THE UnivErsiTy of Tampa A Publication of the Center for Ethics s yk E s Coll E g E of B U sin E ss FALL 2017 ENRON AND ANDY FASTOW side of the story. As business students, it was We believe his outreach in speaking to SUSTAINABLE BUSINESS AWARDS ETHICS SPEAKER SERIES OUR PERSPECTIVE a great experience listening to him. We, as a students like us, without receiving any financial collective group of individuals, have the ability compensation for doing so, is his way of helping by Jessica Luce by Jessica Luce by Alaina Butler and Duncan McGarry to ensure the business world functions without atone for his negative actions. Businesses the center On June 7, 2017, the UT Center for Ethics, with its community partner the Sustany Foundation, corruption and fraud, with ethics and morals. As operate every day in the gray area, making it each Fall Ethics Speaker Series: “Rules hosted the 9th Annual Sustainable Business Awards luncheon. Seven businesses were honored versus Principles.” See review, page 5. we listened to Fastow speak, we saw the world individual’s responsibility to make the ethical for their contributions to building successful companies that positively impact the community. The through his eyes. Although he now admits doing choice; therefore, at any moment an executive businesses were recognized for their contributions in building a sustainable economy in Tampa for ethics wrong and feeling great remorse for harming so can choose poorly, beginning the spiral to fraud. Bay, while embracing the “triple bottom line” — advancing the interests of people, planet and Fall Ethics Hot Seat Series: “Ethics many individuals and families, he admitted that Fastow helped us see just how thin this line can profit through innovative practices, products and services. The 2017 winners include Suncoast from the Outside In and Inside Out.” On “The Best Way to Rob a Bank is to Work for One” at the time of his arrest he did not believe he be in business; explaining how he crossed that Federal Credit Union (NFP), Doubletree, INETICO, Jones Potato Farm, Safer Home Services, Atelier Wednesday, Nov. 8, Earnest Broughton, – Joke Punchline had broken any rules. Today, Fastow admits that line helped us to understand what we can do to Architecture and Kenyon Energy. AACSB International, The Association to Advance Collegiate while he may have technically followed the rules prevent making unethical decisions. senior advisor for the Ethics and Schools of Business, was awarded the Jan Roberts Leadership Award. For more information go to and therefore less threatening than of the time, his actions were unethical because Fastow’s presentation brought the UT Compliance Initiative, was on the hot WHITE COLLAR www.ut.edu/centerforethics/sustainablebusinessawards. violent crime. Our laws, police, and they violated the principles upon which the rules community together for a unique experience, seat. He brought a sold-out crowd on CRIME Alaina Butler Duncan McGarry courts prioritize addressing violent were based. giving us the opportunity to hear the Enron story B.S. Management ‘20 B.S. Finance ‘21 an interactive journey that explored the by Robert Marley, Ph.D. crimes, dealing with white collar Fastow’s perspective was explained through from the perspective of somebody at its core. emerging science behind why we act Although the above quote is a crimes more leniently. Perhaps Boom and bust. Enron flourished and inspired a discussion of loopholes. At Enron, he found If put in a position similar to Fastow’s, would one-liner commonly delivered during unsurprisingly, white collar crime many Americans leading up to the year 2000, loopholes in the rules, being proud of his today’s business students behave similarly? the way we do, especially when our stand-up comedy routines, we continues to increase, while violent and then plummeted once the nation discovered creativity at the time. He helped to create the Those who attended his presentation likely have behavior runs contrary to the values we chuckle because it holds several crime has decreased by 30 percent the truth behind the company’s “success.” illusion of billions of dollars in profits for Enron, a better understanding of right and wrong and hold dearest, and what we can do about it. truths. First: knowledge is power. since 1990. What can be done to stem Three leaders of the company — Kenneth Lay, but his motives were corrupt. Thus, instead of how the gray zone can lead to unethical choices. By working for a bank, a would- the rising tide of white collar crime? Inside this Issue: Jeffrey Skilling, and Andrew Fastow — released breaking the rules outright, he subverted the Thus, our moral compass was strengthened be robber acquires knowledge not Robert Marley, Ph.D. An appropriate starting point seems financial statements that created the appearance spirit of the rules to avoid their intent. Fastow due to this event. With our ethical awareness Associate Director, Page 1... available to the public, giving him to be understanding what motivates of a financially successful, innovative company. stated that there will always be a gray area heightened, we are in a better position to learn Center for Ethics • White Collar Crime more opportunity to steal from the individuals to commit white collar These misleading statements were approved in any business decision, between what is the rules of accounting, keeping in mind the bank without holding it up at gunpoint. Second: crime, so that is precisely what this issue seeks • Researchers Find Security Loophole by Enron’s own accounting department and by technically allowed and what is right. He stated principles of right and wrong. Having gained society views white collar crime as non-violent, to provide. for Square e-Payment App its independent auditor. The actions of these that he lacked the moral compass required new perspectives from Fastow’s presentation, three executives lead to the largest corporate to make the right decisions. We came away we hope that UT graduates will work towards Page 2... accounting scandal in America. believing that Fastow regretted his unethical improving business ethics, perhaps even • Congratulations Rebecca White On Monday, Oct. 16, 2017, over 400 UT actions. When asked by a student what he ensuring that harmful scandals like Enron never Winners of the 2017 Sustainable Business Awards faculty, students and alumni had the opportunity would do today if he were a CFO again, Fastow occur again. RESEARCHERS FIND SECURITY LOOPHOLE FOR SQUARE • Why Does Fraud Occur? to meet Andrew Fastow, the only Enron executive said that he fears the corporate world because E-PAYMENT APP Page 3... who has admitted doing wrong, and hear his he is afraid to go near the gray area again. by Claudia Rodriguez • Faculty in the Spotlight Most people have mobile individuals’ personal information • Global Perspectives on Corruption payment applications on their easily stolen. From Equifax to Target Page 4... TAMPA BAY smartphones these days. Mobile data breaches, the public has become ETHICS AWARD CENTER FOR ETHICS ADVISORY BOARD payment applications such as Venmo, aware that hackers can do pretty • Ethics in the News by Jessica Luce Christine Dever Homack Jessica Luce Square, and PayPal offer easy and much anything from the other end of a Page 5... affordable e-payment solutions to computer terminal. Lorna Taylor, president and CEO of Principal, Accountabilities Consulting Services LLC Associate Editor, Center for Ethics small businesses, allowing customers Recently, during a Black Hat • Enron and Andy Fastow Premier Eye Care, received the 27th The University of Tampa C. Lee Essrig to make payments with the click of a security conference researchers Our