White-collar crime does pay — up to $5,000 a speech
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To join The Pros & The Cons, a speakers’ bureau for white-collar criminals, one first must be convicted of embezzling money, committing securities fraud, or simply using company checks to pay off a personal credit card. Members of this exclusive club find that financial crime does pay—up to $5,000 a speech. They give talks at companies, colleges and even churches, recounting their stories for anyone who will listen.
This summer, MarketWatch spoke to six white-collar criminals who work with the bureau, which arranges for them to speak about fraud prevention—on the condition that they own up to every rotten thing they’ve done. Over the last two decades, founder Gary Zeune, 65, has amassed a roster of more than a dozen convicts-turned-demotivational speakers, including a few involved in some of the country’s most widely publicized fraud cases.
In some cases, it took these folks just a few minutes a day to ruin their own lives and those of their co-workers. “It takes a lot of people to build an organization, and all it takes is one bad decision to take the whole place down,” Zeune says. But it also only takes one person to blow the whistle. Roughly 42% of white collar crime is detected because of a whistleblower; the rest is discovered by accident, internal and external audits, and management review, according to the Association of Certified Fraud Examiners. (The Pros & The Cons also represents some whistleblowers and investigators.)
Some of the felons say they committed their crimes because they had financial worries or because they were following orders. Other say they were people-pleasers trying to help out family members or helping themselves maintain the lifestyle to which they had become accustomed. One faced the courage to do time after watching Martha Stewart on television, looking happy and successful after her own stint in prison.
Whatever their reasons, they now share a similar message: It could happen to you. Anyone can succumb to the temptation to commit fraud—which is why, the ex-cons say, they want to scare people straight.
Fraud numbers are dropping
Zeune’s clients are hitting the stump at a time when white-collar crime is on the wane, at least by some measures. White-collar crime prosecutions were down 8% over the previous year, at 4,496 for the first seven months of 2014, and are down 13% over the last 10 years, according to the Transactional Records Access Clearinghouse (TRAC), a research center at Syracuse University.
The Justice Department definition of white-collar crime includes the executive who manipulates the stock market and the doctor who files false Medicaid bills. It doesn’t include the home-office income tax cheat, but the office embezzler fits right in.
The category also doesn’t include the investment and mortgage-lending shenanigans associated with the recent financial crisis—many of which weren't technically illegal.
Some criminologists attribute the drop in prosecutions to the fact that law-enforcement is looking elsewhere. “The FBI turned its guns on national security after 9/11,” says David Burnham, co-director and co-founder of TRAC. The Federal Bureau of Investigation reassigned an estimated 500 of its 2,500 white-collar crime agents to national security, says William Black, white-collar criminologist and associate professor of economics and law University of Missouri-Kansas City.
The FBI didn't disclose actual figures, but acknowledged to MarketWatch that there was a “significant reduction” in resources to address what it calls “complex financial crimes” following 9/11. “We have regained some of those resources but we are still not back to pre-9/11 levels,” says Angela Byers, section chief of the Financial Crimes Section of the FBI’s Criminal Investigative Division. But she adds, “Threats of higher priority tend to be more complex in nature, thus requiring more resources and often longer-term investigations. Although this may not result in quick accomplishments, it often means a more significant impact to high priority threats.”
Few white-collar criminals commit a crime on the scale of Bernie Madoff, who operated a Ponzi scheme that resulted in more than $17 billion in losses—and is now serving a 150-year prison sentence. The typical white-collar criminal is a 46-year-old male, and is sentenced to an average of three years of imprisonment, according to a 2012 study published in the Journal of Money Laundering Control. These criminals aren’t so much mathematical geniuses as petty crooks whose positions that gave them access to money.
Shepherding a flock of black sheep
How did Zeune, an accountant turned CPA-trainer, wind up shepherding this flock of black sheep? While traveling in Washington, D.C. in 1993, Zeune happened across a copy of “Faking It in America” by Joe Domanick, a book about Barry Minkow, who served seven years for operating a Ponzi scheme (and, more recently, was convicted again on unrelated fraud charges). The book inspired Zaune to write his own tome about fraud for CPAs, which eventually led to the idea for the speakers bureau.
For someone who wants to be part of The Pros & The Cons, Zeune has two requirements. First, they have to be out of prison, Zeune says. “Secondly, they have to admit what they did, take responsibility for it and answer any question that anybody puts to them.” He has rejected some of those who have asked to be part of his bureau. “I won’t give anyone a platform to say it wasn’t their fault,” he says. Such contrition does have its limits: When asked if he would ever commit another crime, one member said, “never say never.”
The rewards for those who make it into the fold are relatively modest. Most say their schedule includes numerous unpaid appearances at churches and prisons; one speaker told MarketWatch he has never been paid for a speech. The top fee that any of Zaune’s clients would admit to receiving was $5,000; by comparison, well-known political figures including Sarah Palin, Ben Bernanke and Bill and Hillary Clinton routinely receive fees of $100,000 or more for a single speech.
Zeune says he can sense when someone if someone hasn’t learned from their mistakes. “I grew up on a farm,” he says. “If a cow has just made a patty and you hit it with a stick, it will stink all over again.”
MarketWatch spoke to 6 white-collar felons who say they want to prevent others from making the same mistakes.
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