When you’re a student reporter at the University of Pennsylvania, and when the subject is the Wharton School’s scads of insider traders, you have to do a lot of digging. There’s a history here, and it’s pretty impressive.
Another reporter goes farther back:
[L]ast week’s conviction of a prominent Wharton MBA alum [was] the biggest insider trading case since the 1989 conviction of junk bond king Michael Miliken, another Wharton grad.
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UD thanks JND.
… which is producing the most criminalized graduating classes of MBAs in the country by far.
Unless the other schools’ grads are simply better at not getting caught.
If you’re going to take in that many fraudsters, you should at least teach them how to evade capture.
Already back in ’09, Jon Stewart was seriously discouraged about the nation’s anti-MBA-grad defense capability. The MBA brigade, equipped by Harvard, Columbia, Wharton, Stanford, and Northwestern with the latest weaponry, launches wave after wave of attacks, year after year, against American suckers like you and me who haven’t learned high-level market-craft. There’s really nothing we can do.
It’s gotten so bad lately, with all the MBA insider traders, that some of their degree-granting institutions have begun to issue public statements.
“These are serious allegations, which if proved true are of great concern to me as a teacher, as a dean, and as someone who is dedicated to restoring people’s trust in business leaders,” said [the dean of the Harvard business school] “We try to do all we can at HBS to convey the importance of integrity and accountability to our students and will keep striving to do more.”
Yadda yadda. He’s talking about yet another insider trader his school trained.
[D]uring his first year at Harvard, [Samir] Barai would have taken the required course ”Decision Making and Ethical Values,” that had been put into HBS’ curriculum eight years earlier. The module offered students an ethical framework to use as a guide for making decisions and using sound judgment… The lessons from that class, including several case studies on ethics, must have eluded him.
One indignant B-school professor, reflecting on all the criminal cases, complains,”People assume that you’re somehow flawed if you go to business school.”
One thing Harvard’s new ethics-oriented dean might do is ask himself what his own professors are modeling for their students. Harvard’s business school, after all, spawned the notorious Monitor Group.
… is a tag UD‘s used so much on this blog that she’s decided to make it a Category.
She’s about to use it again.
She’s always warning universities about their business school faculty. Her experience of this group, as she’s come to know it from keeping this her blog, convinces her that though to be sure most of its members are decent and upright, a disproportionate number of them (disproportionate to other faculty, that is) gets in serious financial and legal trouble. UD’s followed any number of stories of B-school professors – and B-school alumni – whose side or primary businesses become quite the embarrassment for their universities.
Take Wharton, at the University of Pennsylvania. One of its most beloved grads, Raj Rajarantnam, has just been arrested in “a $20 million insider trading scheme by federal prosecutors.” He and five others are charged with “using insider information in 2008 and 2009 to trade in shares of companies including Google Inc., Polycom Inc., Hilton Hotels Corp. and Advanced Micro Devices Inc., according the complaints filed in Manhattan federal court today.”
It’s awkward for U Penn. Not only do various fellowships and scholarships have his name on them; Wharton’s admiration of him in alumni publications now scans a bit ironic:
… Managing General Partner of the Galleon Group, Mr. Rajaratnam notes that Wharton was “an important credential” when he founded the company more than a decade ago. He also recognizes the School for helping him to land his first job in financial services, and for the skills he has used to succeed since then.
His experiences at Wharton continue to shape his life—in particular, through the relationships he formed. Having recently celebrated his 25th reunion, he says, “my classmates are among my closest friends and colleagues. A day doesn’t go by that I don’t interact with Wharton alumni.”
For Mr. Rajaratnam, he wished to give something back to “the institution that was so important to me personally and professionally.” In so doing, he is helping to create a community on campus that reflects the global business environment Wharton students are trained to lead.
To be sure, Wharton gave him a credential… Which must have made it easier to do what he is accused of having done. And as for the global business environment, if the charges are true, he has certainly done a number on it.
… following all the different dirt being kicked up in the Philip Esformes trial (earlier posts about the pious Esformes family here). Paying off all of Miami to help him run his rotten to the core nursing homes! Telling one of his comrades in crime to kill himself so as not to have to testify against him! Hiding frail baffled old people when his paid-off tipsters told him an inspection was about to happen! Giving Penn’s basketball coach three hundred thousand dollars to lie and say Esformes Jr was so talented at the game he should be admitted to the school!
Jerome Allen, while awaiting sentencing for taking bribes, took the stand in the Esformes trial yesterday.
Allen said that the son was not qualified to play varsity basketball at Penn. He said he lied to the prestigious university about the son’s qualifications because he had been bribed by Esformes during a series of trips to Miami in 2013. He testified that the father gave him $10,000 in cash each time, the money tucked into a brown envelope stuffed inside a plastic bag, during their meetings in the lobby of the Fontainebleau Hotel… In total, Esformes paid Allen about $75,000 in cash bribes and an additional $220,000 in wire transfers into the coach’s bank account between 2013 and 2015.