Perspective annual ethics award on Friday, Oct. Principal, Lee Essrig and Associates LLC Robert Marley, Ph.D. button. Square, a very popular mobile figured out a unique way to hack Square • Tampa Bay Ethics Award 6, 2017, at a breakfast ceremony at Associate Director, Center for Ethics Brent Fernandez payment application, offers e-payment readers. Adam Laurie and Zac Franken, UT before her friends, supporters and Assistant Professor, The University of Tampa Project Manager, IDSTC processing services for a small fee Claudia Rodriguez directors of Aperture Labs, created Page 6... Premier Eye Care employees. Sandra Moscovic, Ph.D. of 2.75% per transaction. You have Certifed Fraud a code that let them feed magnetic • Sustainable Business Awards Taylor is an accomplished leader, William “Bill” H. Geiger Examiner Director, Corporate Ethics and Compliance probably seen Square in small shops, stripe data from stolen credit cards both in directing fast-growing Premier Jessica Luce Retired, formerly Corporate Counsel and Group • Ethics Speaker Series Associate Editor TECO Services Inc. farmers’ markets and salons. Square into a microphone, converting it to a and in making an impact in the VP-Compliance, Transamerica/AEGON • Center for Ethics Advisory Board “readers” are easy-to-use payment facilitators sound file. They then played that sound file—a community. Premier, ranked as one of “Florida’s Award recipient Lorna Taylor (third from left), stands alongside Dr. Dan Verreault, Dr. Robert Marley, Brianna Reeves ‘19 First lady Renée Vaughn, President Ronald Vaughn and Dean Frank Ghannadian F. Frank Ghannadian, Ph.D. that snap into the end of a smartphone and read series of beeps—into the Square reader via Best Companies to Work For” for six consecutive UT Student Dean, Sykes College of Business a customer’s credit card information, making stereo cable. The researchers found these beeps other mechanisms to detect fraud. However, I years, has also ranked as one of the state’s Award from the Sustany Foundation and Center Directors (MMD) Board, Preserve Vision The University of Tampa Daniel A. Verreault, Ph.D. Square very attractive to business owners who permitted a Square user to perform electronic sure feel like many big fraud stories started with fastest-growing companies two of the past three for Ethics. The Business Observer named her as Florida, Florida Coalition Against Domestic Director, Center for Ethics Mark Harmon want to simplify their point of sale process. payments! What does this mean? It means that one person trying to tell the world “Hey, there is years by the Florida Business Journals. one of its 2015 top entrepreneurs of the year, Violence Foundation, Arts Conservatory for Associate Professor, The University of Tampa HR/Training Risk and Control, Citigroup However, letting someone else swipe hackers could potentially use individuals credit a problem!” (Madoff anyone?). As a past chair of The Spring of Tampa Bay, and she was recently named as a Florida finalist Teens and Tampa Bay Businesses for Culture Caitlin Whetstone ‘19 your credit card from a tiny card reader on cards without physically cloning them, knowing We can hope that Square is correct and Taylor was honored with the organization’s Angel in the prestigious EY (formerly Ernst & Young) and the Arts. She also serves on UT‘s Board John Hindman UT Student their smartphone may raise questions for you. their PIN, or being physically present during a they indeed have the necessary tools to detect Award, and was named a Woman of Distinction Entrepreneur of the Year 2017 Award. of Trustees. Taylor is a graduate of Princeton CEO, H&A Consulting Partners LLC Is the other person storing your credit card purchase. These researchers presented their and prevent this type of fraud. In my opinion, by the Girl Scouts of West Central Florida in Personally, Taylor is involved in a wide Theological Seminary and earned a master’s Edgel “Ed” Lester information? Can your credit card information findings to Square, but the company did not see prevention is the preferred option when it comes 2013. In 2014, she received the Light of Sight variety of community and charitable causes. degree in divinity, concentrating in social ethics. Chair, Shareholder, Carlton Fields, P.A. be hacked? We’ve all read enough news to know this as a significant threat, stating instead that to fraud. Time will tell how this story plays out. Award from the Lion’s Eye Institute Foundation, Taylor serves on the Board of Trustees for For more information go to www.ut.edu/ (813) 258-7415 • [email protected] that almost everything can be hacked, leaving they have the necessary traffic analytics and and the Jan Roberts Sustainability Leadership The Dalí Museum, and on the Moffitt Medical TampaBayEthicsAward. continued on page 2

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Researchers Find Security Loophole WHY DOES FRAUD OCCUR? to do so. Cressey noted that financial pressure FACULTY IN THE consequence, systems change our behavior. Marley: How do you incorporate ethics in your ETHICS IN THE NEWS environment. Can there be any company not code of ethics, which requires the company to could lead an individual to commit fraud if it was They also make it harder for to consider the accounting information systems classes? aware of the threat of cyberattack? Certainly, “treat customers, consumers, and employees for Square e-Payment App by Robert Marley, Ph.D. SPOTLIGHT by Daniel Verreault, Ph.D. intense enough. Thus, a non-shareable financial ethical implications of our behavior. Walters: Ethics is part of my world view, so the guardian of critically sensitive data for with respect and dignity.” [3] continued from page 1 Would it surprise you to know that pressure is what causes individuals to start by Robert Marley, Ph.D. Marley: I see. So perhaps this explains why it is integrated into the course material that I Volkswagen continues to labor under the most of the adult U.S. population should have Of course, Equifax is not alone. Yahoo, criminologists were not really concerned with References: thinking about committing fraud. Melissa Walters is an people can post surprisingly inappropriate cover and and the approach I use to deliver that burden of its legal and ethical problems. What been on constant alert. The company maintains Target, multiple U.S. government entities, and Mills, E. (2011, August 04). Researchers find avenues for fraud in understanding the root causes of white collar accounting information systems or offensive content on social media… material. For example, when we cover systems differentiates the VW case from most others a staff of almost 300 IT professionals. The Deloitte (among many others) have proved Square. Retrieved September 17, 2017, from https://www.cnet.com/ crime until relatively recent times? The term Opportunity professor at The University of because they are disassociated from the risk management, we discuss risk responsibility, is 1) the blatant level of deception, 2) the now former CEO, Richard Smith, in testimony vulnerable to hackers. As a society we sue and news/researchers-find-avenues-for-fraud-in-square/ white collar criminal was not even coined until While pressure provides the motive to commit Tampa. She teaches courses effect that their post will have on others? or the user’s responsibility to protect sensitive extension of corruption from the C-suite to before congress, blamed a single employee for punish those responsible when professional Yikes: Square hack lowers the bar for credit card fraud. (2011, 1939 when Edwin Sutherland, Ph.D., a professor August 05). Retrieved September 17, 2017, from https://venturebeat. fraud, it does not result in fraud unless an at