Oh honey. Why not tell the judge the whole story of your grade faking? If the judge knows everything, leniency will be that much more lenient. So let’s see. Here are the details:

In late 1998, [Mathew] Martoma, a graduate of Duke, altered the transcript of his first-year law school grades: He gave himself A’s in Civil Procedure, Contracts, and Criminal Law, rather than the B, B+, and B he’d earned, according to a Harvard Administrative Board report. He applied for clerkships with 23 judges using the altered transcripts. Weeks later, someone in the school’s registrar’s office discovered that the transcript had been changed. Martoma then withdrew the clerkship applications and told Harvard that the doctored transcripts had been sent out by mistake.

In a classic example of how the coverup is usually worse than the crime, Martoma appealed his dismissal from Harvard by arguing that he’d withdrawn the applications before he was caught and that the improper transcripts had been submitted accidentally. His efforts apparently involved creating a fake computer data forensics company, complete with a professional-looking marketing flyer, to corroborate the time stamps of his e-mails.

You didn’t just change a few grades! You created a whole fake company! You’ve got like seven aliases! You’re a real criminal, and because of your insider trading trial everyone knows it, and the fact of everyone knowing is a real source of suffering for you.

You see the same grounds for leniency in mafia trials in southern Italy. Yes, your honor, I’m a career piece of shit, but until now with omertà and all no one said it out loud. Show some mercy.

A cheater named Mathew Martoma
Lied his way to a Stanford diploma.
His scam MBA
Was so artful a play
It deserves to be hanging in MOMA.

Corrupted? Corrupted? Corrupted by the big bad hedgie!

Young Sidney who lived at the foot of the hill
Whose fame every virgin with envy doth fill…

How far the delicate lassie has fallen – caught in the clutches of SAC.

It’s America’s worst fraternity – a distinction extremely hard to attain, given the competition.

UD loves the image of Yale’s Sean Stewart getting his degree in ethics while being an SAE man, for, as you know, UD loves hypocrisy, the cruder the better. Stewart went on to become a finance person (he’s just been charged with insider trading), and a striking number of finance people seem to go in for this moral seriousness/massive theft of funds approach to life. Michael Martoma, you may recall, was also an ethics guy in college… Bernard Madoff, come to that, was a pious Yeshiva University insider…

None of these men seems to have been able to keep his dual-track life going. Bernie kept it up, as it were, longest, but now he’s rotting in jail. Martoma will get out of jail in nine years, and I’m sure he’s working out in the gym every day in order not to rot. Stewart could go to jail for 25 years, but he’ll get less time than that. Ten years, maybe. He and his father were in on the scheme together (Bernie also made it a family affair), and they used golf code in their phone conversations about their various trades, which is so cute. Golf is this adorable subtext in many insider trading arrests – remember this guy? Does his perp walk while wearing a sweater with little vintage golfers on it! Sweet.

Monika Juneja, who rose to become deputy leader of the Conservative group at Guildford Borough Council…
pleaded guilty at the Old Bailey to three counts of forgery dating back to 2000, obtaining pecuniary advantage by deception, and a charge of “wilfully pretending to be a barrister” between January 2010 and May 2014.

As in many of these cases, she seems to have spent a good deal of her non-working time forging academic papers – degrees, certificates, approvals… A fraudster’s work is never done until she – or he, like Michael Martoma – has to go to jail.

Once a fraudster, always a fraudster. For some people it’s a way of life. It’s the way they roll.

As with that subset of fraud we routinely cover on this blog – plagiarism – the danger in being a fraud is that you will eventually get caught because you keep doing it, and each time you do it you run the risk that someone’s going to figure out what you’re doing.

David Broxterman, ex-business professor at Polk State University, appears to be a case in point. Like Mathew Martoma, Broxterman allegedly stitched together official university materials and got his job at Polk based on them. He’s been teaching there for five years, snug as a rat in a rug. But then he went and (allegedly) defrauded someone else – a coin collector – who complained to the attorney general, who turned around and asked Polk to reexamine Broxterman’s papers.

Broxterman will possibly have to pay back his years of salary. He might also go to jail.

But the real problem here lies with Polk. Apparently Broxterman’s stitched together materials were laughably amateurish. Any idiot should have been able to detect the fraud.

At Stanford the nasty aroma
Wafting westward from Mathew Martoma
Has become so intense
That it seemed to make sense
To decide to revoke his diploma.

