After Serving Time, Executives Now Serve Up Advice [White collar felons cash in on lecture fees]

The NYT ^ | June 1, 2004 | CHRISTOPHER S. STEWART

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After Serving Time, Executives Now Serve Up Advice

By CHRISTOPHER S. STEWART

Published: June 1, 2004

Corporate executives facing trials for misdeeds at work are grappling with the possibility of a long stretch in prison. But they can take comfort in the fact that business is booming for a few executives-turned-felons who have turned their stories into topics on the lecture circuit.

From a former finance executive to a lawyer who specialized in civil litigation, some white-collar criminals are getting paid several thousand dollars to talk about their crimes to business schools, professional associations and corporations.

"It's a powerful message," said Kellie McElhany, professor of corporate management at the Haas School of Business at the University of California, Berkeley. She has had Walter Pavlo, the former senior manager of collections at MCI who spent more than a year and a half in prison after he was convicted of wire fraud and money laundering, speak at the school's Center for Responsible Business.

"You actually get to see the consequences of poor ethical decision making," Professor McElhany said.

Gary Zeune, who runs Pros & Cons, a speaker agency in Columbus, Ohio, that specializes in former white-collar criminals, says demand has increased about 30 percent in the last year, helped by the prominent trials of executives like Martha Stewart and L. Dennis Kozlowski, the former Tyco chief executive.

At the same time, a growing number of executives appear to be willing to talk about their misdeeds. Mr. Zeune gets phone calls, e-mail messages and letters almost every other week from former criminals, he said, more than double the number of requests he received two years back. Speakers at his agency are paid $1,000 to $3,000.

But the phenomenon is unlikely to last, said Toby Bishop, president and chief executive of the Association of Certified Fraud Examiners, who has used convicted executives to conduct training and to lecture.

Corporate crime is "just a hot topic now," he said. "And in two or three years, if there are no more corporate scandals, it will be replaced by something else."

But for now, white-collar criminals are in demand. Mr. Pavlo of MCI is one of Mr. Zeune's most popular speakers. Since his release in 2003, he has earned more than $30,000.

In his speeches, Mr. Pavlo talks about how he devised a complicated accounting scheme with an outside partner that yielded $6 million in stolen customer money in six months, and he describes what he was thinking at the time of the crime.

This year, he says, he could earn $150,000 to $200,000, charging as much as $5,000 for a speech.

Andrea Bonime-Blanc, senior vice president and chief ethics and compliance officer at the New York office of Bertelsmann Media Worldwide, hired Mr. Pavlo in March for a quarterly executive meeting she holds on the topic of ethics. While it was the first time she had hired a former convict, she said it went over very well.

Karen Bond, a lawyer in Ohio who served 38 months for interstate securities fraud, has talked widely in the media about Martha Stewart's conviction for lying about her sale of ImClone Systems stock. Her speaking run, however, may be short-lived. A spokesman for Ms. Bond, Somer Stephenson of Stephenson Consulting Group in Califon, N.J., said she was no longer available, citing probation issues. Ms. Bond did not return repeated phone calls for comment.

Mark Morze was convicted in the late 1980's of stock fraud, wire fraud and tax evasion while an executive at the carpet cleaning company ZZZZ Best. After emerging from prison in 1994, he hit the speaker's circuit and says he has consistently made $60,000 to $80,000 a year. Mr. Morze is a regular at the Graziadio School of Business at Pepperdine University, where his message is deterrence.

The presence of corporate felons on the talk circuit has been reported by Crain's New York Business.

Public speaking is not a real option for most white-collar criminals, Mr. Zeune said. "You have to have a compelling story and take responsibility for what you did, which is something a lot of criminals won't do."

Even for the few who find speaking jobs, success can be elusive.

David London, who served 11 months for fraud committed while he was chief executive of the former People's Bank of Unity in Pennsylvania, worked as a clerk at a local medical center and did general labor for a film studio after he was released in 1998. Today, he is a speaker with Mr. Zeune's group, but he gives only a handful of lectures a year, making pocket money. He lives in the extra room of an old friend's house and, to make ends meet, he works as a mortgage broker and officiates at college and high school sporting events.

"I can't get a decent job anymore," Mr. London, 61, said. "All my life was in banking, over 30 years. Even if I tried to get a night job at a hotel in auditing, I wouldn't be able to get it. "

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This year, he says, he could earn $150,000 to $200,000, charging as much as $5,000 for a speech. [...]

