The Ethical Barometer

In his statement to the President’s Council on Bioethics in 2002 on the issue of stem-cell research using embryos:

“We want to bequeath to them [referring to our children] a world, a moral universe, in which they ought to live. And . . . we may be jeopardizing the moral quality of that universe, the humanity of that universe, by cavalierly breaking moral rules that we have observed for generations in order that people like me can walk.”

One of the troublesome trends of our era is the belief that we have reached a level of morality superior to that of all those who came before us. With little reflection on consequences of changes in laws and policies. presently or in the future, moral superiority and emotion pull the pendulum to actions that close off morality in the future. The pendulum pulls reason and reflection to their demise. State legislators have begun to conclude (and, in some cases, cheer) that there is no longer a need preserve the life of an infant who has survived an attempted abortion. Censorship of books, individuals, thoughts, videos, films, speeches, and prayers preclude dissent and disagreement.Dissent and disagreement are the life blood of democracy. There was a time, before our morally superior era, when we condemned censorship as antithetical to a free society. Thank goodness we, the morally superior, have returned to the wisdom of censorship.

Howard Schilit, a forensic accounting expert, has provided us with some valuable information. Uber and Lyft have some interesting notions about accounting. Both ride-share services offer discounts, coupons, incentives, freebies, and all manner of lures to get folks into an Uber or Lyft. Now, when you purchase a t-shirt from Vineyard Vines and they have e-mailed you a “Friends and Family 25% off” code, Vineyard Vines does not report a sale of $40 (the price of your t-shirt). It reports $30 in sales (because you did not pay the extra $10. Uber and Lyft, on the other hand, have a far different approach. If you have a 25% off coupon for a “ride share,” and you have a $40 fee from Chicago O’Hare to the Fairmont, you pay $30. Uber and Lyft, however, book the $40 as revenue/sales and take the $10 as a marketing expense.

The result is that Uber’s and Lyft’s sales are numbers are inflated materially, from 12-16%. Uber says its treatment is justified because its drivers are its customers. Those people riding in the cars of its customers (called drivers) are simply “end-users.” per Uber’s 10Q. Attention all folks seeking to hold Uber or Lyft liable for client injuries courtesy of Uber customer/driver. Uber has embraced those customers and perhaps should absorb liability.

Sales numbers should reflect the actual strength of growth or its decline. Marketing expenses are the out-of-pocket stuff, not the self-generated coupons posted on the Internet.Always read the fine print. Next time you are in a ride-share situation, ask the driver how Uber or Lyft is reading him as an employee.

Noting that, “The parents were coming in risqué clothes. They were coming in a manner that was not presentable for the educational setting.” Principal Carlotta Outley Brown of James Madison High School, Houston, Texas.

So, the principal passed a dress code for parents. Among the items banned?

Pajamas
Shower caps
Hair rollers
Sagging pants
Low-rider shorts
Torn jeans that show too much skin
Negligees

The reaction of the school district: The code was not passed or approved properly. The reaction of the ACLU? The code is a violation of Title IX, which prohibits discrimination in education and that the code could result in a loss of federal funds.

The reaction of the Barometer? Leaving the hair curlers and negligees behind doesn’t seem to be too high of a bar. Sad that we have to have codes to stop behaviors that were once unnecessary because we had societal norms. These are issues that are impossible to regulate because of legalities. These are could behaviors vs. should questions. How can children respect the educators and the institution of education when their parents do not? There was a time when no parent would enter a school sans suit, dress, and respect for those who strive to teach.

Mossimo Giannulli, husband of Lori Laughlin, wrote the following in a e-mail to a cooperating witness in Operation Varsity Blue (the college admission cheating investigation), and copied Ms. Loughlin on the e-mail:

“We just met with (our older daughter’s) college counselor this am. I’d like to maybe sit with you after your session with the girls as I have some concerns and want to fully understand the game plan and make sure we have a roadmap for success as it relates to (our daughter) and getting her into a school other than ASU!”

Excuse me? As an emeritus professor of ASU, a fine school, the Barometer is duly insulted.