Esformes’ lawyer said
Esformes’ son has maintained a nearly 3.6 GPA at UPenn, made the Dean’s List at Penn and plans to graduate from the Wharton School with the class of 2019.
But he failed to mention who Esformes has been paying to take the kid’s courses.
Some stories write themselves.
Actually, what you’ve probably learned from reading UD all these years is that almost all stories write themselves, because human beings are limited creatures and the number of plots (conundrums) they can create for themselves is therefore also strictly limited.
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The profoundly pious get rich quick crook who finally gets picked up by the police and carted away to make room for the next profoundly etc. is such an old story.
Specifically, twas ever thus: Credulous grasping god-fearing dolts find a charismatic spiritual/financial advisor who writes best-sellers with titles like The Gospel of Good Success and Entrepreneurial Faith.
The particular guy in question today even has a degree from (wait for it) the Wharton School! (Feast your eyes on America’s Richest Source of Financial Criminals.) He allegedly sold
$3.4 million worth of pre-revolutionary Chinese bonds, which were in default, to the “vulnerable and elderly.”
Southern Methodist U., one of the most pious and dirtiest universities around, had the dude on their board of trustees until recently. They dodged a bullet on that one. Maybe they knew something before the feds did — though, in fairness, they could have told the world about it and maybe spared the vulnerable and elderly their full measure of exploitation.
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But anyway. Another high-toned man of god will be stepping up to the podium soon. It’s a never-ending story.
Will the rise of Trump — suddenly the most famous Penn alumnus on the planet — actually bring the school down?
Penn has apparently always felt inferior relative to other Ivies because its alumni are very underrepresented among American presidents.
But hey – Penn might be on the verge of hitting it big!
And that should be a source of pride. But the Penn alum in question —
“Who would mock a disability? I would never. I’m a smart person. I went to the Wharton School of Finance.”
—
is both an embarrassment and a serious threat to the brand. Some on campus propose that Penn somehow repudiate the person in question – rather in the way Temple repudiated Cosby…
Well, it doesn’t become a real problem unless he wins.
Fraternities create drug distribution gangs; the Wharton School creates insider trader gangs. University athletic teams create rape-gangs and theft-gangs. At the very highest levels, your team of trustees creates international news.
Campuses are places where you connect with people like yourself – people who have similar strong interests and ambitions. Of course in most cases those ambitions aren’t criminal. But if they are, the isolated secret-brotherhood hothouse intensity of certain campus groups, the general public’s romanticization of college and graduate students as inquiring innocents, and the often rabid winner-take-all ideology of some of these associations (the athletes’ cafeteria at the University of Oregon has EAT YOUR ENEMIES in big illuminated letters on the wall), will make it temptingly easy to criminalize your association, if that’s what you’d like to do.
Not everyone on your wrestling team – to take the latest example, from the University of Minnesota – will want to take part in your Xanax distribution conspiracy. But the beauty of things like wrestling teams is that, once inducted into the brotherhood, it’s unlikely even non-participants will squeal.
My point is that when you’ve already got an organized team, you make much easier the transition to organized crime. There’s a lot of disorganized drug selling and buying at colleges, but it’s always going to be small time, and it’s going to be vulnerable to detection (see Wesleyan University). Fraternity drug rings only seem to get infiltrated after they’ve had a chance to grow enormously, as at San Diego State. The Minnesota gang seems to have had a chance to grow similarly huge — it handles spectacular quantities of Xanax.
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UD thanks two readers
for telling her about
the Gophers and the Xanax.
… here, on a Wharton School blog. University Diaries follows lots of campus stories involving pharma-compromised professors and conflict of interest, and it’s easy to get lost in all the cases. This article provides the big picture.
“I have friends who have smart sons with great marks, great boards, great everything and they can’t get into Harvard,” Trump said. “We don’t know a thing about this guy. There are a lot of questions that are unanswered about our president.”
Well at least – thanks to Mary Trump’s forthcoming book – we now know how Donald Trump got into an Ivy League school.
As a high school student in Queens, Ms. Trump writes, Donald Trump paid someone to take a precollegiate test, the SAT, on his behalf. The high score the proxy earned for him, Ms. Trump adds, helped the young Mr. Trump to later gain admittance as an undergraduate to the University of Pennsylvania’s prestigious Wharton business school.
A couple of things will follow from this Least Surprising Revelation of the Decade:
Uncle Don will tweet that Mary is a fucking piece of shit cunt whore piece of shit. He will then have Kayleigh McEnany announce that “the president was unable to take the SAT due to a disabling bone spur.”
U Penn will take a good hard look at the accolades it has bestowed upon its highest profile grad (“[Trump was] appointed to Wharton’s Board of Overseers in 1987, and the following year appeared in a video promoting the business school. Trump received an award from Wharton in the fall of 2014, just eight months before announcing his candidacy, and the most favorable recent mention of him as an alum comes in Wharton’s list of “125 Influential People and Ideas” from 2012.”). It will cross itself with relief and self-congratulation that it never gave him an honorary degree (Lehigh University however…), and it will announce that it’s opening an investigation into Trump’s degree. With an eye toward rescinding it. I mean, Varsity Blues is one thing…
Oh, and Jared… You’re up…
Oh! And in about a half hour, the Lincoln Project will release a new thigh-slapper.