both the undergraduate and Walters: Right. Social media and other electronic data from unauthorized disclosure. I the engineering function, 3) the extent of the “forgetting” to install a software patch to plug a standards are not upheld. However, we have com/2011/08/05/square-hack-credit-card-fraud/ at Indiana University, was the first to explore opportunity is also available. Cressey discovered graduate level, simultaneously online content presents several unique use an ethics-based activity that I call “online theft from diesel customers world-wide who vulnerability in the Apache Strut System. [2] The yet to determine whether society has the S. (n.d.). Accept Payments - Payment Processing Solutions. Retrieved why corporations committed criminal acts. It that whenever fraud occurs, two components of maintaining her technical Melissa Walters, Ph.D. problems. For example, the way content is minute research.” This entails unexpectedly paid for “clean diesel” and received something patch was available to Equifax in March and the will and means to deal with cybercriminals– September 17, 2017, https://squareup.com/ payments?signup=true is somewhat ironic, then, that his term is now opportunity are also present: (1) an individual expertise while giving back to Associate Professor, presented on social media frequently leads stopping the class to ask everyone to spend 60 else, 4) negative health effects in Europe, first hacking intrusion likely occurred on May whether they be lone-wolf hackers, organized &gclid=EAIaIQobChMIzrqC5sOt1gIViAFpCh3rTQJDEAAYASAAEgItv Accounting PD_BwE&pcrid=214112656028&pdv=c&pkw=square%2Bpayments used to describe non-violent financial crimes is aware of a weakness that can be exploited, the community by serving as people to forget about copyright issues. seconds researching a systems-based ethics where diesel and population concentration are 13. The internal guideline for installing patches criminal enterprises, or state-sponsored actors. &pmt=e committed by individuals. and (2) the individual is able to exploit the UT’s academic advocate to the West Florida Because content is is so widely available and topic using the internet. At the end of the very high [1], and 5) decimation of an entire is 48 hours, which would involve the following: If we can conclude anything, it is that our IT Sutherland died unexpectedly in 1950 weakness. To illustrate, suppose that a customer chapter of the Information Systems Audit & so immediately accessible, people often don’t minute, I ask students to lead the discussion by line of business. It is difficult to imagine a installing the patch, closing the work order, and systems are often vulnerable, and that those before being able to answer the question “Why becomes aware that cash received from daily Control Association (ISACA). Given that recognize the intellectual property issue. Most sharing what they have discovered. more pervasive betrayal of trust. Moreover, a patch effectiveness review by IT management. who illegally seek out those vulnerabilities are does white collar crime occur?” Fortunately, sales remains in the cash register until it is information systems change so rapidly, I asked individuals would never steal a framed painting Marley: Neat. By the way, the only time one VW is still not offering its European customers Unfortunately, a system-wide electronic sweep always on the prowl. Sutherland’s quest was continued by one of deposited on Friday. Thus, although the customer for her insight on the connection among ethics, hanging in somebody’s office, but many people of my professors ever stopped class was to the same financial incentives offered to U.S. for system vulnerabilities indicated no threat, his students, Donald Cressey, whose research References: is aware of a weakness, he cannot exploit the information systems, and students. will download and use artwork posted online hand out pop quizzes. What spurred your customers. It is difficult to predict how the therefore proving to be ineffective. But was [1] https://www.sciencedaily.com/releases/2017/09/170918093337. culminated in the publication of “Other People’s weakness unless he has access to the cash Marley: Why is it important to include ethics without a second thought. interest in ethics? claims against VW will be settled. It is even the patch-related vulnerability red-lighted by htm accessed on October 18, 2017. Money” in 1954, which laid the foundation from register. Thus, opportunity is the weakness that into classes that teach students information Marley: Unintentional white-collar crime? Walters: I acquired a greater appreciation more difficult to imagine when VW will regain the system after 48 hours? The situation as [2] https://www.engadget.com/2017/10/03/former-equifax-ceo- which the fraud triangle emerged 20 years later. allows fraud to occur. systems concepts? Walters: Most people don’t see it as crime. They for ethics by conducting research with a UT the trust of consumers. currently depicted seems to suggest an internal blames-breach-on-one-it-employee/ accessed on 10/18/17. Still the primary tool used to understand fraud, Walters: Teaching ethics is important because don’t consider how principles of ethical behavior colleague, Teresa Pergola, Ph.D. While doing The Equifax case involves a failure of “due control failure on the part of Equifax and its [3] http://m.equifax.com/about_equifax/governance/code_of_ethics/ en_us accessed on 10/18/17. the fraud triangle consists of three elements: Rationalization information systems change dynamics. When apply to the use of information systems. In my so, I volunteered to teach an ethics class. care” with respect to the maintenance of external auditor. Disclosing the hack almost five Pressure, Opportunity, and Rationalization. Rationalization is how a would-be fraudster we use an information system, it serves as a opinion, a large part of the problem is that we Teaching that class provided me with a deeper internal control systems in a known hostile months after it occurred violates the company’s justifies his behavior, enabling him to avoid viewing buffer between those using the system (users) tend to embrace new technology before we fully understanding of how to incorporate ethics in my himself negatively. In other words, rationalization and those affected by the system. In other understand its implications. Ideally, we need to information systems classes. is what permits a fraudster to continue living a words, systems remove the person-to-person more carefully think about ethical behavior while Marley: Thank you for this interview. You’ve Thoughts on Stock Price Reaction to Scandals normal life. Common rationalizations include, component, which disassociates us from using systems, which is why ethics should be given us some unique insights to reflect upon. “I am just borrowing the money, I will pay the impact our actions have on others. As a incorporated into information systems classes. Here are two, fve-year charts of VW and Wells Fargo American Depository Receipts (ADR), both suffering from severe it back later,” “This makes up for the raise I did not receive this year,” and “I deserve this scandals. On the left is Volkswagen ADRs, and on the right is Wells Fargo. VW is struggling to bounce back. Wells Fargo has money because I am underpaid.” As a result, it GLOBAL and Italy, which appear as far more corrupt mostly recovered, even though much of the recovery is recent, based on relatively good results and governance changes. Fraud is important to note that rationalization is not PERSPECTIVES in the TI report. We suggest that the data Triangle a means of justifying a fraud that has already ON CORRUPTION sets are driven by their