However, the Barometer believes that if Lori and Mossimo’s daughter ever gets her test scores and GPAs up to ASU’s standards, we would be happy to consider her for admission now that USC has not panned out, if her parents agree to retract this insult — no cash or photo alterations required over here in our neck of the woods. We also keep a fairly tight rein on our coaches. And we have a couple of terrific ethics courses for her. We would even allow Lori and Mossimo to audit them, no charge once again.

A March 2019 survey by the executive search firm indicates that 81% of parents care about their children getting into a top-tier school, meaning that only 19% of their children do. The kids probably have this one right — the quality of education and the college experience could be better at a smaller, incognito school. Why? You actually have faculty teaching you. You have a place where everybody knows your name, and when they know your name, they actually follow what’s happening to you. In short, the support, encouragement, and friendships may be better and perhaps offer the key to a successful transition from the nest to life.

Cook County State’s Attorney, Kim Foxx, indicated that she had recused herself from the Jussie Smollett debacle because she had communicated with outsiders (representatives for Smollett) who were concerned about Mr. Smollett’s fate. When text messages emerged that indicated her continued involvement in the case, including concerns about the number and level of charges, her office explained that when Ms. Foxx said recusal she did not mean it in the “legal” sense, she meant it in the “colloquial.”

“Colloquial” means not formal or literary. Funny, but “recused” is a legal term, not a colloquial one. Huck Finn did not have a term for “recused.” “Recusal” is used by lawyers, judges, and board members, and it means that you step out of the matter: no more participating in discussions, decisions, or voting. Period.

In the field of ethics, we would call Ms. Foxx an amoral technician. Amoral technicians find interpretations, ways to do what they want to do without technically violating the law. However, to the outside world, their conduct produces head-shaking, eye-rolling, and exasperation. Colloquially speaking, it is weasel behavior.

UPDATE: April Perry, the chief ethics officer, and Mark Rotert, the chief of the Conviction Integrity Unit, for the Cook County State Attorney’s office, have submitted their resignations. Meanwhile, the Cook County Inspector General continues an investigation into the office’s sudden dismissal of all charges against Mr. Smollett.

In the Barometer’s experience, it is always a bad sign when your ethical officer resigns.

A friend of Lori Laughlin and her designer husband told ET (Entertainment Tonight, not the Spielberg character (the Barometer checked because, well, with this story being so over the top that it is hard to believe 90% of it all, so ET could well be an ace Hollywood celebrity scoop reporter)), “[Lori and her husband] claim they were under the impression they might be breaking rules, but not laws.They feel they were manipulated by those involved and are planning that as part of their defense.” Okay, so, if the Barometer has this straight, a grifter in a jogging suit with coaching connections convinced you that photoshopping your daughter’s picture on another athlete’s body and getting her admitted to USC as a crew athlete when she cannot row, row, row her boat was not a problem? What could possibly go wrong with this scheme?

Ignorance of the law is not a defense. Lack of intent is, however, a defense, and saying that you knew you were breaking rules may just provide prosecutors with that element. One never knows if the spokespersons have things straight, but if this one did: Find a new spokesperson.

One piece of additional piece of advice: When you are in a hole, stop digging.

The charges against Ms. Loughlin and her husband carry the additional issues of the money and laundering and then the tax deduction for the charity that got the funds (the grifter’s charity). The guilty pleas other parents took may not be the best option for this couple, but in criminal cases, contrition plays a role in everything from juror perception to sentences. One senses that the Hallmark nactress’s heart has not yet heard the call.

That rate is double the average free-riders in other cities and well above the 3.4% of subway riders who do not pay. Between the subway and bus free-riders, New York City loses $225 million in revenue per year. A reporter riding an NYC bus saw many riders, from a construction worker to an elderly woman with a walker bypass the fare box with the bus driver simply pressing the F5 button on the bus dashboard — F5 is for recording fare evaders.

