? Was she thinking about breaking free from American Express Financial Advisors, with whom she was employeed in the Advanced Advisor Group? Was she captivated by the money she needed to open Evolutionary Strategic Planning – the company she founded when she left American Express? Was it the need for money to promote her books – “The Loved Ones Kit, Dating Your Money, or Dating Your Money for Couples?”

What ever her thoughts, after pleading guilty to participating in a $1.6 million Real Estate Fraud scheme – my guess is, as she spends time in prison, she’ll have time to ponder what took her from a promising career to becoming a convicted felon and, likely, losing it all.

The Story: Carla Zimbalist, Beverly Hills, CA and Pam Chanla, Alhambra, CA were sole partners in CPM Holdings, Inc., PMC Interests, Inc., and Scott Avenue Development, Inc. Seems that these two found investors through Jennifer Wilkov – former financial advisor at American Express Financial Advisors. Through her position with American Express she solicited clients for Zimbalist and Chanla.

For her efforts Wilkov received more than $140,000 in commissions and consulting fees. I imagine at the time that the extra commission was welcome and helped to fund her needs as she pulled away from American Express to venture out on her own.

On the other hand, Zimbalist and Chanla used the funds fraudulently obtained to pay for personal expenses and civil judgments that had been entered against them for similar thefts from California victims. Seems they told investors that they would use the funds to purchase and renovate Southern California residential properties when, in fact, they never owned most of the properties in question.

The Outcome: Wilkov, Zimbalist and Chanla were charged by the Grand Jury with Scheme to defraud in the first degree, and multiple counts of securities fraud. Zimbalist and Chanla could receive up to 15 years in prison – while Wilkov faces 4 years.

Where From Here?

Well, having plead guilty, the likely outcome for all will be prison. As it appears that the charges were brought by the state, that would mean state prison … and for most that is worse than federal prison.

Wilkov most surely has lost her securities license, her certification as a financial advisor and her credibility – which would sell her books. Her life as she once knew it is over. I know, as I’ve been exactly where she is now and I can say from personal experience it is a humbling experience to be stripped of all that you’ve worked for – reduced to the reality of who you are. This experience will define her. The choice she now makes will have a profound impact on her for the rest of her life.

Chuck Gallagher, Ethics Speaker

Every choice has a consequence. As a White Collar Crime Keynote Speaker, (www.chuckgallagher.com) I share the first hand experience of making bad choices. From successful tax partner in a CPA firm to inmate in federal prison, I know what Wilkov is facing now and in the future. Some call it “Club Fed” – speaking on the incarceration experience of white collar criminals. Let me state – it is no “Club” – it is fed…federal prison that is and it’s no fun.

However, the choices Wilkov makes today will create the outcomes she’ll experience in the future. Even though I am a convicted felon I still serve as a Senior VP of Sales and Marketing for a public company. At a low point in my life I was told something that has been profound: You may make a mistake; you are not a mistake. Since the lessons of incarceration I have founded a non-profit foundation called the Choices Foundation. Through that I speak to youth and young adults about the choices they make – I speak about the Truth About Consequences.

Perhaps Wilkov can find her truth and use the unpleasant experience she will no doubt face to help others in the future.

Business ethics speaker, Chuck Gallagher, signing off…