James Ray – Guilty of Negligent Homicide – What’s Next for the Self-Help Author? What’s to be Learned from this Tragedy?

June 25, 2011

At times even the best intentions can result in unintended consequences.  The question here is whether Self-Help author and speaker, James Ray, became blind to the risks and was too focused on the outcome?  This week Ray was found guilty on three counts of negligent homicide in the deaths of three people who died at his sweat-lodge event near Sedona in October 2009.

A charge of negligent homicide could carry penalties of up to 11 years. He was found not guilty on three counts of the more serious charge of manslaughter.

Three participants in the sweat lodge died: Kirby Brown, 38; James Shore, 40; and Liz Newman, 49.

It took jurors a bit less than eight hours over two days to reach their verdict.  When the verdict was announced, Ray was not taken into custody but rather allowed to remain free on bail.

On Tuesday the jury will hear from both sides regarding aggravating factors in advance of sentencing.  Found guilty of negligent homicide, Ray could be eligible for probation.  If aggravating factors are found, the defendant could be sentence to 3.75 years per count. Aggravating factors include being convicted of more than one offense, and mitigating factors, which could reduce a sentence, include whether a defendant has no prior convictions.

The sweat lodge was the culmination of a five-day “Spiritual Warrior” retreat near Sedona, for which some 50 participants had paid up to $10,000 each to attend.  Participants in the sweat lodge gathered in a long, low, wood-framed structure covered with blankets and tarps. Stones were heated on a fire outside, then brought in by volunteers before each of eight roughly 15-minute rounds and placed in a hole near the center. Ray controlled the length and number of rounds, the number of stones used and how much water he poured over them to create steam.

James Ray conducted these sort of ritual processes – this was old stuff to him.  People flocked to him to for the experience and knew that there were risks.  Yet, none anticipated those experiences would include their death.  So…with all the publicity what are the practical ramifications?  Did Ray become callous to the risks and fail to see the obvious warning signs as people passed out?  Is it possible that we can become so caught up in the illusion of what we do that we miss the obvious?

And, regardless of the Jury’s guilty verdict – do you think Ray should serve time in prison or be sentenced to probation?


John Edwards – Guilty before trial! What happened to our system of Justice?

June 6, 2011

As news of the indictment of John Edwards hit the wire I began to hear many people speak of joy and hope that he would be punished!  Comments like, “Well, I’m glad.  For too long those with money and power seem to get away with their crimes.”  Yet others said, “Look what he did to his poor wife, he deserves whatever punishment he gets!”

As I heard those words I began to wonder what has happened to our system of justice 0r maybe better asked, what has happened to our moral compassion?  Did John Edwards do wrong?  Well, he says he did, but regarding the consequence, seems to me that’s for the legal system to decide…yet, what I do know is that Every Choice Has A Consequence.  John Edwards choices are leading to the consequences he is facing today.

Pleading NOT GUILTY to a federal grand jury indictment on six counts, including conspiracy, issuing false statements and violating campaign contribution laws, John Edwards, former Democratic vice presidential nominee and two-time presidential candidate, acknowledged that he had “done wrong,” but denied breaking the law.

“There’s no question that I’ve done wrong,” Edwards told reporters. “But I did not break the law and I never, ever thought I was breaking the law.”

I understand Edwards comments…I really get the truth in what he is saying.  Yet, “ever thinking about breaking the law” and breaking the law are two different things.  As a convicted felon (not proud of that fact, but it is a fact), I never thought I was doing wrong until I had to face the truth and see that the illusion I created was in fact nothing more than an elaborate lie – the truth was I was then (not now) a liar and a thief.  Perhaps now Edwards is coming to see reality – not the illusion he lived under for so long.

Released on his own recognizance, Edwards was ordered to surrender his passport and remain within the lower 48 states and if convicted on all counts, Edwards would face up to 30 years in prison and a maximum fine of $1.5 million.


The question is whether money given to support Edwards’ mistress, Rielle Hunter, by benefactors of Edwards should have been considered campaign donations, a contention Edwards’ team has disputed.  Here is the foundation of the illusion.  Is it possible that cover up (some $900,000) money given for a person running a public campaign can be anything other than a campaign donation?

A CNN Report states the following:

While prosecutors believe the monetary help given to Hunter by two of Edwards’ political backers should have been considered campaign donations, Edwards’ attorneys disagree.

“This is an unprecedented prosecution,” Craig said. “No one would have known or could be expected to know that these payments would be treated as campaign contributions, and there is no way Senator Edwards knew that fact either.”

Craig said the government’s theory of the case “is wrong on the facts and wrong on the law.”

The government is believed to be building its case that Edwards violated campaign finance law based on an 11-year-old advisory opinion issued by the Federal Election Commission, which asserted that a gift to a candidate for federal office would be considered a campaign contribution, a source with knowledge of the inquiry told CNN this week.

The decision, dated June 14, 2000, is known as “Harvey.” It’s named after a man named Phillip Harvey who sought guidance from the FEC because he wanted to give money to someone who was preparing to run for federal office, but didn’t want the money to be used for campaign purposes.

The opinion is important because Hunter received more than $1 million from two contributors, 100-year-old philanthropist Rachel “Bunny” Mellon of Virginia and attorney Fred Baron, who has since died.