measures, where IBE For VW, business disruption and legal liability is greater than for Wells Fargo. A whole dominant line of business, clean diesel, occurred, but part of the fraudster’s motive for required a reported observation, and thus are is defunct. VW’s deception has extended further than that of Wells Fargo geographically, even including claims of 5,000 committing a crime. Thus, rationalization is how by Daniel Verreault, Ph.D. not directly comparable. In our opinion, the TI early deaths in Europe from “dieselgate.” The market is assessing the comparative penalties on future cash fows rather Congratulations to Rebecca White, a person considering fraud convinces himself that First, let’s revisit definitions with methodology and scores seem to better capture a focus on global applications of the “true” levels of corruption and represent a Ph.D., who recently received committing the fraud would be justified. Global Corruption Perceptions Index - 2017 than making an ethical assessment. In this case, we think that the market has the cash fow penalties correct. Entirely by both private and public sectors. better guide for models of governance and for the Women in Entrepreneurship coincidence we think that, although both were serious violations of trust, the ethics transgressions rank in the same order. Conclusion White collar crime refers to corruption combine in creating a capital allocation by companies. Education Award and the 2017 Max Pressure In the opening remarks on the first page of financially motivated nonviolent 21st century gulag of malevolence. References: Fraud begins with pressure. While interviewing crime committed by business and Dan Verreault, Ph.D. TI scores and ranks countries on a J. Wortman Award from the U.S. this newsletter, I suggested that understanding Director, Center https://en.wikipedia.org/wiki/White-collar_crime accessed on VW ADR Wells Fargo ADR white collar prison inmates (“fraudsters”), Cressey government professionals. Within corruption scale that underlies the 10/18/2017. Association for Small Business and the causes of white collar crime was an important for Ethics noticed a common pattern: all had a financial starting place. Consequently, this article applied criminology, it was first defined by world map. Institute of Business Ethics. Surveys on Business Ethics 2016. Entrepreneurship (USASBE). The problem and believed that nobody else would Survey data from The Institute of Business http://www.ibe.org.uk/list-of-publications/67/47.PDF downloaded on the fraud triangle to answer the question “Why sociologist Edwin Sutherland in 1939 as “a 10/14/2017. Wortman Award recognizes lifetime help. In other words, they all had a non-sharable does fraud occur?” Armed with the knowledge crime committed by a person of respectability Ethics “Surveys on Business Ethics — 2016 (IBE) also calculated corruption scores for selected https://www.transparency.org/news/feature/corruption_ achievement encompassing the ideals financial problem. Cressey also noted that it did that fraud occurs when an individual has a and high social status in the course of his perceptions_index_2016 accessed on 10/18/2017. not matter whether there were people who might non-sharable financial pressure, an awareness occupation.” Transparency International defines countries around the world. The IBE data was of entrepreneurial activity — through help the fraudster (such as a mother, a father, and ability to take advantage of an exploitable corruption as “the abuse of entrusted power for based on reported observations of bribery and Compara:ve Levels of Corrup:on new venturing, corporate venturing or siblings, spouse, or friends), it only mattered that weakness, and a way to justify their behavior, private gain. This is the working definition used corruption. IBE reported its data on a 0 to in Selected Countries 100 94 90 90 the fraudster believed there was nobody he could by Transparency International (TI), applying to 100 scale where 0 indicates no corruption. We 87 85 84 84 social venturing. White is Director of you are now prepared to help your organization 90 81 81 81 79 81 74 77 turn to for help. While society might empathize both the public and private sectors,” Based on recoded the IBE country data to the TI scale 80 72 69 73 70 protect itself against fraud. 70 58 the Lowth Entrepreneurship Center in 52 with certain universal financial pressures (such these definitions, corruption encompasses both where 100 is least corrupt to make a comparison. 60 47 References: 50 40 40 40 The University of Tampa’s Sykes College as the need for money to buy food, medicine, public and private sectors and focuses on the The figure to the right illustrates the comparative 40 29 30 Wells, J. T. 2014. Principles of Fraud Examination. 4th edition, John 30 20 of Business, which was also awarded or clothing), Cressey observed that financial Wiley & Sons, Inc. well to do and powerful subverting value for scores for the IBE selected countries. 10 0 the National Model Program Award pressures often went beyond the boundaries of Cressey, D. R. 1954. Other People’s Money: A Study of the Social personal gain. Looking at the world map in the TI The IBE scores are both higher (less corrupt) societal acceptance – such as a fraudster who Psychology of Embezzlement. Free Press: Glencoe, IL. 2017 Corruption Perceptions Index, we see that and less variable than TI scores. The median for undergraduate entrepreneurship felt financial pressure to attain higher status. For reds and oranges dominate (higher corruption country score per IBE for the set was 84 vs. Countries Countries Covered Covered by IBE by Survey I.B.E. and TI Survey Scores and T.I Scores programs by USASBE in 2016. example, even though many people may want to levels), with islands of yellows and golds (lower a median score of 52 for TI Among the major Ins:tute for Business Ethics Transparency Interna:onal own a Ferrari, most people will not commit fraud corruption levels). Both government and private differences in scores was Russia, Mexico, Brazil, =less corrup:on: 0-­‐100 score higher where Score

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Researchers Find Security Loophole WHY DOES FRAUD OCCUR? to do so. Cressey noted that financial pressure FACULTY IN THE consequence, systems change our behavior. Marley: How do you incorporate ethics in your ETHICS IN THE NEWS environment. Can there be any company not code of ethics, which requires the company to could lead an individual to commit fraud if it was They also make it harder for to consider the accounting information systems classes? aware of the threat of cyberattack? Certainly, “treat customers, consumers, and employees for Square e-Payment App by Robert Marley, Ph.D. SPOTLIGHT by Daniel Verreault, Ph.D. intense enough. Thus, a non-shareable financial ethical implications of our behavior. Walters: Ethics is part of my world view, so the guardian of critically sensitive data for with respect and dignity.” [3] continued from page 1 Would it surprise you to know that pressure is what causes individuals to start by Robert Marley, Ph.D. Marley: I see. So perhaps this explains why it is integrated into the course material that I Volkswagen continues to labor under the most of the adult U.S. population should have Of course, Equifax is not alone. Yahoo, criminologists were not really concerned with References: thinking about committing fraud. Melissa Walters is an people can post surprisingly inappropriate cover and and the approach I use to deliver that burden of its legal and ethical problems. What been on constant alert. The company maintains Target, multiple U.S. government entities, and Mills, E. (2011, August 04). Researchers