What have all the Ethics gone? Seems that Fraud is rampant! Business Ethics expert Chuck Gallagher comments

December 21, 2009

All too often I’m asked, especially as we review this past year on the anniversary month of the disclosure of Bernie Madoff’s fraud, whether fraud should decrease since we are more focused on ethics and ethical choices. Unfortunately, as I see it the answer is a resounding no!   Yet, the Ethics Resource Center in their new 2009 biennial National Business Ethics Survey reported a surprising conclusion:

We behave better in bad times.  “Contrary to what one might expect, misconduct declines in turbulent economic times and rises when the pressure’s off,” the report says.  When asked about specific abuses or ethical lapses – such as misusing company resources, lying to outside stakeholders or falsifying time or expenses – a smaller percentage of U.S. workers observed problems this year compared with the 2007 survey, taken before the recession began.  “Yet our research suggests that the improvements in ethical conduct will be temporary,” warned the ethics center’s CEO, Patricia Harned.

As I review ethics issues weekly I must say that I have a hard time believing in the validity of their survey.  Just look at these stories reported on here the first two weeks of this month.

Patricia Wilson, 57, of Draper, Virginia, has pleaded guilty to embezzling more than $167,000 from the Memorial Christian Church where she had served as the church bookkeeper for 9 years. Prosecutors alleged last April that Wilson diverted most of the monies from the Church’s building fund but also from it’s general fund.

Casey Jane Goebel, of Indio, California, was arrested last week for allegedly embezzling at least $250,000 from Hyde’s Air Conditioning where she had been employed as a bookkeeper. According to authorities, Goebel’s thefts ocurred between August 2007 and July 2009

Robin K. Ramey, 48, of Huntington, Ohio, pleaded guilty to charges she embezzled some $185,000 from the Huntington National Bank where she was a longtime employee, ultimately rising to the level of supervisor. Ramey caused at least 86 wire transfers in bank funds to be sent to her personal checking and saving accounts. If the plea agreement holds, Ramey will be ordered to spend two years in prison and repay the bank. She is scheduled to be sentenced on January 21, 2010.

Jessica Harmon, 32, of Lowell, Michigan, has been charged with embezzling more than $100,000 from a unnamed local law firm where she had been employed apparently in a bookkeeping position. The thefts reportedly occurred over a 3 year period. Specifically, Harmon faces charges of embezzlement of more than $20,000, uttering and publishing and using a computer to commit a crime. Harmon, who had been employed by the law firm for 10 years, allegedly made unauthorized withdrawals from firm accounts and wrote herself extra pay checks.

Capt. Michael Dung Nguyen, 28, of Beaverton, Oregon, pleaded guilty Monday to theft and money-laundering charges related to the theft of some $690,000 in cash intended for relief and reconstruction in Iraq. Nguyen was the U.S. Army battalion civil affairs officer in Muqdadiyah, Iraq and had been entrusted with cash designated for local commanders in Iraq and Afghanistan for urgent humanitarian relief and reconstruction. He was indicted last March on charges of theft of government property, structuring financial transactions and money laundering. The thefts occurred between April 2007 and February 2009, according to the indictment. He spend some of the money on luxury vehicles, among other personal items.

Three components come together when a fraud, like the ones reported above, take place.  NEED – OPPORTUNITY and RATIONALIZATION.  In the cases above – I cannot speak to the first and third component – Need and Rationalization, but in each case the fraudster exploited a weakness or put another way – found an OPPORTUNITY.

Patricia Wilson used her trusted position as church bookkeeper (9 years no less) to  exploit what was likely a weak system of internal controls for Memorial Christian Church.  Likewise, two other bookkeepers, Casey Jane Goebel and Jessica Harmon, used their positions of trust to embezzle funds from their employers.  Robin K. Ramey stated, related to her embezzlement, “Why it took so long is that (the bank) doesn’t usually check there.”  Finally, Capt. Michael Dung Nguyen had been entrusted with cash to benefit members of the US military.

What was common in each of the cases above – TRUST.  Did each of the fraudsters know better?  Sure they did!  Were they at one time ethical – I would guess so.  Yet, in each of their lives they made choices – choices that clearly reflect unethical behavior and consequences that are life changing that follow.

As a business ethics speaker, I often state to audiences – Every Choice Has A Consequence.

COMMENTS ARE ALWAYS WELCOME.  If you knew either of the individuals mentioned above – perhaps you’d be willing to share what motivated them to make the choices they made.