Edwards’ attorneys have said that the payments were not and should not be considered political contributions. If they weren’t political contributions, what were they? The most widely reported theory — which the Edwards team has publicly neither confirmed nor denied — is that the money was given to keep Edwards’ wife, Elizabeth, from finding out about his mistress and child.

The source with knowledge of the inner workings of the case and other legal observers have noted that the Harvey advisory opinion is shaky ground to base a federal prosecution on because it is not a black-letter federal statute, and apparently has not been cited in any important case law, or as legal authority behind any important court decisions.

Some experts have said the Justice Department will have a strong case in court if it can prove Edwards knew about the funds and what they were being used for — a contention he has denied.


John Edwards has made choices – the consequences he must now face.  The only issue I have (at least for the moment) is why we – the general public – are so willing to seal his fate and find joy in his indictment, conviction and punishment?  Is it possible that those who so quickly point fingers are unwilling to look in the mirror and see the illusions that they work hard to maintain?


Ethics and Redemption – Do Sexual Abusers Deserve a Second Chance?

January 13, 2011

From time to time I open my blog for guests who have unique insights related to ethics and choices.  I am proud to feature an interesting and perhaps controversial entry by a dear friend and colleague – Mary Auda.  Mary helped me in writing my new book “Second Chances.”  She is a skilled writer and pulled from me many emotional ties that made “Second Chances” really connect with readers.  For her help I am truly grateful.  Here, Mary is opening up herself and sharing not only an interesting perspective but a part of herself as well…as Mary has been a victim of child sexual abuse.  I am proud of what she has done to find healing in her life and know that her comments below will open debate around a very sensitive subject.

“Mary, I want to apply as a lay counselor in the counseling ministries,” George said.

I was a bit surprised.  I didn’t know George very well other than he had spent time in prison.  “That is great,” I replied.   I am one who believes we all deserve second chances in life.  I’ve often said when judgment would arise “There by the grace of God go I”.  None of us are perfect.  If you believe in sin, then sin is sin.  There are no degrees of sin.

“You may think differently after I share my story,” George said.  After taking a deep breath he continued “I went to prison because I sexually abused my two daughters.”

I took a moment to breathe to center.  Hearing his words touched my pain deep inside as I had been sexually abused as a child by my father.  I knew it was important for me to hear his story.  I had only just begun dealing with my issues and really had no desire to hear his story.  For some reason unknown to me, I said “Tell me about it.”  I didn’t mean to say those words.  What I wanted to say is “You need to leave and have no right to even speak with me about it.”

He proceeded to tell me about the events leading up to his incarceration.  He shared why he sexually abused his children, how he felt about what he did and the time spent in prison.  He demonstrated a lot of remorse, sadness and shame.

“Are you feeling remorseful because you were caught and had to go to prison or are you feeling remorseful because of the pain you inflicted upon your daughter?” I asked.  I needed to know.

“I loved my daughters and can’t believe that I sexually abused them.  I rationalized it that I was teaching them about sex.  It was my sick mind.  They did nothing wrong.  I was wrong,” he replied.  There were tears in his eyes.

I felt a myriad of things: compassion, anger, hurt, confusion.  For me personally I wanted to appear that I was not affected by my experience of being sexually abused.  Somehow I thought that made me stronger when in reality it was simply a layer of protection. I was quiet.  George alternately looked down at his hands and up at me.  I finally willed myself to speak.

“George,” I said, you served your time.  Because of the nature of your crime, I need the Counseling Center Board approval and the Elder Board approval.”  Although I was the Executive Director of the Counseling Center, certain decisions needed board input.

George said, “I want to help people.  I want this to have some meaning greater than the sexual abuse of my daughters.  I want to help people because I hurt people.”

“I understand,” I replied.  “I will get back with you and let you know.  By the way, thank you for sharing your story.  That took a lot of courage.  I will let you know what the boards say.”

George walked out of my office that day.  I sat for a while staring out the window.  I was feeling a little sick to my stomach because sexual abuse is a major issue for me.  I didn’t share with him my story.  I was angry with him for what he did to his daughters knowing that they had a lifetime of dealing with the effects of having been raped by their father – the one man in their life with whom they should feel safe.  I was also still in a lot of denial about the extent of the effects of my being sexually abused by my father.

I didn’t know if he should be trusted in a counseling situation.  I really believed, and still believe that redemption and mercy are available to everyone regardless of their choices.  I believe that all people are divine expressions of God and that their choices, no matter how heinous, should not define them.  I am not saying there are no consequences, there are certainly consequences and we all must experience the consequences of our choices.

Now I was being challenged in a way that affected me deep within my soul.  Could I accept George as a child of God who sexually abused his children?  Is he not as valuable as anyone else?  After much mulling it in my head and heart, I picked up the phone and initiated the process for review by the board.

There would be much debate by the boards.  Some were clearly on the side of forgiveness and he should be allowed to participate in the counseling ministry of the church in some capacity.  Others were clearly on the side of once a rapist, always a rapist and he can’t be trusted in such a capacity.  Still others were concerned only about how it would be perceived if we allowed a convicted child molester to counsel.  Would we lose credibility and would some people leave the church?  I suggested that perhaps we could limit his ministry to men only and he be subjected to intense supervision by the licensed therapists.