find avenues for fraud in understanding the root causes of white collar accounting information systems or offensive content on social media… material. For example, when we cover systems differentiates the VW case from most others a staff of almost 300 IT professionals. The Deloitte (among many others) have proved Square. Retrieved September 17, 2017, from https://www.cnet.com/ crime until relatively recent times? The term Opportunity professor at The University of because they are disassociated from the risk management, we discuss risk responsibility, is 1) the blatant level of deception, 2) the now former CEO, Richard Smith, in testimony vulnerable to hackers. As a society we sue and news/researchers-find-avenues-for-fraud-in-square/ white collar criminal was not even coined until While pressure provides the motive to commit Tampa. She teaches courses effect that their post will have on others? or the user’s responsibility to protect sensitive extension of corruption from the C-suite to before congress, blamed a single employee for punish those responsible when professional Yikes: Square hack lowers the bar for credit card fraud. (2011, 1939 when Edwin Sutherland, Ph.D., a professor August 05). Retrieved September 17, 2017, from https://venturebeat. fraud, it does not result in fraud unless an at both the undergraduate and Walters: Right. Social media and other electronic data from unauthorized disclosure. I the engineering function, 3) the extent of the “forgetting” to install a software patch to plug a standards are not upheld. However, we have com/2011/08/05/square-hack-credit-card-fraud/ at Indiana University, was the first to explore opportunity is also available. Cressey discovered graduate level, simultaneously online content presents several unique use an ethics-based activity that I call “online theft from diesel customers world-wide who vulnerability in the Apache Strut System. [2] The yet to determine whether society has the S. (n.d.). Accept Payments - Payment Processing Solutions. Retrieved why corporations committed criminal acts. It that whenever fraud occurs, two components of maintaining her technical Melissa Walters, Ph.D. problems. For example, the way content is minute research.” This entails unexpectedly paid for “clean diesel” and received something patch was available to Equifax in March and the will and means to deal with cybercriminals– September 17, 2017, https://squareup.com/ payments?signup=true is somewhat ironic, then, that his term is now opportunity are also present: (1) an individual expertise while giving back to Associate Professor, presented on social media frequently leads stopping the class to ask everyone to spend 60 else, 4) negative health effects in Europe, first hacking intrusion likely occurred on May whether they be lone-wolf hackers, organized &gclid=EAIaIQobChMIzrqC5sOt1gIViAFpCh3rTQJDEAAYASAAEgItv Accounting PD_BwE&pcrid=214112656028&pdv=c&pkw=square%2Bpayments used to describe non-violent financial crimes is aware of a weakness that can be exploited, the community by serving as people to forget about copyright issues. seconds researching a systems-based ethics where diesel and population concentration are 13. The internal guideline for installing patches criminal enterprises, or state-sponsored actors. &pmt=e committed by individuals. and (2) the individual is able to exploit the UT’s academic advocate to the West Florida Because content is is so widely available and topic using the internet. At the end of the very high [1], and 5) decimation of an entire is 48 hours, which would involve the following: If we can conclude anything, it is that our IT Sutherland died unexpectedly in 1950 weakness. To illustrate, suppose that a customer chapter of the Information Systems Audit & so immediately accessible, people often don’t minute, I ask students to lead the discussion by line of business. It is difficult to imagine a installing the patch, closing the work order, and systems are often vulnerable, and that those before being able to answer the question “Why becomes aware that cash received from daily Control Association (ISACA). Given that recognize the intellectual property issue. Most sharing what they have discovered. more pervasive betrayal of trust. Moreover, a patch effectiveness review by IT management. who illegally seek out those vulnerabilities are does white collar crime occur?” Fortunately, sales remains in the cash register until it is information systems change so rapidly, I asked individuals would never steal a framed painting Marley: Neat. By the way, the only time one VW is still not offering its European customers Unfortunately, a system-wide electronic sweep always on the prowl. Sutherland’s quest was continued by one of deposited on Friday. Thus, although the customer for her insight on the connection among ethics, hanging in somebody’s office, but many people of my professors ever stopped class was to the same financial incentives offered to U.S. for system vulnerabilities indicated no threat, his students, Donald Cressey, whose research References: is aware of a weakness, he cannot exploit the information systems, and students. will download and use artwork posted online hand out pop quizzes. What spurred your customers. It is difficult to predict how the therefore proving to be ineffective. But was [1] https://www.sciencedaily.com/releases/2017/09/170918093337. culminated in the publication of “Other People’s weakness unless he has access to the cash Marley: Why is it important to include ethics without a second thought. interest in ethics? claims against VW will be settled. It is even the patch-related vulnerability red-lighted by htm accessed on October 18, 2017. Money” in 1954, which laid the foundation from register. Thus, opportunity is the weakness that into classes that teach students information Marley: Unintentional white-collar crime? Walters: I acquired a greater appreciation more difficult to imagine when VW will regain the system after 48 hours? The situation as [2] https://www.engadget.com/2017/10/03/former-equifax-ceo- which the fraud triangle emerged 20 years later. allows fraud to occur. systems concepts? Walters: Most people don’t see it as crime. They for ethics by conducting research with a UT the trust of consumers. currently depicted seems to suggest an internal blames-breach-on-one-it-employee/ accessed on 10/18/17. Still the primary tool used to understand fraud, Walters: Teaching ethics is important because don’t consider how principles of ethical behavior colleague, Teresa Pergola, Ph.D. While doing The Equifax case involves a failure of “due control failure on the part of Equifax and its [3] http://m.equifax.com/about_equifax/governance/code_of_ethics/ en_us accessed on 10/18/17. the fraud triangle consists of three elements: Rationalization information systems change dynamics. When apply to the use of information systems. In my so, I volunteered to teach an ethics class. care” with respect to the maintenance of external auditor. Disclosing the hack almost five Pressure, Opportunity, and Rationalization. Rationalization is how a would-be fraudster we use an information system, it serves as a opinion, a large part of the problem is that we Teaching that class provided me with a deeper internal control systems in a known hostile months after it occurred violates the company’s justifies his behavior, enabling him to avoid viewing buffer between those using the system (users) tend to embrace new technology before we fully understanding of how to incorporate ethics in my himself negatively. In other words, rationalization and those affected by the system. In other understand its implications. Ideally, we need to information