… yet another of his employees (the career fraudster Michael Martoma) has been found guilty of insider trading? That’s the question on everyone’s mind.

“From a public perception, how do you go after all of the subordinates, but stop before getting to the guy on top,” asks trial lawyer Thomas Rohback, a partner and chairman of the litigation group at Axinn, Veltrop & Harkrider. “If somebody is a billionaire, and you’re sending other people that have worked for him to prison, isn’t there something lacking if you don’t bring the possibility of a jail sentence against that person,” continues Rohback.

… Under Dodd-Frank, the statue of limitations for financial crimes was extended to six years, from five previously, meaning Bharara and his team still have time to bring criminal charges against Cohen.

Board of trustees meetings at Brown must be awfully… awkward lately…

“So Steve any inside scoops on potential donors for the new arts center? …Ahem! … I mean… haha! … Any ideas…?”

Brown just can’t let him go yet. His fellow trustees sit across from him at that big ol’ conference table and whenever they look at him, whenever he opens his mouth, they’re all thinking the same thing:

NINE FUCKING BILLION DOLLAR PERSONAL FORTUNE! F-U-U-U-CK…

It’s just too much. They’ll hold onto him because they figure he will never go to jail because they figure there MUST be a law in the United States that says something like once you’re worth seven or more billion dollars you cannot be jailed because your legal status is no longer person. Something like that. You’re like a Gross National Product. Your legal status has actually changed and you’re actually too rich to go to prison. It’s like at some point you’re too rich to die. What’s that line from White Noise?… Babette says, of the very rich: “I have trouble imagining death at that income level.” It’s like – if Madoff hadn’t had to give it all back, he’d have been too rich to go to prison… Yeah, good ol’ Steve! He won’t go to jail. And if we hold onto him some day he’ll give Brown say one billion say…

… you don’t know what you’re going to find.

… Mr. Martoma changed some of his first-year [Harvard] law school grades from B’s to A’s, including one in criminal law. He then sent the forged transcript to 23 judges when he applied for federal clerkships.

… After Harvard expelled him, Mr. Martoma, who at the time was known as Ajai Mathew Thomas, legally changed his name to Mathew Martoma in 2001, the same year he entered Stanford. It is not known what name Mr. Martoma used on his Stanford application.

Three years after graduating from Stanford [who knew Stanford had an eye for forgers?], Mr. Martoma landed a job as health care stock portfolio manager at SAC Capital. Jonathan Gasthalter, an SAC spokesman, has declined to comment about whether Mr. Cohen’s hedge fund was aware of the Harvard incident when it hired Mr. Martoma.

Why not be honest and say We not only knew about it; it made him a shoo-in…

***************************

Details, in case you want to give it a go.

In late 1998, Martoma, a graduate of Duke, altered the transcript of his first-year law school grades: He gave himself A’s in Civil Procedure, Contracts, and Criminal Law, rather than the B, B+, and B he’d earned, according to a Harvard Administrative Board report. He applied for clerkships with 23 judges using the altered transcripts. Weeks later, someone in the school’s registrar’s office discovered that the transcript had been changed. Martoma then withdrew the clerkship applications and told Harvard that the doctored transcripts had been sent out by mistake.

In a classic example of how the coverup is usually worse than the crime, Martoma appealed his dismissal from Harvard by arguing that he’d withdrawn the applications before he was caught and that the improper transcripts had been submitted accidentally. His efforts apparently involved creating a fake computer data forensics company, complete with a professional-looking marketing flyer, to corroborate the time stamps of his e-mails.

[The SEC’s] pursuit of [Brown University trustee Steven] Cohen has been compared to Captain Ahab’s quest to vanquish the White Whale. Preet Bharara’s investigation into insider trading in the hedge-fund industry has already led to the convictions of former Galleon Group founder [and high-profile University of Pennsylvania donor] Raj Rajaratnam and former Goldman Sachs director and McKinsey managing director Rajat Gupta. Rajaratnam is currently serving an 11-year prison sentence, and last year Gupta was sentenced to two years in prison. Bharara says the U.S. Wall Street insider trading investigation is ongoing.