Eventually it was decided that he could not be active in the church counseling ministry, consequences still were active with respect to the choices George had made.  In this case, because he was caught, prosecuted, convicted and open and honest about the nature of his crime, the boards made a decision that he could not participate as a lay counselor.  Had he not had a conviction and been honest, the decision may have been different.

I told George the board decisions.  He was sad.  He had hoped to make a difference in this world and just not leave a legacy of pain.  I told him that there were consequences to every choice we make and this was just part of the consequence.

“I understand the decision.  I served my time,” he said. “Is there ever an opportunity that I might be given a second chance to show the world that I am not a demon?”

It was a fair question.   I shared with him at that moment my story.  We talked about his daughters never being able to get back what they lost physically, emotionally, spiritually and would never have a healthy relationship with their father.  He understood and once again expressed deep remorse.

Many years have passed and George and I are not in contact.  I’ve spent 57 years either being abused or healing from the abuse.    I’ve gone from all sexual abusers ought to be put to death to a better understanding and openness to forgiveness.  I thought about George the other night and the question that arose is – do sexual abusers deserve a second chance or is it unethical, because of the nature of their crime, to give them a second chance?  Does the crime define whether he should be given a second chance?  Perhaps he doesn’t get to work with children but why not be able to work with men?

I know the long term effects of being sexually abused.  I’ve lived them.  I know I can never go back to regain the life I could have had had I not been sexually abused.  I also know through choosing to move out of my prison of victimization, that I get a second chance to have a fulfilling life now.  To live totally free means that I choose to not hold onto bitterness and resentment.  Perhaps by giving this man a second chance it assists in changing his daughter’s experience.  Perhaps by giving this man a second chance it can help other men who are abusers to stop and get help even if it means jail time.  Perhaps his second chance will help heal the world.

I thank Mary for her openness and boldness in sharing this story and posing this interesting question regarding SECOND CHANCES.  As I read this I had an interesting question myself – and that relates to how one’s SECOND CHANCE manifests.  Perhaps George has found his “Second Chance” but not in the manner that he was initially seeking.  Perhaps, we try to define how, where or when we get our “Second Chance” when, in fact, in divine order our “Second Chance” may come in ways we least expect and in manners that provide greater meaning.  What do you think?  Should some people ever be given a “Second Chance”?



Chuck Gallagher is the author of the new book SECOND CHANCES: Transforming Adversity into Opportunity.  The book – SECOND CHANCES – carries you on a journey that is transformative, inspirational and opens the door to exploring life changing choices that through determination can create the Opportunity you need to enjoy the Success you desire!

This book, called an “Inspirational self-help masterpiece” was written over the scope of many years and through the experience of many hard lessons learned.  I hope that through  this book, you too, may uncover the keys to unlock your prison and find a happier life. You have the power to unlock those chains that bind you and turn adversity into opportunity. You have the power of choice.

Christmas in Prison – Inmates remembered or forgotten? Second Chances book Excerpt by Chuck Gallagher

December 15, 2010

Today I shipped a copy of my new book SECOND CHANCES to an inmate in prison.  Seems that someone cared enough about this man to want to send him a Christmas present – the gift of potential – the gift of how to turn Adversity into Opportunity – the gift of how to change your life.

As I packaged the book for shipment, it caused me to reflect on my first (and thank God only) Christmas in prison.  It’s been 15 years now and yet I can vividly remember that time and the strong emotions I was feeling as Christmas approached.  All to often we can get caught up in the wrongs that folks have done (and, yes I was a wrong-doer) and we lose track of the tragedy that all face when dealing with the consequences of the choices we make.  Here in 2010 Bernie Madoff’s son Mark is just another example of the pain and brokenness that all who are associated with bad choices experience.

For those who cling to self-righteous judgment, allow me this moment to share my experience – to give my readers a brief glimpse or view into the inside of prison at Christmas…

SECOND CHANCES book excerpt:

On Christmas morning, my first and, as I thought, hopefully my last in prison, I lay in my bed feeling an aching in my chest. The pain was not from a physical ailment. Rather, the pain was an emotional ache that hurt to the very core of my soul, perhaps more deeply than any physical pain I ever experienced before. Although Christmas was my favorite time of year, this year it was the most painful time, and I was not alone in those thoughts. By this time, Buck and I had developed a close bond. Even he found Christmas morning difficult, and he had seen six of them come and go before I got there. I couldn’t imagine what that was like.

Five hundred men in this prison facility and on Christmas day, most of them would shed a tear. Being in prison doesn’t make anyone immune from pain and loss. On days like today, it magnifies the pain and loss. Just like them, as I lay motionless in my top bunk bed, I found myself thinking with tears streaming down my face. I cannot, to this day, say why the thought came to mind, but it made a powerful impression. It seemed that this “learning laboratory” had the tendency to teach at a rapid rate. At least, it did for me.