systems classes. is what permits a fraudster to continue living a words, systems remove the person-to-person more carefully think about ethical behavior while Marley: Thank you for this interview. You’ve Thoughts on Stock Price Reaction to Scandals normal life. Common rationalizations include, component, which disassociates us from using systems, which is why ethics should be given us some unique insights to reflect upon. “I am just borrowing the money, I will pay the impact our actions have on others. As a incorporated into information systems classes. Here are two, fve-year charts of VW and Wells Fargo American Depository Receipts (ADR), both suffering from severe it back later,” “This makes up for the raise I did not receive this year,” and “I deserve this scandals. On the left is Volkswagen ADRs, and on the right is Wells Fargo. VW is struggling to bounce back. Wells Fargo has money because I am underpaid.” As a result, it GLOBAL and Italy, which appear as far more corrupt mostly recovered, even though much of the recovery is recent, based on relatively good results and governance changes. is important to note that rationalization is not PERSPECTIVES in the TI report. We suggest that the data a means of justifying a fraud that has already ON CORRUPTION sets are driven by their measures, where IBE For VW, business disruption and legal liability is greater than for Wells Fargo. A whole dominant line of business, clean diesel, occurred, but part of the fraudster’s motive for required a reported observation, and thus are is defunct. VW’s deception has extended further than that of Wells Fargo geographically, even including claims of 5,000 committing a crime. Thus, rationalization is how by Daniel Verreault, Ph.D. not directly comparable. In our opinion, the TI early deaths in Europe from “dieselgate.” The market is assessing the comparative penalties on future cash fows rather Congratulations to Rebecca White, a person considering fraud convinces himself that First, let’s revisit definitions with methodology and scores seem to better capture a focus on global applications of the “true” levels of corruption and represent a Ph.D., who recently received committing the fraud would be justified. Global Corruption Perceptions Index - 2017 than making an ethical assessment. In this case, we think that the market has the cash fow penalties correct. Entirely by both private and public sectors. better guide for models of governance and for the Women in Entrepreneurship coincidence we think that, although both were serious violations of trust, the ethics transgressions rank in the same order. Conclusion White collar crime refers to corruption combine in creating a capital allocation by companies. Education Award and the 2017 Max Pressure In the opening remarks on the first page of financially motivated nonviolent 21st century gulag of malevolence. References: Fraud begins with pressure. While interviewing crime committed by business and Dan Verreault, Ph.D. TI scores and ranks countries on a J. Wortman Award from the U.S. this newsletter, I suggested that understanding Director, Center https://en.wikipedia.org/wiki/White-collar_crime accessed on VW ADR Wells Fargo ADR white collar prison inmates (“fraudsters”), Cressey government professionals. Within corruption scale that underlies the 10/18/2017. Association for Small Business and the causes of white collar crime was an important for Ethics noticed a common pattern: all had a financial starting place. Consequently, this article applied criminology, it was first defined by world map. Institute of Business Ethics. Surveys on Business Ethics 2016. Entrepreneurship (USASBE). The problem and believed that nobody else would Survey data from The Institute of Business http://www.ibe.org.uk/list-of-publications/67/47.PDF downloaded on the fraud triangle to answer the question “Why sociologist Edwin Sutherland in 1939 as “a 10/14/2017. Wortman Award recognizes lifetime help. In other words, they all had a non-sharable does fraud occur?” Armed with the knowledge crime committed by a person of respectability Ethics “Surveys on Business Ethics — 2016 (IBE) also calculated corruption scores for selected https://www.transparency.org/news/feature/corruption_ achievement encompassing the ideals financial problem. Cressey also noted that it did that fraud occurs when an individual has a and high social status in the course of his perceptions_index_2016 accessed on 10/18/2017. not matter whether there were people who might non-sharable financial pressure, an awareness occupation.” Transparency International defines countries around the world. The IBE data was of entrepreneurial activity — through help the fraudster (such as a mother, a father, and ability to take advantage of an exploitable corruption as “the abuse of entrusted power for based on reported observations of bribery and Compara:ve Levels of Corrup:on new venturing, corporate venturing or siblings, spouse, or friends), it only mattered that weakness, and a way to justify their behavior, private gain. This is the working definition used corruption. IBE reported its data on a 0 to in Selected Countries 100 94 90 90 the fraudster believed there was nobody he could by Transparency International (TI), applying to 100 scale where 0 indicates no corruption. We 87 85 84 84 social venturing. White is Director of you are now prepared to help your organization 90 81 81 81 79 81 74 77 turn to for help. While society might empathize both the public and private sectors,” Based on recoded the IBE country data to the TI scale 80 72 69 73 70 protect itself against fraud. 70 58 the Lowth Entrepreneurship Center in 52 with certain universal financial pressures (such these definitions, corruption encompasses both where 100 is least corrupt to make a comparison. 60 47 References: 50 40 40 40 The University of Tampa’s Sykes College as the need for money to buy food, medicine, public and private sectors and focuses on the The figure to the right illustrates the comparative 40 29 30 Wells, J. T. 2014. Principles of Fraud Examination. 4th edition, John 30 20 of Business, which was also awarded or clothing), Cressey observed that financial Wiley & Sons, Inc. well to do and powerful subverting value for scores for the IBE selected countries. 10 0 the National Model Program Award pressures often went beyond the boundaries of Cressey, D. R. 1954. Other People’s Money: A Study of the Social personal gain. Looking at the world map in the TI The IBE scores are both higher (less corrupt) societal acceptance – such as a fraudster who Psychology of Embezzlement. Free Press: Glencoe, IL. 2017 Corruption Perceptions Index, we see that and less variable than TI scores. The median for undergraduate entrepreneurship felt financial pressure to attain higher status. For reds and oranges dominate (higher corruption country score per IBE for the set was 84 vs. CounCountriestries Covered Cov ered by by IBE I.B.E. Survey and Survey TI Scoror and T.I Sc eses programs by USASBE in 2016. example, even though many people may want to levels), with islands of yellows and golds (lower a median score of 52 for TI Among the major Ins:tute for Business Ethics Transparency Interna:onal own a Ferrari, most people will not commit fraud corruption levels). Both government and private differences in scores was Russia, Mexico, Brazil, =less corrup:on: 0-­‐100 score higher where Score

2 3 4 www.ut.edu

