Thursday, April 30, 2009
Nineteen Days Until My Release From Taft Federal Prison Camp
Today I read an article from a business magazine that described the infamous fraud triangle. That concept has been discussed widely in business circles. I wrote about the fraud triangle extensively in my book, Lessons From Prison.
Essentially, the fraud triangle identifies three prongs of a fraudulent decision. The individual, first of all, feels a pressure that clouds his judgment. That pressure represents the first prong. The pressure leads to rationalization, leaving the individual with feelings as to why he is entitled to the perceived outcome of the fraud. Rationalization, then, represents the second prong of the fraud triangle. Finally, the individual is in a position of power or capacity to facilitate the fraud. That power is the third prong.
When an individual has all three prongs in place, and when that individual lacks strong moral character, or when that individual does not live a values-based life, the temptation for fraud sometimes proves too great to resist.
I serve a prison sentence, I realize, because I felt the the pressure. When I switched my career from Bear Stearns to UBS, I incurred significant tax obligations that related to my six figure bonus. Each month I had a duty to perform. If I failed to reach a predefined commission level each month, then I would struggle. I could rationalize that I was entitled to high commissions, as I deluded myself with the mantra of Wall Street. "You earn the money when you sign up the account." On the basis of my having attracted the millions of dollars in assets from a hedge fund, I could rationalize that I was entitled to the commissions it generated.
As a stockbroker, I believed myself entitled, and I had the capacity to allow a fraud to continue. I succumbed to the fraud triangle, and I serve a prison term for that character flaw. It's a decision I expect to build a career in preventing others from making