It’s become quite the cat and mouse game between Brown University’s Steven Cohen and law enforcement. Does someone in Brown’s English department teach Melville? There’s a great opportunity here to spice up the Moby lecture:

So powerful and persistent a metaphor has the Ahab/whale struggle become that we encounter it in the media’s account of our trustee Steve Cohen’s white whale-esque evasion of capture (so far!) by “Ahab” Bharara …

Tomorrow night, Brown has a rare opportunity to model for its students how to become a success in life: Frontline is featuring the university’s highest-profile trustee in a special report titled To Catch a Trader. UD hears echoes of To Catch a Thief in that title, but that’s probably just her.

… This week, I stopped by St. Andrews Plaza in Lower Manhattan to see Preet Bharara, the United States attorney for the Southern District of New York, and his deputy, Richard Zabel, the former head of the criminal division. Both said they couldn’t discuss any pending cases. But many people who work in financial markets “are highly skilled at cost-benefit analysis,” Mr. Bharara told me. “They’re highly intelligent. They’ve been to the best schools. They weigh the risk of getting caught against the potential reward, and they decide it’s worth the risk. We’re trying to tilt that equation.”

… For the most part, inside traders aren’t hardened criminals but rational decision-makers. When confronted by an F.B.I. agent in his front yard, [Mathew] Martoma fainted.

So what we’ve created with our best schools is a class of sensitive, rational, ethically keen criminals who do not think of themselves as criminals. They faint when they see the FBI coming.

I suppose it’s a sort of cultural accomplishment. Me, I prefer the old school.

… for insider trading (“Among researchers, physicians, government officials and corporate executives, the lure of easy money in health-care insider trading has become epidemic.”), you might want to pay attention to the sort of people likely to get arrested and embarrass you the way Sid Gilman has embarrassed the University of Michigan. I hate to be the one to tell you, but the endless futzing you’ve been doing with your conflict of interest forms for professors ain’t gonna cut it. You need to be able to see these guys coming.

The Gilman/Martoma story, and the related Benhamou/Skowron story, reveal, for those who wish to see, “the deeply compromised, fundamentally flawed research system in which academic figureheads serve as puppets for industry interests.” Of course, these two are just the really big money stories – hundreds of millions in profit, or avoidance of loss; Gilman’s $1,000 an hour fee for the care and feeding of his hedgie. If you want to be reminded of the zillions of smaller stories (these aren’t always about insider trading; they’re about mercenary professors as other sorts of corporate puppets), click on this blog’s conflict of interest category.

So – how do you see ’em coming?

First: Here’s what you shouldn’t do. Don’t do this retrospectively. Don’t think that by reviewing the traumatic life stories, and the pleading-for-mercy-in-front-of-a-judge statements, of people already in jail you can detect who among your faculty is, even as we speak, breaking insider trading laws. They all say the same thing. They have no idea how they lost their moral compass but they’re sure it’s around here somewhere. They thought they were dealing pretty well with their mother’s death but actually it turned them into bitter twisted nihilists. Don’t bother with this.

Instead, gaze about you at your medical faculty and ask the following question: Who’s the greediest of them all? The very greediest? I’m not talking about people who want to live well. Everyone wants to live well, and long may we prosper. I’m talking about faculty members whose acquisitiveness, ostentation, and status anxiety are notorious — the subject of jokes and stories and general incredulity. These guys are liable to be deeply in debt as they buy more and more and more and more. You want to have them in for a chat about their corporate ties.

See now here’s a whole article about how exceptionally morally reflective Mathew Martoma was in college and graduate school.

One of his friends calls him “very smart and ethical,” and wonders: “Did the situation and SAC push him over the edge?”

Brown University’s highest-profile trustee, Steven Cohen, does run a strikingly … aggressive hedge fund, but if you allow people to blame Martoma’s insider trading indictment (he’s accused of the most lucrative insider trading in history) on his environment, you’re allowing them to blame the bad behavior of everyone (and everyone here means everyone from a less wonderful, less gloriously privileged environment than Martoma’s, which is to say everyone) on their environment. If you blame Martoma’s downfall on the misfortune of his having been hired by the most powerful, prestigious hedge fund in the world, I mean boooohoooo. Fuggedaboutit.

This guy isn’t your average impressionable morally middling guy. He’s described by lots of people as keenly knowledgeable and sensitive in the moral realm. There’s Dr. Rieux over there risking his life every day to save Oran from the plague, presiding stoically at the bedside of a child dying in appalling agony; and here’s Martoma bringing to that novel acute insights on the capacity of human beings to empathize with and sacrifice for one another. How can a guy able to reason about morality at that level cheat and steal like a son of a bitch?