I recalled one evening, sometime back in the mid-eighties, standing in the checkout line at the grocery store I frequented in my former hometown. At that time, I was in my mid to late twenties and had a budding career. Now, I must admit, I thought that was an odd thing to recall on Christmas morning in prison, but this is what came to mind.  Looking back, there was clearly a reason.  The memory was crystal clear. I had walked into the store quickly to buy some steak and shrimp, having told my wife I would pick up some on my way home. We were to grill out that night, and I knew it would save her a trip. Little did I know that something so simple would provide such a profound lesson. Frankly, I had forgotten the experience until that day─Christmas morning in 1995.  As I entered the checkout line, the clerk, a female around my age, spoke to me.

“Chuck Gallagher. You’re Chuck Gallagher.”

“Yes.” Somewhat startled, I responded tentatively, realizing I had no idea who this person was and how she knew me. Here I was, standing in my suit, having just finished a workday at the office, and now I was being identified by a stranger at the grocery store.

“I’m Suzie,” she said, as if I should know her. I did catch her name as it was on the badge she wore on her grocery store smock. Even though she knew me, for the life of me, I had no clue who she was. Not only did I not know her name, but her face was also unfamiliar. While I tried not to show my unfamiliarity, my face must have given it away.

“We went to high school together,” she exclaimed, as if that should somehow jog my memory. “I read about you often in the paper. You seem to be doing so well.” Noticing my wedding ring, she then asked, “Do you have any children?”

“Yes, one,” I replied, smiling at her as I acknowledged her obvious warmth. I was just trying to be nice and carry on conversation, even though inside I just wanted to check out and move on. Then I asked what, in retrospect, was a dangerous question, “Do you?”

Little did I know that those simple two words would change the course of this unexpected visit.  With my question she responded, “Yes, three.” And with that, she stopped the process, even though we were in the express lane. She reached under the counter, removed her pocketbook, and proceeded to take out her wallet, wherein she had two pictures each for three children─and that was just the beginning.

Standing there, I could tell that the people in line were perturbed at her for the lengthy explanation and at me for even asking. Frankly, I wasn’t excited either. I didn’t remember her and I was just being nice. In reality, I just wanted to get out the door and get home. As she began to wind down, I knew not to ask any further questions.

“It’s so good to see you,” she said as she handed me the receipt for my purchases. “Maybe we’ll see each other again sometime.” I smiled and quickly walked away.

As I walked to the Mercedes I was then driving, I gloried in self-righteous thoughts. How important I was. She had read about me in the paper. I was ‘somebody.’ All of this time away from high school and the highest rung of the ladder she had aspired to was a check-out chick at the local grocery store. That thought was judgmental, ugly, and turned out to be profound.

Yet, on that Christmas day, 1995, as I lay on my top bunk, my thoughts drifted back to that incident. I couldn’t even remember her name, yet, in my mind’s eye, I vividly saw her with her family on this Christmas day.  No doubt she and her husband shared joy as their children squealed with delight over the meager gifts Santa left. Most of the time you can’t get kids out of bed, but on Christmas morning they won’t stay in bed. The joy and love you feel as a parent, seeing those tiny little eyes light up as they experience Christmas, is hard to describe. That feeling is one I ached to have there in prison on Christmas morning.  I imagined seeing her as she prepared their Christmas meal.  As their energy began to wane, she would hold her children in her arms and tell them that she loved them. As I lay there, I imagined her gently stroking their heads as they struggled to keep their eyes open, fearing they might miss something. Gently, they would fall asleep in her arms.

All those thoughts passed as I noticed the wetness of the pillow against my cheeks. She was home with her little ones. She was more of a “somebody” than I had ever dreamed of being. She was there, and I was in prison.

As the thought passed, I knew there were still choices to make. I could wallow in self-pity, or make a choice that would brighten my day and perhaps the day of others. A part of me longed to continue feeling sorry for myself, but I chose to move past it. With that, I got up and stood in the phone line. Most of the time there wasn’t a line for the pay phone, but today, Christmas day, there was a long one. So I waited.

I waited my turn in order to make a three-minute collect call to my children.  Hearing their voices on the phone, I choked back my emotion and with the most cheer I could muster I said, “Rob – Alex, Merry Christmas boys – this is Dad.”

15 years later my sons are grown men, yet I never forget the loss I felt the Christmas of 1995.  Christmas is not about the gifts, the carols, the outer trappings that merchants wish to lure you in with.  Rather, Christmas is about sharing the deep and abiding love of God that is indwelling in each of us with others.  So where ever you are, what ever you do, make sure to take some time to reflect on who is important in your life and how you can bring love and light to them – even if it’s in the darkest of prisons.

Dr. Janet Johnson Hunter Pleads Guilty to Medicare Fraud…what was she thinking?

January 5, 2010

For more than three years, Janet Johnson-Hunter, a licensed medical doctor and former owner/manager of a private ambulance transportation company, committed fraud.  Johnson-Hunter, late this past year, pled guilty to conspiring to conceal material facts in connection with the delivery of payment for health care benefit, items and services according to a news release from the US Attorney’s office.

Johnson-Hunter changed medical records and ordered employees to change records to indicate patients’ needs to ride in an ambulance, when they did not, in order to be reimbursed by Medicare or Medicaid, according to a federal criminal information complaint was filed Nov. 30.   According to numerous EMT’s and billing staff, Johnson-Hunter, directly and through subordinates, directed employees to re-write medical records which indicated that patient-beneficiaries could sit upright, stand, walk or ride in a wheelchair.  The loss to Medicare/Medicaid = $400,000.


