Monday, February 23, 2009
Eighty-Five Days Until My Release From Taft Federal Prison Camp
This past Friday, the USA Today published an article indicating that UBS, my former employer, agreed to pay a financial settlement of $780 million to the U.S. government. The banking and brokerage giant had been complicitous in helping clients evade federal taxes. Rather than face the much more severe sanctions of criminal charges, the global financial house paid up.
I don’t expect the financial settlement will do much to strengthen the image of banking secrecy that the Swiss have tried to cultivate for more than a century. Other prisoners here at Taft Camp have asked my perspective. I had left Bear Stearns as a stockbroker to build my career at UBS. During my time in prison, I’ve seen both of my former employers go down in disgrace. Whereas they had once enjoyed reputations as pillars of Wall Street, they are now ridiculed as being symbolic of the corruption that caused the economic collapse of our country.
Like millions of Americans, I have seen my financial assets plummet over the past year. Besides losing the financial stability I had worked hard to build, my indiscretions and lack of good judgment as a stockbroker resulted in my loss of freedom. I have had time to contemplate the decisions that led to my imprisonment. As I read about the downfall of Bear Stearns and UBS, I felt some empathy for the people who built careers working in financial services. I understood the dilemmas with which they constantly struggled. Many of them were now out of work, and many would face challenges from the criminal justice system.
As the settlement between UBS and the federal government showed, a dichotomy existed between the published ethical standards and the corporate culture that existed on Wall Street with massive financial settlements when the government alleged wrongdoing. Many of the individual executives would lose their freedom as well as their financial stability, however, as a consequence of decisions they made to further their career.
I’ve gone through the gauntlet. I was a young stockbroker who was instrumental in the management and oversight of more than $100 million in assets. One of my hedge fund accounts morphed into a Ponzi scheme. The appropriate ethical decision would have been to report the fraud as soon as we suspected wrongdoing. Instead, I joined the team of financial professionals in ignoring the published ethical standards of our firm. The personal compensation of my supervisor, the corporate counsel, and other senior executives within the firm were linked to the six-figure commissions we generated; making values-based decisions did not bring the short-term bonuses to which we had grown addicted.
I regret having lost my way, and I know that I have no one to blame but myself. I may have worked in an incestuous environment, where everyone was out to enrich himself, but I alone am responsible for having made decisions that brought disgrace upon my family, my profession, and my reputation. I hope to atone, and one way I can work toward that is by telling my story to others who are working in corporate environments. I can humanize the importance of making value-based decisions by describing the consequences that frequently follow a compromise of ethical judgments.
Justin Paperny
