Ethics Class and Operations Strategy – What is the strategy of big and small corporations in the US?
In five more weeks I will graduate, completing my MBA for Global/International Management. My last class is ‘Operations Strategy’ and the first week’s material focuses is on ethics. I happen to have had more than my fair share of being involved with unethical companies and people who made short-term, short-sighted decisions.
So in class, I shared a story about an experience I had working for a company called Premium Sales in Florida about fourteen years ago. The owners of Premium scammed millions from investors as part a Ponzi scheme in which they created duplicate books, and spent investor’s money lavishly on their own lifestyles. In 1992, the SEC came in and shut the company down. I was out my commission, 401K, insurance, etc. – and I had been clueless anything funky was going on. Needless to say, it was quite an experience.
After that job, I went to another grocery diverting company that changed my commission structure as soon as I started making a commission, so I left there, and ended up at another grocery diverting company called Atlantic Wholesale. I was there for over a year before I ended up filing sexual harassment charges against the owner of that company. That is a different story, but this one here is about ethics and making money.
Deja vue – Nevin – what did you do?
While I worked at Atlantic, I sat next to this guy who was a little spit-fire and his name was Nevin Shapiro. I thought he was about 10 years younger than me, but it turns out he was only about 5. He came to work every day with his dress shoes polished, his Armani suits pressed, his nice blue or white shirt, with gold cufflinks and he carried the sports section of the newspaper and his phone; a regular GQ type guy to the 9th.
Our office was in South Miami and the guy that we worked for had come from the garment industry. He was just playing in the diverting market as an investor in his retirement. Nevin had sustained a back injury that ruined his sports career, and so he was forced into business but I got the feeling, he hated it.
Our boss would play the stock market and announce quietly to Nevin and I, when he was up or down. He’d lose millions or gain millions in any given day, and it was just beyond my comprehension how much money could be gained or lost with a bat of an eye. I was happy with my income, I was making six figures, but I could see the glint in Nevin’s eyes; he wanted the millionaires life.
I ended up quitting that company too for unethical practices, but I remembered Nevin and every so often I would think about him and wonder what he was up to. His name was unique and he was unique; he looked like a cross between a mini Arnold Swartzenegger and Doogy Howse,(Neal Patrick Harris). We used to make jokes about some of the other guys we worked with who worked out and who could bench press him because he was a little guy.
Well, anyway, I was in my operations strategy class, and somebody commented on my post at school, so I looked it up on the web to see if I could give them a referral to learn more on Premium Sales when I found my dear old row buddy, Nevin, making headlines in the paper down in Florida.
In fact, in reading the write-ups, it appears he has been bench pressed by some of the greats, but unfortunately, he’s not in the paper for that.
Loansafe.org reports “The SEC’s complaint alleges that Shapiro misappropriated at least $38 million of investor funds to enrich himself and finance outside business activities unrelated to the grocery business, including a sport representation business and real estate ventures. His lavish lifestyle includes a $5 million home in Miami Beach, a $1 million boat, luxury cars, expensive clothes, high-stakes gambling, and season tickets to premium sporting events. Shapiro additionally tapped approximately $13 million of investor funds to pay large undisclosed commissions to individuals who attracted other investors.” (loansafe.org)
Nevin was being accused of being involved in a Ponzi scheme. Oh no! He didn’t work at Premium Sales from what I remember, but maybe some of his family or friends had. In any event, someone was resourceful enough to do it again.
Is Unethical behavior in our genes, or is it just in our jeans?
Well, this discovery gave me more to talk about in my ethics class, but I wasn’t happy about it and I still don’t have any answers either. Do you ever see former acquaintances or classmates in the headlines? Is it for good or for bad things?
I am just wondering if there an “unethical” gene – something like vasopressin – the supposed cheating gene? Wasn’t it just last week that we learned that 40% of men are predisposed to cheating because of a genetic disorder? The show apparently didn’t talk about the women, but they must have about a 40% genetic function too. Does unethical financial behavior have the same cheating gene? Does this anomaly run run in families, in demographic groups, and/or in industries?
Is regulation, fear of repercussions, or emulation of the lifestyle of the rich and famous, to blame?
Is more regulation the answer, or is it peer pressure and the fear of the repercussions more important (laws, fines and jail time)?
If Wall Street is any indication, people will just make things up like derivatives and hedges and tell us they are complicated, and sucker investors (myself included) will believe them. Maybe the new catch phrase should be, if it seems to be too complicated for the average Joe, maybe we shouldn’t invest until we get educated about the wool being pulled over our eyes.
Maybe we should be asking corporations and CEO’s for their DNA – maybe that will be the wave of the future? Otherwise, the guy you sit next to might just grow up to be an alleged schemer.