All good writers know never to use exclamation marks! I mean, almost never!
But UD has stumbled over a piece in the U Penn newspaper which demands exclamation marks. She will now quote some of the piece and insert the quotation marks its content demands.
In the wake of the admissions bribery scandal! involving former Penn men’s basketball star and coach Jerome Allen, Penn Dean of Admissions Eric Furda is saying that safeguards need to be put in place in both the athletics and admissions departments.
On Oct. 5, Allen, who is currently an assistant coach for the Boston Celtics, pleaded guilty to bribery in connection to the recruitment of a student athlete – now Wharton senior Morris Esformes – to gain him admission to the University. Allen had been implicated in an indictment of businessman Philip Esformes, who had allegedly defrauded the federal government of $1 billion!!! and had used some of that money to bribe Allen and help Morris get into Penn.
… Furda suggested new professional development and training for staffers in both departments to prevent future incidents of bribery!!!!
[So a guy comes at you with tens of thousands of dollars, private luxury jet trips on his dime, and anything else you want, and says in exchange for this I want my kid who can’t play competitive basketball to get a basketball scholarship and thereby admission to your school. Slowly, now. Think it through. Is this RIGHT or WRONG?]
… [Morris] Esformes was accepted to Penn in 2015 as a member of Allen’s final recruiting class before Allen was replaced by current coach Steve Donahue. Esformes never played or appeared !!!!! on the men’s basketball team’s roster.
… “the life blood of this and almost all other nations,” UD always refers her readers to its explanatory urtext, The Great Gatsby. Gatsby is the great American novel in part because it captures better than any other literary work the entirely engineered, shabby dreamweaver thing that is the modern self-made – or rather made-self – American.
If you cry for poor James Gatz/Jay Gatsby at the end of that novel, dead in his pool, spare a tear for Melanija Knavs/Melania Knauss/Melania Trump/Melania whatever last name she takes after Trump divorces her… because it’s not really her fault that she read a plagiarized speech written for her (she’s not well-educated — like Gatsby, who advertises himself as “an Oxford man” but who had only a glancing acquaintance with that school, Melania claims to have graduated from college when she did not) instead of an original speech written for her. F. Scott Fitzgerald already gave us her shiny bogus world, which she had every reason to believe was shiny and bogus all the way down.
Is there a scammy, crime-tinted, er, aspect to that world? Has her husband, like Gatsby, been a little less than legit in his dealings? Well he didn’t graduate from Wharton for nothing and it’s a big bad dirty world out there, etc., etc. etc. but the main thing is that it all looks good and no one’s floating in a pool. Keep the aspidistra flying. Brazen it out.
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Yes of course there’s an ugly under the pretty. Slave Michelle provides the labor; Master Melania and her Manipulators exploit it. But after all “the Obamas don’t really belong in the White House, i.e., they didn’t legitimately achieve their current status.”
Not everybody, in other words, gets to play the Gatsby game – like say if you were really born in Kenya.
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Has damage been done to Trump’s campaign, as some observers suggest?
No. Trump’s followers are people who do not mind that their candidate correctly characterizes them as “the poorly educated.” Melania would have done damage had she attempted to disentangle, in the minds of her listeners, Slovenia, Slovakia, Slavonia, Slobodan Milošević, and Lower Slobbovia.
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UD thanks Dave.
Why do you think Beware the B-School Boys is one of this blog’s perennially popular categories? If the statement in my headline is true, or roughly true, what do you think places like Wharton, which not only produced Donald Trump and Raj Rajatnaram and Steven Cohen and many of their, er, close associates, but boasts a long glorious history of producing scads of America’s most spectacular thieves, have been teaching people all these years? I mean, not the specific content of courses… I mean the gestalt.
And what a remarkable fact about American culture, that we have these gilded b-schools specializing in predatory capitalism. And the highest-profile b-school of them all produced not only the founder of Trump University, but – possibly – the next president of the United States.
… going, plus his recent New Republic piece is a more than worthy addition to one of UD‘s most popular categories, Beware the B-School Boys. Gets a bit preachy at the end (“When a person’s worth is determined only by money, only by success as it is and can be monetized, when one has no sense of being without the BMW, the Rolex, the Armani suits, the yacht, etc, the moral flabbiness emerges. Indeed, it engulfs entire organizations and perhaps even entire societies.”), but one does tend to zoom out in one’s final paragraph…
[The idea that] the only duty of a corporation is return on investment [has now been] drilled into generations of business school graduates… [Further,] evidence suggests that not only are business students more impaired in their moral judgments in a broader sense than are those in other majors and professional schools, but that business schools themselves may be responsible.
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SCHOOL FOR SCANDAL: UD has long argued that this would be a wonderful new motto for Wharton.