Hannah Montana Tickets and A Heart Warming Positive Ethics Story!

January 10, 2008

No doubt most people have heard of the terrible incident where a Dallas area mother made up a story for her child in order to win prized Hannah Montana tickets. The story entitled “My Daddy Died This Year In Iraq.” Of course, the story was later found to be false and the tickets were withdrawn.

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Showbiz tonight (part of CNN) has reported a truly touching story – in fact a polar opposite story compared to the which made headlines across the country. Here (as reported) a five year old girl – Jada Carlson – donated her Hannah Montana tickets to another for a truly selfless reason.

According to the report, Jada received expensive Hannah Montana tickets for Christmas from her mom Faith. While Jada was excited about going to the show, there was a story about one of Jada’s school mates – Gabby. It was reported that Gabby had been in and out of the hospital and people in her community have held fund raisers for her family to help with doctor bills.

Jada felt that Gabby needed one more thing to help her with the difficult time she was facing. So, in an act of selfless love, Jada gave Gabby her tickets so that “Gabby would know that Jada really did care!”

According to Jada’s mother – the only thing she asked of Gabby was that sometime in the future 30 years from now, she would remember and “pay it forward.”

Watching that video story was heart warming. To see the video click here: http://www.cnn.com/video/#/video/showbiz/2008/01/10/anderson.sbt.montana.miracle.cnn

Kudos to a child who saw past the personal value of self-gratification and enjoyed the greater value of “giving!”  As a teen ethics speaker and founder of the Choices Foundation, you bet that this story will be used to contrast the difference between the consequences that come from right acts.

Every choice has a consequence.  I speak about the “Truth about Consequences.”  http://www.chuckgallagher.com    In the first example the consequences for lying were humiliation and loss of the tickets.  In this example the benefits for right actions have been incredible publicity and benefits that are yet to come.

What do you think?  Feel free to comment!


Hannah Montana and An Ethics Meltdown – Anything For Success? Ethics Speaker Chuck Gallagher Comments!

December 31, 2007

A sad story out of Garland, Texas (not far from my home in Southlake, TX). A story of Iraq, a little girl, compassion and all for Hannah Montana tickets.

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The little girl was six years old who won Hannah Montana tickets to a sold out concert for the touching essay she wrote. What a special reward for a girl who touched the hearts of those who read.

The essay was a fake – the story told a lie! All done to influence the judges and win the tickets. Ethical choices gone bad and at six years old (and get this) with the knowledge (and likely help) of her mother.

The Associated Press story featured on CNN is shown below: http://www.cnn.com/2007/SHOWBIZ/Music/12/29/fake.essay.ap/index.html

Here’s what took place:

  • Club Libby Lu, a store that sells clothes, accessories and games intended for young girls based out of Chicago, sponsored a contest which included airfare for four to a sold-out Hannah Montana concert on January 9th in Albany, NY.
  • The little girl who won had an essay whose first line began with: “My daddy died this year in Iraq.”
  • The story wasn’t true!
  • Priscilla Ceballos, the little girls mother, told an interviewer with KDFW (a Dallas, TX TV station), “We did whatever we could to win.”

Mary Drolet, the CEO for Club Libby Lu stated, “We regret that the original intent of the contest, which was to make a little girl’s holiday extra special, has not been realized in the way we anticipated.” The company is considering taking away the girls tickets.

What should the outcome be?

I seriously doubt that a six year old girl could come up with a deception that contrived on her own. She had to have had help and her mother has as much admitted her part in the overall deception.

If the little girl were allowed to keep the prize, including the tickets, it would send a clear message that unethical behavior (regardless of who made the decision) is alright. It’s not alright!

If the little girl had the tickets revoked, while she would likely be hurt, it would demonstrate at a very young age, something that I state to groups all over the country, that every choice has a consequence. Reality is, by your choices you determine the consequences you receive – negative consequences (loss of the tickets) or positive results (enjoyment of the prize).

Either way, her mother, through national attention, has been exposed as a liar and a person who was willing, as she put it, to do “whatever we could do to win.” The likely outcome for their family will play out in many ways for time to come.

What do you think the outcome should be? Your comments are welcome.

Do you think that children and teens are taught ethics or is ethical behavior instinctive? Again, your comments are welcome.

For now, Motivational and Ethics Speaker, Chuck Gallagher signing off.