So, not only do we know it happens, we know exactly how much is being lost. The reasons bus riders do not pay:

1. Do not have the right change.
2. They never get in trouble.
3. Constant fare increases anger them.
4. They do not want to pay for using a system that is unreliable.
5. Trying to manage children.
6. Could not get into my purse in time.
7. Cannot afford the fares.
8. Trying to get to work on time.
9. Bus drivers grow weary of confrontations and they slow them down.
10. Bus drivers are fearful — they do not know who is carrying a knife or a gun, and bus drivers have been killed or injured.

Do the riders feel guilt? Absolutely not! They hate the system.

By looking around the country and world, we can see how cities manage low evasion rates. Paris has an 11% rate, but it has 1,200 staff members on the issue and they hand out one million fines per year to evaders. London has a 1.5% evasion rate largely because the fine is $1,300 per violation. Washington DC has a 14% evader rate, but the city council recently reduced the fine for evasion for fear of harming the poor. Some experts say police officers being on the bus are a deterrent even if they never hand out a citation. Folks just behave better when the police are around.

There are the basics of economics at work here. The free-riders make it more expensive for those who do pay until the cost becomes too high, and then the bus service ends. The tragedy of the commons occurs when the free-riders destroy the commons through rationalizations and trying to artificially remedy economic disparity. if everyone pays, everyone pays less.

One guesses that successful burglars could list all the weak point in home security systems and advise accordingly. However, there is also the possibility that they might withhold some or employe false premises to convince homeowners to take or not take steps that would leave them vulnerable. You might never know.

Be that as it may, the consulting firm, without admitting any wrongdoing, that was fined for violating federal bankruptcy conflicts disclosure standards, has been asked to develop new rules that could be adopted universally by the bankruptcy courts. The problem is that McKinsey, without any admission of failure to disclose or recognition of the perceptions of a conflict its standards caused, is now drafting a the new bankruptcy court rules. McKinsey sees conflicts differently from the rest of us; its approach will be sophisticated, tolerant, and detailed. However, one can be assured that some conflicts will be able to slip through the cracks.

The Barometer could write the rule. If you are working with the trustee in a bankruptcy case, you, as a consultant, must disclose all relationships (including those of your subsidiaries, pension plans, etc.) with the debtor, the creditor, the judge, the lawyers for all of these. Relationships include contracts, investments, consulting, board memberships, joint ventures, joint sponsorships, and let your imaginations run wild for more. When in doubt, disclose. In fact, that last part is a conflicts standard many companies, board members, and government officials follow, and has served them well.

All done outside of probate, financial adviser Lawrence J. Mieras, Jr. received $500,000 from two annuities owned by his deceased client, Addie Belle Jones. The two variable annuities paid Mr. Mieras the sums outside of her probate. Not bad work if you can get it. A state investigator concluded that Mr. Mieras acted unethically and violated Maryland’s insurance law with the payments. An arbitration panel found that Mr. Mieras firm not only failed to supervise him adequately but also was not licensed properly for conducting operations in the state.

Addie Belle had left the funds to Mr. Mieras in her 2014 will. Just before she died she signed documents that permitted him to receive it independent of her estate.

Interestingly, Finra (the private financial oversight organization) took the time to take Mr. Mieras and his firm to task with words but then declined to take any disciplinary action, noting that the matters were regulatory issues to be handled by the state. However, the state disagreed with the investigator’s findings, concluding there had been no legal or regulatory violations. The investigator was then fired because his agency was “going in a different direction.”

So, to sum things up: Mr. Mieras walks away in good standing, with $500,000 in cash, and he and his firm are still operating in Maryland. The Maryland Insurance Administration stands by its decision, noting that no laws were violated.

They may be correct about the laws, but the ethical issues are another matter. Professions should be self-policing, but they are, from CPAs to lawyers to financial advisers to physicians, notoriously lacking backbone. However, it looks as if they have fallen between the Finra and Maryland Insurance Administration cracks. Taking toes right up to the line and a half a mil ends up in the hands of a widow’s financial adviser. Not exactly a positive comment on the roles and actions of financial advisers. These kinds of actions lead to the types of regulations about which the members of the profession will weep, wail, and gnash their teeth. They will groan about the heavy-handed regulators when they themselves brought on the legal and regulatory controls because they could not self-police.