After emerging from prison in 1994, [another convicted felon] hit the speaker's circuit and says he has consistently made $60,000 to $80,000 a year

There is something not right about this to me. Fees that result in a $60-$80K or $200k annual salary seem way too high to pay convicted white collar felons talking about their crimes.

How about paying them $0 for these lectures?

Maybe the way they now earn a living -- post-conviction -- is something they should have considered before committing their crimes. These generous lecture fees seem destined to encourage more white collar crime.

[TomB]

There is something not right about this to me. Fees that result in a $60-$80K or $200k annual salary seem way too high to pay convicted white collar felons talking about their crimes.

If they've paid their debt to society, and they have, what gives you the right to dictate how much they make?

How about paying them $0 for these lectures?

Why? Because it isn't fair?

Talk about a slippery slope.

These generous lecture fees seem destined to encourage more white collar crime.

Become a felon and spend several years in prison in order to hit the speaking circuit? That's just plain silly.

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To tell you the truth, it has nothing to do with being "fair" or a "slippery slope" as I see it.

I was thinking of the New York Son of Sam law, which prohibits a convicted killer in NYS to earn any money for seeling or writing the story of the murder.

Do you think that law should be repealed -- and murderers should be allowed to earn money like any other author or screenwriter? (Remember, the murderer would be writing about a crime he actually committed.)

You sound like you are against that law. Well, I support that law. And, I would like to see a version of that same law for white collar criminals.

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seeling = selling

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BTW, the idea that white collar crimes have no victims is just ridiculous, if that's your next argument. When these felons - former executives steal money from people, people do suffer.

[I_killed_kenny]

"There is something not right about this to me"
He DID the time and now people want to pay him to talk to them. What's wrong with it? Should he starve to death and never get a second chance even after serving his sentence?

[jscd3]

This year, he says, he could earn $150,000 to $200,000, charging as much as $5,000 for a speech. [...]

And this differs from what former felon-in-chief Bill Clinton is doing how, exactly?

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See my post #3. BTW, I am all for people doing the time if they did the crime, and getting rehabbed, but, it disturbs me that then they get out of prison and continue to profit off their crimes, albeit in a new way. Again, there is something not right about that to me. And, again, see my post #3.

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Well, Clinto is not currently lecturing the country on the topic of what unlawful acts you can committ, like he did, to do to get your law license suspended. And, he never served time in jail, as far as I recall. So, while I am not endorsing him, or his past conduct, you are comparing apples and oranges here.

[I_killed_kenny]

to me, once your time is done, you've served your time and should have the same rights as everyone else. If you're still dangerous, then you should be in jail. If we don't let them get a job, then they'll have no choice but commit new crimes again.

[summer]

If we don't let them get a job,

Of course they should get a job. But not by making more money off the same crimes than landed them in jail in the first place. People change careers, you know. They wouldn't be the first ones to have to do that.

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than landed = that landed

[TomB]

I was thinking of the New York Son of Sam law, which prohibits a convicted killer in NYS to earn any money for seeling or writing the story of the murder.

The "Son of Sam" law only refers to convicts earning money while still in jail. In this case the people served their debt to society, and are now free. There is absolutely nothing wrong with these men making a living.

BTW, the idea that white collar crimes have no victims is just ridiculous, if that's your next argument. When these felons - former executives steal money from people, people do suffer.

It isn't. They comitted a crime and did the time. They are now free men.

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The "Son of Sam" law only refers to convicts earning money while still in jail.

No, you are wrong about that. It refers to the convicted person's ability to EVER earn money off the crime, and prohibits such.

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FYI -- from April 2000:

GOVERNOR PATAKI PROPOSES BILL TO STRENGTHEN SON OF SAM LAW
Allows Victims to Recover All Money, Property Received by Convicted Criminals"

[NYS] Governor George E. Pataki today announced he has proposed legislation that would significantly enhance the ability of crime victims to obtain financial compensation from convicted criminals. The bill would ensure that criminals are held accountable to their victims financially regardless of their source of wealth or the crime for which they were convicted.

"We must strengthen the Son of Sam law so that crime victims and their families can collect any money that a convicted criminal receives from any source," Governor Pataki said. "This legislation would ensure that every opportunity is available to every crime victim in our state to get the justice and full compensation that they deserve for their pain and loss.