First I should say, it is not for me to point the finger.  I am not here to pass judgment, that is not mine to pass.  Rather, I’d like to explore the WHY this would or did happen.  As a business ethics speaker, I know that EVERY CHOICE HAS A CONSEQUENCE!  I have lived those words and spent time in federal prison as a result of my past misdeeds.  While I am not proud of that fact, it is a fact nonetheless.  The one thing I am able to do, as a result, is look at choices from a unique perspective.

NEED:  I can’t identify the need directly.  One would assume that to change records in order to increase billing or reimbursement from Medicare would driven by a need for money.  Seems obvious, but Bernie Madoff surely did not need the money, yet he effected one of the largest frauds in US history.  So what’s the need here?  Perhaps those who know Dr. Johnson-Hunter could help with that piece of the puzzle.  FEEL FREE TO COMMENT.

OPPORTUNITY:  It is of little doubt that any system can be manipulated.  If one person can take advantage of a system, one might say that there is a material weakness.  In this case, Janet Johnson-Hunter did not do this alone.  Rather, she used her power and influence to cause others to change records and thus deceive Medicare.  Now…a fair question is: will the Federal Government go after those who admitted to changing records or have they been given immunity from prosecution.

RATIONALIZATION:  This area is most troublesome.  Here’s a reality check…a 50 year old female medical doctor knows better.  You can’t live for half a century and earn a medical degree without having some clue that choices have consequences.  This is especially true when you involve others in the fraud.  You have to know that someone somewhere is going to reveal the truth.

Why would Dr. Janet do this..?  Perhaps that will come out as people comment.  For now, let me restate the obvious:  EVERY CHOICE HAS A CONSEQUENCE.  When you hear the words, “You will reap what you sow” let me state from experience – THEY ARE VERY TRUE.

Likely, Dr. Janet will spend time in federal prison (as did I some 15 years ago for a similar crime).  Prison is no fun as Dr. Janet will soon find out.  But, the question she has to face now, especially now since her misdeeds are brought to light, is what choices will she make now that prove redemptive in the future.

A wise man once said to me:  “You’ve made a big mistake, BUT YOU ARE NOT A MISTAKE!  The choices you make today will define your life in the future and the legacy you leave for your two sons.  MAKE THOSE CHOICES WISELY!”

Comments are welcome

Tiger Woods – The Consequences of Choice – AT&T Ends Sponsorship

December 31, 2009

Having attended several major golf tournaments, I must say that watching Tiger Woods play golf was like poetry in motion.  He was (is) awesome as a professional golfer.  Most thought he was sweaky clean as well…which is why so many major companies selected Tiger as their spokesperson.  But, as I say in every presentation I make on ethics, EVERY CHOICE HAS A CONSEQUENCE.

As the end of the year and decade draw to a close, AT&T announced that they are ending their business relationship with Tiger Woods.  This announcement adds to a growing list of sponsors who are dropping Woods after his announcement of infidelity and the media storm that has followed.

AT&T has not used Woods’ image extensively in advertising, but its logo appeared on his golf bag. The original sponsorship agreement was billed as a “multi-year” agreement when it was signed early in 2009. Woods has also been the host of the AT&T National PGA Tour event since it started in 2007 and AT&T has said it will continue to sponsor the event.

Accenture, the consulting firm, dropped Tiger several weeks ago, saying he was “no longer the right representative” of the company’s values.  Likewise, Gillette said it won’t air ads for its razors that include Woods or include him in public appearances.  Swiss watch maker Tag Heuer, who initially said they stood by Tiger, eventually stated that they would “downscale” its use of golfer Tiger Woods’ image in its advertising campaigns for the foreseeable future.

CHOICES AND CONSEQUENCES – It is said often that you reap what you sow.  Whether we like that comment reality is – it is a fact.  Tiger Woods is now facing what for him is likely the greatest challenge of his life.  No longer will he be defined by the extraordinary talent on the golf course that he has, but he is now challenged with personal life issues that will define a large part of his legacy.

While I am not proud of my past (details here), when the “card” so to speak was pulled from the “house of cards” I had created and I knew that my hidden past was soon to be brought to light – a wise man shared the following with me.  He said, “You have made a terrible mistake, but YOU are not a mistake!  The choices you make today will define the life you create in the future and the legacy you leave for your two children.  MAKE THOSE CHOICES WISELY.”

While Tiger Woods will continue to experience the consequences from the choices he has made, he has the opportunity to make different – more empowering choices – and from them he can rise from the ashes and become more than just a great golfer.

QUESTION: What advice would you give Tiger today that could help him?

Ethics Speaker Chuck Gallagher to Address University of South Dakota Business Ethics Symposium

April 26, 2009

VERMILLION, S.D. – During troubled economic times, Chuck Gallagher isn’t afraid to share his story of success – and how he lost it all. Gallagher, a business executive and motivational speaker, will be a guest of the Beacom School of Business of The University of South Dakota on Monday, April 27 at 7 p.m. in the Wayne S. Knutson Theatre.

