A Few Bad Apples

The summer before my senior year of college, I interned with a government agency.  My supervisor was a short, swarthy, cocky man with an inflated sense of self-worth and a confrontational air.

I remember this guy regaling me about how he wouldn’t stay in his job too much longer.  Public sector work was for suckers and the lazy, he’d tell me, in between a lot of b-school wisdom culled from the One Minute Manager and Warren Bennis.  The people he worked with were nobodies, “mediocrities” who would never make their mark.  He, on the other hand, was going to get his law degree and then go into business for himself.

I just kind of shrugged off his bluster at the time.  Over the years, I’ve heard a lot of the same crap from flabby suburbanites in sport shirts and Dockers who fantasize about being Howard Roark or John Galt but come off more as malign Walter Mittys.  I’d nearly forgotten about my summer boss of yesteryear when I stumbled across his name not long ago while web surfing. 

It turns out that he really did go to law school and start his own business.  I also learned he had just been sentenced to nine years in federal prison for running a Ponzi scheme.  It seems he bilked his investors—many of them former classmates who trusted him with their life savings—of several tens of millions dollars as well as swindling his partners in a chain of coffee shops.  I wasn’t sure at first it was the same person until I saw his mug shot posted in Google Images.  Yep, it was him, all right.  A little grayer, a little paunchier to be sure, but it was him.

Reading the news story of his sentencing, I’ll have to say I wasn’t terribly surprised at his behavior.  Ignoring his lawyer’s pleas to shut up, he tearfully begged the judge for a light sentence, saying his wife was sick with cancer and that she and their kids couldn’t cope without him.  I don’t know if that performance softened the judge’s stony heart or steeled his resolve, but the miscreant left the courtroom facing the next decade behind bars.

I’ll cop to a feeling certain schadenfreude upon finding out that this pissant Bernie Madoff was going to the pokey.  I did not like the man at all during the brief spell I knew him, and if he had done something wrong I’m glad to know he will pay for it.  And if you’re tempted to think I’m a jerk for kicking a man when he’s down, don’t.  It’s not as if he’s doing time at San Quentin or Sing Sing.  He’s a nonviolent, white collar criminal in federal custody.  Federal prison is where they send unpopular Republicans.

We also need to consider the victims.  There’s a depressing familiarity in the methods used by these charlatans.  People want to believe there’s some magic formula for getting rich quick, no matter how often these hopes are expensively dashed.  We want to believe in things like “proprietary formulas” that somehow allow investment advisers to exceed average market returns.  (In the case of Summer Boss, he told his marks that his knowledge of—get this—physics gave him a way to beat the market.  I’ve had my moments of naïvete and fallen for a few lines in my time, but Jesus…)       

The shamelessness of these people when the time comes to pay the piper punctuates their misdeeds.  I got an amazed chuckle or two reading about Summer Boss’ sentencing, but I didn’t find it particularly funny.  Begging for mercy didn’t seem to work in his case, but it has in similar situations.  An example that comes to mind was Enron defendant Lea Fastow’s sentencing.  Even though she’d known for some time she was going to jail, she asked the judge at her sentencing to delay her report date because she had no one to look after her children while her husband was serving his own stretch.   The judge was quite accommodating, even though the defendant had been an accomplice in defrauding investors and wiping out the pension plans of numerous employees working for Enron subsidiaries.  I wonder how it would have played out in the inverse if it had been a poor woman of color who had stolen from her employer.  Somehow, I doubt that the “somebody’s gotta watch the kids” excuse would fly.  Or, if it did, we’d hear the outraged bellows of the law n’ order crowd that another criminal had escaped justice, if only temporarily.

Different spanks for different ranks, as they say in the army.  However, it’s clear our lack of tolerance for criminal behavior is situational.  I don’t know about you or anyone else, but I’m sick of the presumption that just because a person has made a lot of money he or she is somehow smarter or superior to the rest of us.  I’m even more tired of the argument that large fortunes are somehow earned.  (Once, when I criticized the resistance of the 1% to higher income and capital gains taxes when they could afford mansions and yachts, a friend told me in high dudgeon that my notional plutocrat had earned that yacht.  How the hell do you earn a yacht? I asked her.  Can anyone do it?  How many shifts at Wal Mart or Starbucks do you have to work to buy one?  My friend didn’t have an answer.  I wish all my arguments ended so succinctly.)

The financial scandals of the past ten-plus years carry a single, unavoidable lesson: You can’t just chalk it up to a few bad apples anymore.  The system is fraught with moral hazards.  Always has been.  We’ve had over two centuries’ experience to teach us that fact.  From the Crédit Mobilier affair to the Panic of 1873 to the Great Crash of 1929 to the mortgage meltdown, we never learn.  We don’t want to.  To accept the fundamental rottenness of the financial system would be to question our basic self-conception.  And, I think, we may prefer things that way as a society.  A few months ago, CBS’ 60 Minutes ran a piece on how Bernard Madoff was faring in prison.  Apparently, he’s thriving.  In fact, he’s something of a hero to his fellow inmates.  I’m not surprised. 

As much as I want to close my eyes and put my hands over my ears, I’ve concluded that it’s not just career criminals who admire the guy who got away (or almost got away) with it.  The rest of us do, too.  I think that’s why we’re more willing to go easy on a corner office thief than we are on a mugger.  It doesn’t take a lot of brains to rob somebody on the street, but to manipulate stocks or skim funds…well, that takes a degree of sophistication and subtlety we all wish we had, no?   That’s not criminal; that’s cleverness.  That’s just being enterprising. 

I’m sure it seems I’m dwelling on the outliers.  You might argue that while corrupt individuals exist everywhere, corporate institutions are generally clean.  I’m not so sure.  This argument doesn’t hold up when you consider that institutions are made up of individuals who shape and are in turn shaped by them.  Corporations as institutions inflict far more damage on society than all street crime put together, and their crimes are prosecuted much less frequently.  The ability of corporations to lobby Congress and state legislatures and thereby define the laws that regulate them can only create an environment in which corruption is inevitable.  Winning’s easy when the game’s rigged.

I suppose I should be happy that someone has been held to account for his crimes, even if it’s only a small fry con man like Summer Boss.  But it doesn’t restore my faith in the system.  Not when the whole barrel is rotten.

© 2012 The Unassuming Scholar