As an author, the Barometer can appreciate how difficult it is to write a book, even more difficult to work for sales. However, the mayor of Baltimore, Catherine Pugh, has streamlined the whole process. Her Honor has a series of books, known as the Healthy Holly series (children’s books), that help children learn about healthy living. There are fewer words in children’s books, so that part of authorship was streamlined from the writing angle. Also, the books are self-published, leaving out that pesky step of editors, reviews, distribution, etc. No need for all that rigmarole, Her Honor also found bulk purchasers for her books. The former state senator served on a number of nonprofit boards, and the organizations would purchase large numbers of Healthy Holly books. The University of Maryland Medical System was one of of the book purchasers ($500,000 for 100,000 books), and the then-Senator Pugh went on to sponsor legislation that would have benefited the System (had it passed). In fairness to Mayor Pugh, there were 9 board members of the System that had contracts with the System. However, when Mayor Pugh took office (and let us not forget that Mayor Pugh was elected to replace the former Baltimore mayor who was convicted of embezzlement in 2010) contracts with the city were closely timed to book sales.Kaiser Permanente purchased $100,000 in books, and then received a $48 million contract from the city. Whoa, Nellie, that Baltimore/Maryland area is treacherous ethical territory.

Mayor Pugh is on an extended leave of absence (pneumonia). However, the entire city council has written to Her Honor asking that she resign because of the book deals. Mayor Pugh did issue this bizarre apology: “I sincerely want to say that I apologize that I have done something to upset the people of Baltimore. I never intended to do anything that could not stand up to scrutiny.”

The Barometer critiques apologies — this one should read, “I sincerely want to say that I apologize to the people of Baltimore for what I have done. I should have been more careful in thinking through my actions under a standard of strict scrutiny.”

Meanwhile, crime is up in Baltimore, along with police resignations, and the Feds have not yet taken a hard look at the book deals. “Extended leave of absence” may be optimistic and charitable language for the fate that awaits the mayor.

Update — Catherine Pugh resigned on May 2, 2019. To her credit she said, “I am sorry for the harm that I have caused to the image of Baltimore and the credibility of the office of Mayer. Baltimore deserves a mayor who can move our great city forward.” Good decision.

Gordon Caplan, former partner (and co-chair) at the Wilkie Farr & Gallagher law firm said in disclosing his plannedplea, “the remorse and shame that I feel is more than I can convey. I apologize not only to my family, friends, colleagues and the legal bar, but also to students everywhere who have been accepted to college through their own hard work.”

Taped phone conversations between Mr. Caplan and Rick Singer, the jogging-suited mastermind behind the national web of paid-for college admissions (and who has also entered a guilty plea), were devastating for any possible defense. Mr. Singer told Mr. Caplan, in exchange for $75,000, to have his daughter “be stupid” in a psychological evaluation in order to qualify for a learning disability that meant she could take the college entrance exam over two days at a testing center in California. Mr. Singer had a test administrator at that center on his pay roll who would then fix the test with the right answers. Mr. Singer told Mr. Caplan, “She will think that she’s really super smart, and she got lucky on a test, Does that make sense?” Mr. Caplan responded, “That does.” Well, it seemed to make sense at the time. In hindsight, it is difficult to believe that Mr. Caplan was American Lawyer’s 2018 “Dealmaker of the Year.” He missed a few loopholes on this deal for his daughter.

One nit, the Barometer has is that Mr. Caplan also said in his statements on his planned plea and apology that his daughter knew nothing about the scheme. As the Barometer reads the taped phone conversations in the criminal complaint, the then-high school junior had to participate at some level in the psychological evaluation. She may not have known about the $75,000, but she was part of using a system with testing exceptions that has left mile-wide gaps for gaming.