Gallagher, a former CPA who lost everything because of poor choices, will present the program “Choices: Negative Consequences, Positive Results” where he will discuss some of the decisions he made in his attempts to make a better life for he and his family. Gallagher eventually lost it all, spent time in federal prison, but has found success again by making the right choices – personally and professionally.

“My lecture deals with issues of business ethics, particularly the choices we make in life and the consequences that follow,” says Gallagher. “Having been a successful CPA in the 80s, spent time in federal prison in the 90s and risen to the level of senior VP in a public company in the 2000s, I can speak from experience that I’ve lived with negative consequences thanks to some very stupid choices I made. But I’ve also had some incredible positive results based on the choices I made after spending time in a federal prison.”

Gallagher’s message is sure to resonate with students who are seeking answers on what it takes to be successful in today’s business world despite the presence of poor ethics and negative consequences. Ultimately, he explains, it’s about students differentiating themselves – positively – from their peers.

“I’m the poster child of what not to do,” he admits. “Ethical issues aren’t always black and white. If you want to be successful, ask the question ‘what are you doing to differentiate yourself?’”

A professional speaker, business entrepreneur, and sales executive, Gallagher has led a $40 million sales region with 125 sales representatives and started his own training business with projects in 30 states. Gallagher currently helps employees increase their sales results and skills while realizing the ramifications of their ethical choices. In addition to addressing students and audiences at colleges and universities throughout the United States, Gallagher also shares his business ethics message with business-related and health care related organizations.

“Choices: Negative Consequences, Positive Results” is made possible by the Beacom Opportunity Fund and the Arthur A. Volk Symposium. The Beacom Opportunity Fund provides resources for initiatives that promote the Beacom School of Business’s students and programs. Funding from the Volk Symposium affords opportunities for the business school to bring together students, academicians, and business leaders for discussion of current topics of interest. For more information about “Choices: Negative Consequences, Positive Results,” please contact the Beacom School of Business at (605) 677-5455.

A photograph of Gallagher is available for download at http://www.usd.edu/urelations/images/Chuck_Gallagher.jpg.

About The University of South Dakota
Founded in 1862, The University of South Dakota is designated as the only public liberal arts university in the state and is home to a comprehensive College of Arts and Sciences, School of Education, the state’s only School of Law, School of Medicine, School of Health Sciences, the accredited Beacom School of Business and the College of Fine Arts. It has an enrollment of approximately 9,200 students taught by 400 faculty members. More information is available at http://www.usd.edu/press/news.

Dumb but Premeditated Fraud – Stephanie L. Mayer of Simpsonville, SC Pleads Guilty

March 20, 2009

As I leave Pittsburgh, PA from a speaking engagement on ethics and fraud, I couldn’t help but stop when I read about a 38 year old Simpsonville, SC woman and her attempt at fraud.  A “Bernie Madoff” she isn’t as her fraud lacked creativity and ended quickly.

Every choice has a consequence.  That is a statement that I speak often as I address groups nationwide.  Whether it is Bernie Madoff, his accountant (now charged with fraud), Robert Stanford, Gordon Grigg or a host of others, the reality is whether the fraud lasts for some time or is short lived – in the case of Stephanie L. Mayer – there is a consequence for choices that we make.  If those choices are unethical, then the consequences can’t be good.

According to the US Attorney’s office:

In February 2008, Meyer opened accounts at four brokerage firms including the ultimate victims, The Vanguard Group and Ameriprise jail-cartoonFinancial.  Meyer then deposited worthless checks into the accounts, which resulted in fictitious or “phantom” balances.  Meyer then withdrew $175,000 from the credited Vanguard account and $130,000 from the Ameriprise account before the fraud was detected.

Without intending to sound judgmental, the “real impact” of the current recession wasn’t felt till late summer ’08 or certainly the fall ’08.  Therefore, the question is – what motivated Mayer to take such radical action.  She had to know that passing worthless checks to set up brokerage accounts was a venture that had a short life.

Of course – as reported in the Greenville News – “Until June 2008, Meyer deposited $5.4 million in checks spread across the firms from bank accounts that didn’t have sufficient funds to cover the checks, according to the charges.  She also pleaded guilty to mail fraud charges for mailings to Minnesota and Pennsylvania, according to the charges.”


Frauds, regardless of type, need three things in order to take life – (1) Need; (2) Opportunity and (3) Rationalization.  The question related to the Mayer fraud is what was her (1) need and (2) rationalization?  The obvious opportunity was the method of execution of the fraud – which was amateurish and dumb.  How Mayer effected her fraud shows her lack of experience and hopefully will be taken into account in her pre-sentence report.

Her guilty plea could result in a penalty of up to 20 years in prison and a fine of up to $250,000.00 on each of the two counts to which she pled guilty.  While, I would suspect that Stephanie L. Mayer is an amateur fraudster, in the current environment, I would not be surprised if she received a prison sentence of well over three years.

If you know Stephanie and might comment on her motivation – please know that YOUR COMMENTS ARE WELCOME.

David G. Friehling, CPA for Bernie Madoff Investment Securities Charged with Fraud! And The Dominios Begin To Fall…

March 19, 2009

With a $65 Billion Ponzi scheme in play and Bernie Madoff electing to plead guilty, it is no great surprise that others will being to fall as the government widens the responsibility net for the largest Ponzi scheme in US history.