"For too long, crime victims who have already endured tremendous suffering have been forced to stand by and watch as convicted criminals receive windfalls," the Governor said. "By expanding the law, we will give victims and their families the tools they need to obtain justice and ensure that no criminal is allowed to reap financial rewards in the face of those they have harmed."

The Governor's [new] bill would strengthen the Son of Sam law to allow crime victims to sue the convicted criminals who caused them harm for any money and property that the criminals receive from any source. Current law is inadequate because it allows crime victims to sue under the Son of Sam law only when a convicted criminal receives money that represents "profits from the crime." [....]

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From the same link above:

In 1977, New York became the first state to enact a law to prevent convicted criminals from obtaining financial rewards from their own crimes. The law was prompted by the capture of serial killer David Berkowitz, a/k/a Son of Sam, whom the New York State Legislature sought to preclude from profiting from his notoriety. Under the former Son of Sam law, all proceeds from the sales of "books, magazines, motion pictures," or other media exploitations of crimes, otherwise payable to the convicted perpetrator, were paid to the CVB for the benefit of victims of the crime.

The main advantage of this law was that, for the first time, crime victims were able to bring a civil action after discovery of a criminal's proceeds despite the expiration of any other statute of limitations. Subsequently, the law was utilized against some of society's most notorious, tell-all criminals, including Jean Harris and Mark David Chapman. Thirty states and the federal government enacted legislation modeled on New York's.
,br> In 1991 the legislature amended the Son of Sam law to expand the definition of "profits from the crime" to include "any property obtained through or income generated from the commission of a crime of which the defendant was convicted." The revised law thus permits a crime victim to recover the gains a convicted perpetrator realizes from committing a crime, and it no longer limits the recovery to proceeds from books, magazines or movies.

Despite its enhancement in 1991, the Son of Sam law still does not adequately allow victims to seek compensation for unlawful acts. Although a crime victim may presently sue a convicted criminal for compensatory damages using the extended statute of limitations available under the Son of Sam law, the victim can sue only in the narrow situation where the criminal has obtained "profits from the crime." Money or property that a criminal acquires from all other sources -- gifts, bequests, income, civil recoveries -- cannot be recovered to pay the debts that the criminal owes a crime victim.

As a result, crime victims who, perhaps for many years, reasonably incur expenses as the direct result of a crime -- medical expenses, loss of earnings or support, repair or replacement of essential personal property, occupational or other rehabilitative training, on-going counseling, burial costs -- are often left uncompensated.

These weaknesses in the Son of Sam law prevent crime victims and their families from rightfully recouping expenses. The Governor's bill would strengthen the Son of Sam law to improve the ability of crime victims to obtain compensation for injuries and expenses that result from criminal acts.

By expanding the law to cover money and property that a convicted criminal receives from any source, the Governor's bill achieves this aim and better ensures that crime victims are justly and fully reimbursed for their losses and suffering.

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Consequently, I have no idea where you are getting your information from - or why you think crime victims do not deserve compensation.

[TomB]

Consequently, I have no idea where you are getting your information from - or why you think crime victims do not deserve compensation.

This was your original statement:

I was thinking of the New York Son of Sam law, which prohibits a convicted killer in NYS to earn any money for seeling or writing the story of the murder.

First of all, I'd appreciate you not putting words in my mouth. I never said that victims don't deserve compensation. Next, the amendend law allows victims to sue the perpetrator for any funds generated from the "exploitation" of the crime. Nowhere does it prohibit a convict from making money. It just gives the victims easy redress.

If there are any victims out there who want to sue these men, they are free to do so. But I doubt they'd get too far.

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First of all, I'd appreciate you not putting words in my mouth

Uh, you incorrectly defined the Son of Sam law on this thread. I corrected your misinformation with true information for those reading the thread. You're welcome.

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Nowhere does it prohibit a convict from making money

Nor do I wish to prohibit people from making money - just not off their crimes.

And, yes, I initially gave a very brief definition of the law. But, I was at least correct -- your definition was totally wrong.

And, my position is the same as when I began -- criminal should not be allowed to make money off their crimes. That is why the Son of Sam law also prohibits earning from "media" and media appearances, via these lectures, is exactly how white collar criminals are now making money. That money, which is now being paid to a criminal to talk about their crimes, should go instead to the victim. But, you seem to be against that.

I don't know why you would be.