This is one for the book on the human mind having no limitations on creativity when it comes to desperation. Harvard is investigating its fencing coach, Peter Brand’s, sale of his home in Needham, Massachusetts to Jie Zhao, a wealthy businessman from Maryland, for over $400,000 above the home’s appraised value of $549,300. The Needham assessor described the home as vintage 1960s in “bad shape,” and that the sale for that amount made no sense.

Ah, but the assessor did not understand that shortly after the sale took place, Mr. Zhao’s youngest son (in high school at the time) was admitted to Harvard and, for a time, was on the fencing team. Mr. Zhao, not planning on relocating from Maryland to Needham, sold the house one year later, for $665,000. So, speculating here, Mr. Zhao got his son into Harvard and was able to write off a bribe paid to a coach as a capital loss.

Harvard has indicated that it does not believe the incident was related to Operation Varsity Blue, the sting operation that has nailed coaches and parents across the fruited plain. Nah, of course not.

The Barometer would like an answer to this question: How exactly do these conversations for these schemes go? “Say, coach, I am thinking of relocating to the suburb of Needham, MA. Know any good housing opportunities?” Coach, “Have I got a place for you! And I can get it for you for just $400,000 above appraised value.”

As the topper, following their fortuitous sale to the Maryland businessman with wanderlust, Coach Brand and his wife purchased a condominium for $1.3 million, just about $300,000 above the asking price. These folks were some awfully shrewd deal makers when it comes to real estate transactions.

Now, to add to the circumstantial pile of transactions, Mr. Zhao previously made a $1 million donation to the National Fencing Foundation. Who knew there was such a charity? The next year, Mr. Zhao’s oldest son was admitted to Harvard, as a fencer. When the son enrolled in Harvard, the National Fencing Foundation made a $100,000 donation to a private foundation started by Coach Brand and his wife. The donation was only one of two donations that the Brand private foundation received before it was dissolved within two years. Speculating here again. Before the Brands realized the 1960s home they were sitting on was a gold mine, they found the world of charity and all of its tax deductible/exemption glories. Oh, what a tangled web and all that.

Harvard issued a statement saying that there was a great deal it did not know about the allegations. No kidding!

An astonishing settlement by Duke University with the federal government received minimal coverage.Duke agreed to pay $112.5 million to settle claims that it knowingly submitted false data in federal grant work that brought in $200 million to the university for research. The false data, which resulted in the retraction of 17 of 38 research articles on the grant research, came to light as a result of a whistleblower, former Duke biologist, Joseph Thomas. Mr. Thomas will receive 30% of the #112.5 million, as provided under the False Claims Act and his qui tam claim. Mr. Thomas was a former lab analyst who reported the false data submitted to obtain and retain grants from the National Institutes of Health and the EPA. The false data were submitted over a seven-year period.

Erin Potts-Kant was the pulmonary researcher involved, and the Duke internal investigation into the false data issue began when she was arrested for embezzling $15,000 from Duke. Ms. Potts-Kant entered a guilty plea and has repaid the funds to Duke.

Interestingly, when Mr. Thomas raised the issue of the false data to the federal government, it declined to be involved in the suit. Mr. Thomas and his lawyers carried the suit through on their own with the Feds stepping in only at the last minute on settlement negotiations. There were over 300 motions and other court filings in the case, which began in 2013.

You better believe that universities around the country are now taking a hard look at federally funded research grants for irregularities. Duke has established a committee to develop new recommendations for research integrity and grant administration and oversight. The panel’s work is due June 30. Duke’s leadership is going about reform all wrong.

Duke might begin by looking at its culture of research. As Ms. Potts-Kant explained in her deposition, “Everyone needed a grant. Everyone needed money,” and that she falsified data “because researchers would be more happy if they could get a grant.” She also noted that the principal investigators on the research projects were “very vocal” about the pressure they felt to get and keep grants. One researcher explained in testimony before Duke’s Ad Hoc Investigation Committee, “if she (Potts-Kant) keeps brining good data, we get funded, she keeps her job, she gets a raise, everybody’s happy.”

Culture trumps integrity, ethics, and even federal regulations. Start there, not with new platitudes on research integrity.