I must admit this hits home and was something I expected.  Although I wish I could say something different, I, too, was a CPA, created a Ponzi scheme and spent time in Federal prison.  It is no fun.  And, without a doubt, Friehling will spend time there himself – although my guess – his sentence will much longer than mine.

Yesterday, David G. Friehling, CPA (licensed in the State of New York) was charged with securities fraud, aiding and abetting investment adviser fraud, and 19madoff190 four counts of filing false audit reports with theExchange Commission (“SEC”).   Friehling is the sole practitioner at Friehling & Horowitz, CPAs, P.C. in New York.  As a point of reference, Friehling was the son-in-law of Jerome Horowitz (his former accounting partner) who didn’t live to see it all unravel.  He dided on March 12, the day Madoff plead guilty.

According to a news release issued by the US Attorney’s office:

From 1991 through 2008, F&H was the accounting firm retained by BLMIS (Bernie L. Madoff Investment Securities) purportedly to audit BLMIS’s financial statements. FRIEHLING created BLMIS’s certified and purportedly audited financial statements, including balance sheets, statements of income, statements of cash flows, and reports on internal control. FRIEHLING falsely certified that he had prepared such statements in accordance with Generally Accepted Auditing Standards (“GAAS”) and in conformity with Generally Accepted Accounting Principles (“GAAP”). Those financial  statements were filed with the SEC and sent to clients of BLMIS.   BLMIS paid FRIEHLING approximately $12,000 to $14,500 per month for his services between 2004 and 2007.

Sorry, but before going any further, one must question the payment.  $14,500 a month is a small price to pay for disgusing a fraud considering that Friehling will be facing certain loss of his license and a lot of time in Federal Prison.  But, there is more…  the news release goes on to say:

FRIEHLING failed to conduct audits that complied with GAAS and GAAP by, among other things, failing to: (a) conduct independent verification of BLMIS assets; (b) review material sources of BLMIS revenue, including commissions; (c) examine a bank account through which billions of dollars of BLMIS client funds flowed; (d) verify liabilities related to BLMIS client accounts; or (e) verify the purchase and custody of securities by BLMIS. FRIEHLING also failed to test internal controls as required under GAAP and GAAS standards. For example, FRIEHLING did not take any steps to test internal controls over areas such as BLMIS’s redemption of client funds, the payment of invoices for corporate expenses, or the purchase of securities by BLMIS on behalf of its clients. Further, commencing at least as far back as 1995, FRIEHLING did not maintain professional independence from his audit client, BLMIS.   Specifically, FRIEHLING and/or his wife had an account at BLMIS with a year-end net equity of more than $500,000 — the maximum amount that, under SEC rules, he could have invested with a broker-dealer client and still maintain his independence.

According to the SEC’s complaint, Friehling similarly did not conduct any audit procedures with respect to BMIS internal controls, and had no basis to represent that BMIS had no material inadequacies. Afraid that his work for BMIS would be subject to peer review, as required of accountants who conduct audits, Friehling lied to the American Institute of Certified Public Accountants for years and denied that he conducted any audit work.

Articles in Forbes stated the following:

“Friehling essentially sold his license to Madoff for more than 17 years while Madoff’s Ponzi scheme went undetected,” said James Clarkson, acting director of the SEC’s New York Regional Office. “For all those years, Friehling deceived investors and regulators by declaring that Madoff’s enterprise had a clean audit record.”

Madoff has said his business didn’t become a Ponzi scheme until the early 1990s, around the time that Horowitz retired and Friehling took over. He was not accused of wrongdoing in the court complaint.

Numerous reports claim that Friehling and family had $14 million invested with Madoff two months before his confession to the largest financial fraud in US history.  Since 2000, Friehling withdrew about $5.5 million from those accounts, the SEC stated.


Bernie Madoff, while perhaps brilliant (in his own way) is not capable – in my opinion – of pulling off a fraud of this magnitude without help.  I am not suggesting that Friehling knew about the Ponzi scheme (he says he didn’t), but it is likely that he’ll be found guilty on most of the charges as there is no doubt that he’s (at a minimum) negligent.  Selling his license for money seems very clear.

But, from these headlines, I suspect there will be a demand for more “accountability” for audited financial statements and regulations placed on compliant CPA’s.  That is not the answer.  I have stated before and will again, you cannot legislate or regulate ethics or morality.  If a person elects to be dishonest…they will be dishonest regardless of the rules in place.

Friehling was a puppet for Bernard Madoff.  Most people (although most will deny it) have a price.  It appears that Friehling’s price wasn’t all that much.  Comfortable yes – rich no!  And knowing that his reputation is ruined, his license all but gone and many many years in prison facing him, I know that Friehling wishes he’d never met Bernie Madoff.  Hind sight is 20/20 and there is no doubt with all that is facing this CPA – Friehling is just beginning to face the consequences of his choices.

Every choice has a consequence!

My prediction – Friehling isn’t the only pawn is this massive fraud to fall.  There will be others so stay tuned…

FRIEHLING, 49, faces a statutory maximum sentence of 105 years in prison.


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Bernie Madoff – The Human Tragedy. Is Compassion Possible?

March 14, 2009

At the end of the movie – Saving Private Ryan – Ryan, as an old man speaks these words to his wife who walks up to his side:

“Tell me I’ve have led a good life.  Tell me I’m a good man.”