***********************

Er, is this really a problem for you? Do you really think there’s a puzzle to work out here? Have you read Dr. Faustus, Notes from Underground, Hamlet, or almost any serious work of literature?

***********************

We can go back and forth, and I’m happy to go back and forth, about the utility of ethics courses in business school. Say we appoint David Petraeus to lecture in such courses, along with other people we think of as moral paragons. If we’re lucky, the focus of his lectures will be the very complex vulnerabilities and blindnesses and compulsions that lie within all of us.

Not that understanding this, even on a very high level, will tend to make you, personally, more ethical. Ask Michael Martoma, and many other insider traders who share his excellent upbringing, his excellent education, and his exquisite moral reasoning, about that. If anything, the staggering good fortune these people have enjoyed all their lives, their easy entry into elite settings, their great wealth, even their great intellect, tends to make them feel removed from the common suffering humanity that Dr. Rieux found so compelling. These days, Americans are wealthy in ways unimaginable in the past. Steve Cohen’s personal fortune is close to ten billion dollars, and Michael Martoma moved very much in Steve Cohen’s world. The power, and the almost absolute removal from common human life, this sort of wealth — or a life lusting after this sort of wealth — yields, has — obviously — for many people — disastrous moral consequences. No business school is going to talk honestly about this, because no business school wants to be in the business of saying Come to study here, and we’ll teach you all about limits.

But you won’t believe us that ethics courses in business school are a total waste of time and money. As Orwin says:

By the time a student arrives at university, and a fortiori several years later when he ambles on to his MBA, his ethical character is already firmly set. Whether virtue can ever be taught was already a thorny question for Plato. Whether it can be taught to adults, in a classroom, shouldn’t be a thorny question for anyone.

Yet even with the latest amazing, high-profile evidence for our position, people continue to resist the idea:

A former student at Harvard Law School, [Mathew Martoma] co-wrote papers on medical ethics before seeking a business degree at Stanford University and joining a little-known Boston hedge fund. … [Martoma is] at the center of what U.S. prosecutors describe as the most-lucrative insider-trading scheme they’ve ever uncovered… [At Harvard Law School he] wrote two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics.

Martoma’s partner in crime, University of Michigan professor Sid Gilman, spent decades on safety and ethics and compliance committees.

… says Sid Gilman on his University of Michigan medical school page.

You said it. Ever since his insider trading charge, Sid’s been too busy with lawyers to make time for students:

Dr. Sidney Gilman, a neurology professor at the University of Michigan Medical School … was chairman of the safety monitoring committee overseeing the clinical trials of the Alzheimer’s drug.

[Hedge fund manager Mathew Martoma, also charged,] met Gilman some time between 2006 and 2008 through paid consultations, the SEC complaint says. “During these consultations, Gilman provided Martoma with material, nonpublic information about the ongoing trial,” the SEC complaint said.

In mid-July 2008, “Gilman provided Martoma with the actual, detailed results of the clinical trial” before an official announcement on July 29, 2008, the SEC said.

And wow did these guys make a lot of money. Most lucrative insider trading scheme ever.

Details, in case you want to try this yourself.

Martoma allegedly found out from Sidney Gilman, a leading Alzheimer’s investigator at the University of Michigan, that bapineuzumab–then owned by Wyeth and Elan–had failed a key study. Not only did the hedge fund sell all of its shares in the two companies, they shorted the developers as well. And they made a killing when the share price for both cratered on the news. Gilman, who reportedly was connected to Martoma through an expert networking firm that paid him $100,000, is now cooperating with the feds.

Here’s Sid in happier days, sleeping and perchance dreaming of making a killing and then having to try to save his ass by cooperating with the feds.

****************************

Update: A fellow University of Michigan professor comments.

Gilman’s conduct raises fresh questions about firms that match investors with experts in subjects that could move stock prices, said Erik Gordon, a University of Michigan business professor who follows the pharmaceutical industry.

“If the allegations are true, it’s reprehensible conduct for someone who has misused a position of trust,” said Gordon, who added that he doesn’t know Gilman. “This is crookery of really the lowest possible ethical standards. It doesn’t get much lower.”

One does wonder… Here’s a much-venerated man with, you figure, oodles of income. Why do it? Why be so greedy as to risk ruining your life — when you don’t need the money?