I must say that, although I’ve seen that movie many times, I am always brought to tears.  I am touched knowing that others come into our lives for a reason and, through their efforts, we find that our lives are shaped.  In Ryan’s case, his concern was living up to the sacrifice made for him and on his behalf.  Ryan wanted to know if the life he lived and the legacy he left was worth the price.

As the movie ended, I could not help but feel sadness for the tragedy that came to light some four months ago when Bernie Madoff admitted that his work wa nothing but a ponzi scheme.  As those words were spoken – lives were changed and, at least for now, not for the better.  The reality of lost investments came to light, financial futures were changed and Madoff’s legacy was forever etched in history.


From the standpoint of those who were victimized the loss is great.  But the tragedy goes much deeper than lost money.  I do not wish to minimize the loss bernie-madoffof treasure, but it is – afterall – just money.  Money can be made and often is lost.  The question is how do we react to that loss?

I heard one of Madoff’s victims on a radio clip Thursday the day Madoff was sentenced.  She said, “My life is over…”  I cringed when I heard her comments.  I, too, (admittedly for different reasons) lost everything material.  I know the feeling of loss and despair, but LIFE IS NOT OVER.  In fact, while life will most certainly change, she still has her freedom and the ability to make choices to improve her life.

One part of the human tragedy is the natural feeling of anger that lost trust naturally brings.  That anger and the negative emotion that is a part of what we hear about Madoff does little to promote joy and healing.  Perhaps over time that will come.

There is grief over loss.  In this case the loss is not only the obvious – the investments that didn’t exist, but the grief over loss is the trust that forever is gone.  Many people have come to learn the pain of betrayed trust, and that is hard to heal from.  As I have talked with victims from other similar scams, many have said that they have a hard time trusting anyone.


Beyond the victims, I have to say that I feel for Madoff.  I do not condone his actions – they are abhorent.  But, I feel for the man.  Imagine for a moment the feeling inside as Madoff once again crawls into his prison bed.  As a child, as a teen as a young man, never would he have imagined that the end of his life would be spent in prison.  In his early years he was able to use his intellect to benefit others and himself.  Madoff is not dumb and certainly has a vast compentency.  Unfortunately, he elected to miguide his brilliance.

Again, at the risk of offending his victims, I do not express my feelings for Madoff in support of his actions.  He has earned every night he spends in prison.  The empathetic feelings I have are for him as a human being.  How tragic that his actions have not only hurt those whom he was entrusted with investments, but his actions have harmed his family and others closely connected to him.

As a human being, it is difficult to find your life relegated to the structure and environment of prison.  Here’s a man who has a brilliant mind, who now will wake at 6ish each day, eat prison food at designated times and eat only what is offered.  He will eventually be assigned a location which will likely be a medium to minimum security facility.  It is NOT “Club Fed” – the days are filled with counts, structure and work.  You quickly lose the feeling for the outside world as contact is kept to a minimum and while you may read the newspaper, you find that reading or TV is no replacement for contact that free people have with each other.

As time goes on as he languishes away in prison, those close to him will die – but, he’ll find himself disconnected.  He will have gone from high flying financier to just another inmate.  He will withdraw for his own protection finding that the culture in federal prison is something foreign to him.  He will hear and learn things that will repulse him and there will be those who will leach on to him hoping to make him their prey.  Perhaps, they might think, “If I can threaten or endanger him, I might get some money for my family on the outside.”  He may become a target or he may just fade into oblivion.

For a time, he will continue to have notoriety as the federal government seeks to unravel the true scope of his actions.  Did his wife and/or children know?  Were they involved?  Was his accounting firm in the know or where they just incompetent?  How was he able to maintain the grandeur of his illusion for so long?  These questions and many more will arise – but all the while, the human tragedy is that someone – Bernie Madoff – through his choices is ending his life sitting in a prison cell.

Beyond Madoff – for a moment – imagine being one of his children, grandchildren or greatgrandchildren – the name Madoff is tainted.  He will be remembered for his crime – for the effect he had on the lives of thousands who trusted him – for his last days spent in prison.  If you were a grandchild – think of what happens when you enter college and for the first time the teach calls the role.  When they get to your name and say “Madoff” – think of the looks you’ll get when folks quickly begin to wonder – “is he connected to that guy”?   Their lives have been changed forever as well – and not by their doing.

Charles Ponzi created this scheme.  The name “Ponzi” is forever associated with something negative – just like the name Hitler.  As we live our lives today, the same is true with “Madoff” – his name has been etched in history never to be associated with positive thougths.


As a business ethics and fraud prevention speaker, I know what it must be like for Madoff – this his first weekend in prison.  While I wish I could say otherwise, I know because I’ve been there.   I earned my time there.  It was no fun, but punishment is a consequence of choices.  My choices led me to prison, and Madoff’s have led him there as well.

Perhaps, when the dust settles, we can all take a moment and, like Private Ryan from the movie, ask “have I led a good life?”  I pray when my life ends that I’ll be able to look back and see a life well lived.  I wonder though for Madoff if it is possible for people to find compassion while at the same time accepting that his life is prison is a clear consequence for the choices he made?