Researchers Find Security Loophole WHY DOES FRAUD OCCUR? to do so. Cressey noted that financial pressure FACULTY IN THE consequence, systems change our behavior. Marley: How do you incorporate ethics in your ETHICS IN THE NEWS environment. Can there be any company not code of ethics, which requires the company to could lead an individual to commit fraud if it was They also make it harder for to consider the accounting information systems classes? aware of the threat of cyberattack? Certainly, “treat customers, consumers, and employees for Square e-Payment App by Robert Marley, Ph.D. SPOTLIGHT by Daniel Verreault, Ph.D. intense enough. Thus, a non-shareable financial ethical implications of our behavior. Walters: Ethics is part of my world view, so the guardian of critically sensitive data for with respect and dignity.” [3] continued from page 1 Would it surprise you to know that pressure is what causes individuals to start by Robert Marley, Ph.D. Marley: I see. So perhaps this explains why it is integrated into the course material that I Volkswagen continues to labor under the most of the adult U.S. population should have Of course, Equifax is not alone. Yahoo, criminologists were not really concerned with References: thinking about committing fraud. Melissa Walters is an people can post surprisingly inappropriate cover and and the approach I use to deliver that burden of its legal and ethical problems. What been on constant alert. The company maintains Target, multiple U.S. government entities, and Mills, E. (2011, August 04). Researchers find avenues for fraud in understanding the root causes of white collar accounting information systems or offensive content on social media… material. For example, when we cover systems differentiates the VW case from most others a staff of almost 300 IT professionals. The Deloitte (among many others) have proved Square. Retrieved September 17, 2017, from https://www.cnet.com/ crime until relatively recent times? The term Opportunity professor at The University of because they are disassociated from the risk management, we discuss risk responsibility, is 1) the blatant level of deception, 2) the now former CEO, Richard Smith, in testimony vulnerable to hackers. As a society we sue and news/researchers-find-avenues-for-fraud-in-square/ white collar criminal was not even coined until While pressure provides the motive to commit Tampa. She teaches courses effect that their post will have on others? or the user’s responsibility to protect sensitive extension of corruption from the C-suite to before congress, blamed a single employee for punish those responsible when professional Yikes: Square hack lowers the bar for credit card fraud. (2011, 1939 when Edwin Sutherland, Ph.D., a professor August 05). Retrieved September 17, 2017, from https://venturebeat. fraud, it does not result in fraud unless an at both the undergraduate and Walters: Right. Social media and other electronic data from unauthorized disclosure. I the engineering function, 3) the extent of the “forgetting” to install a software patch to plug a standards are not upheld. However, we have com/2011/08/05/square-hack-credit-card-fraud/ at Indiana University, was the first to explore opportunity is also available. Cressey discovered graduate level, simultaneously online content presents several unique use an ethics-based activity that I call “online theft from diesel customers world-wide who vulnerability in the Apache Strut System. [2] The yet to determine whether society has the S. (n.d.). Accept Payments - Payment Processing Solutions. Retrieved why corporations committed criminal acts. It that whenever fraud occurs, two components of maintaining her technical Melissa Walters, Ph.D. problems. For example, the way content is minute research.” This entails unexpectedly paid for “clean diesel” and received something patch was available to Equifax in March and the will and means to deal with cybercriminals– September 17, 2017, https://squareup.com/ payments?signup=true is somewhat ironic, then, that his term is now opportunity are also present: (1) an individual expertise while giving back to Associate Professor, presented on social media frequently leads stopping the class to ask everyone to spend 60 else, 4) negative health effects in Europe, first hacking intrusion likely occurred on May whether they be lone-wolf hackers, organized &gclid=EAIaIQobChMIzrqC5sOt1gIViAFpCh3rTQJDEAAYASAAEgItv Accounting PD_BwE&pcrid=214112656028&pdv=c&pkw=square%2Bpayments used to describe non-violent financial crimes is aware of a weakness that can be exploited, the community by serving as people to forget about copyright issues. seconds researching a systems-based ethics where diesel and population concentration are 13. The internal guideline for installing patches criminal enterprises, or state-sponsored actors. &pmt=e committed by individuals. and (2) the individual is able to exploit the UT’s academic advocate to the West Florida Because content is is so widely available and topic using the internet. At the end of the very high [1], and 5) decimation of an entire is 48 hours, which would involve the following: If we can conclude anything, it is that our IT Sutherland died unexpectedly in 1950 weakness. To illustrate, suppose that a customer chapter of the Information Systems Audit & so immediately accessible, people often don’t minute, I ask students to lead the discussion by line of business. It is difficult to imagine a installing the patch, closing the work order, and systems are often vulnerable, and that those before being able to answer the question “Why becomes aware that cash received from daily Control Association (ISACA). Given that recognize the intellectual property issue. Most sharing what they have discovered. more pervasive betrayal of trust. Moreover, a patch effectiveness review by IT management. who illegally seek out those vulnerabilities are does white collar crime occur?” Fortunately, sales remains in the cash register until it is information systems change so rapidly, I asked individuals would never steal a framed painting Marley: Neat. By the way, the only time one VW is still not offering its European customers Unfortunately, a system-wide electronic sweep always on the prowl. Sutherland’s quest was continued by one of deposited on Friday. Thus, although the customer for her insight on the connection among ethics, hanging in somebody’s office, but many people of my professors ever stopped class was to the same financial incentives offered to U.S. for system vulnerabilities indicated no threat, his students, Donald Cressey, whose research References: is aware of a weakness, he cannot exploit the information systems, and students. will download and use artwork posted online hand out pop quizzes. What spurred your customers. It is difficult to predict how the therefore proving to be ineffective. But was [1] https://www.sciencedaily.com/releases/2017/09/170918093337. culminated in the publication of “Other People’s weakness unless he has access to the cash Marley: Why is it important to include ethics without a second thought. interest in ethics? claims against VW will be settled. It is even the patch-related vulnerability red-lighted by htm accessed on October 18, 2017. Money” in 1954, which laid the foundation from register. Thus, opportunity is the weakness that into classes that teach students information Marley: Unintentional white-collar crime? Walters: I acquired a greater appreciation more difficult to imagine when VW will regain the system after 48 hours? The situation as [2] https://www.engadget.com/2017/10/03/former-equifax-ceo- which the fraud triangle emerged 20 years later. allows fraud to occur. systems concepts? Walters: Most people don’t see it as crime. They for ethics by conducting research with a UT the trust of consumers. currently depicted seems to suggest an internal blames-breach-on-one-it-employee/ accessed on 10/18/17. Still the primary tool used to understand fraud, Walters: Teaching ethics is important because don’t consider how principles of ethical behavior colleague, Teresa Pergola, Ph.D. While doing The Equifax case involves a failure of “due control failure on the part of Equifax and its [3] http://m.equifax.com/about_equifax/governance/code_of_ethics/ en_us accessed on 10/18/17. the fraud triangle consists of three elements: Rationalization information systems change dynamics. When apply to the use of information systems. In my so, I volunteered to teach an ethics class. care” with respect to the maintenance of external auditor. Disclosing the hack almost five Pressure, Opportunity, and Rationalization. Rationalization is how a would-be fraudster we use an information system, it serves as a opinion, a large part of the problem is that we Teaching that class provided me with a deeper internal control systems in a known hostile months after it occurred violates the company’s justifies his behavior, enabling him to avoid viewing buffer between those using the system (users) tend to embrace new technology before we fully understanding of how to incorporate ethics in my himself negatively. In other words, rationalization and those affected by the system. In other understand its implications. Ideally, we need to information systems classes. is what permits a fraudster to continue living a words, systems remove the person-to-person more carefully think about ethical behavior while Marley: Thank you for this interview. You’ve Thoughts on Stock Price Reaction to Scandals normal life. Common rationalizations include, component, which disassociates us from using systems, which is why ethics should be given us some unique insights to reflect upon. “I am just borrowing the money, I will pay the impact our actions have on others. As a incorporated into information systems classes. Here are two, fve-year charts of VW and Wells Fargo American Depository Receipts (ADR), both suffering from severe it back later,” “This makes up for the raise I did not receive this year,” and “I deserve this scandals. On the left is Volkswagen ADRs, and on the right is Wells Fargo. VW is struggling to bounce back. Wells Fargo has money because I am underpaid.” As a result, it GLOBAL and Italy, which appear as far more corrupt mostly recovered, even though much of the recovery is recent, based on relatively good results and governance changes. is important to note that rationalization is not PERSPECTIVES in the TI report. We suggest that the data a means of justifying a fraud that has already ON CORRUPTION sets are driven by their measures, where IBE For VW, business disruption and legal liability is greater than for Wells Fargo. A whole dominant line of business, clean diesel, occurred, but part of the fraudster’s motive for required a reported observation, and thus are is defunct. VW’s deception has extended further than that of Wells Fargo geographically, even including claims of 5,000 committing a crime. Thus, rationalization is how by Daniel Verreault, Ph.D. not directly comparable. In our opinion, the TI early deaths in Europe from “dieselgate.” The market is assessing the comparative penalties on future cash fows rather Congratulations to Rebecca White, a person considering fraud convinces himself that First, let’s revisit definitions with methodology and scores seem to better capture a focus on global applications of the “true” levels of corruption and represent a Ph.D., who recently received committing the fraud would be justified. Global Corruption Perceptions Index - 2017 than making an ethical assessment. In this case, we think that the market has the cash fow penalties correct. Entirely by both private and public sectors. better guide for models of governance and for the Women in Entrepreneurship coincidence we think that, although both were serious violations of trust, the ethics transgressions rank in the same order. Conclusion White collar crime refers to corruption combine in creating a capital allocation by companies. Education Award and the 2017 Max Pressure In the opening remarks on the first page of financially motivated nonviolent 21st century gulag of malevolence. References: Fraud begins with pressure. While interviewing crime committed by business and Dan Verreault, Ph.D. TI scores and ranks countries on a J. Wortman Award from the U.S. this newsletter, I suggested that understanding Director, Center https://en.wikipedia.org/wiki/White-collar_crime accessed on VW ADR Wells Fargo ADR white collar prison inmates (“fraudsters”), Cressey government professionals. Within corruption scale that underlies the 10/18/2017. Association for Small Business and the causes of white collar crime was an important for Ethics noticed a common pattern: all had a financial starting place. Consequently, this article applied criminology, it was first defined by world map. Institute of Business Ethics. Surveys on Business Ethics 2016. Entrepreneurship (USASBE). The problem and believed that nobody else would Survey data from The Institute of Business http://www.ibe.org.uk/list-of-publications/67/47.PDF downloaded on the fraud triangle to answer the question “Why sociologist Edwin Sutherland in 1939 as “a 10/14/2017. Wortman Award recognizes lifetime help. In other words, they all had a non-sharable does fraud occur?” Armed with the knowledge crime committed by a person of respectability Ethics “Surveys on Business Ethics — 2016 (IBE) also calculated corruption scores for selected https://www.transparency.org/news/feature/corruption_ achievement encompassing the ideals financial problem. Cressey also noted that it did that fraud occurs when an individual has a and high social status in the course of his perceptions_index_2016 accessed on 10/18/2017. not matter whether there were people who might non-sharable financial pressure, an awareness occupation.” Transparency International defines countries around the world. The IBE data was of entrepreneurial activity — through help the fraudster (such as a mother, a father, and ability to take advantage of an exploitable corruption as “the abuse of entrusted power for based on reported observations of bribery and Compara:ve Levels of Corrup:on new venturing, corporate venturing or siblings, spouse, or friends), it only mattered that weakness, and a way to justify their behavior, private gain. This is the working definition used corruption. IBE reported its data on a 0 to in Selected Countries 100 94 90 90 the fraudster believed there was nobody he could by Transparency International (TI), applying to 100 scale where 0 indicates no corruption. We 87 85 84 84 social venturing. White is Director of you are now prepared to help your organization 90 81 81 81 79 81 74 77 turn to for help. While society might empathize both the public and private sectors,” Based on recoded the IBE country data to the TI scale 80 72 69 73 70 protect itself against fraud. 70 58 the Lowth Entrepreneurship Center in 52 with certain universal financial pressures (such these definitions, corruption encompasses both where 100 is least corrupt to make a comparison. 60 47 References: 50 40 40 40 The University of Tampa’s Sykes College as the need for money to buy food, medicine, public and private sectors and focuses on the The figure to the right illustrates the comparative 40 29 30 Wells, J. T. 2014. Principles of Fraud Examination. 4th edition, John 30 20 of Business, which was also awarded or clothing), Cressey observed that financial Wiley & Sons, Inc. well to do and powerful subverting value for scores for the IBE selected countries. 10 0 the National Model Program Award pressures often went beyond the boundaries of Cressey, D. R. 1954. Other People’s Money: A Study of the Social personal gain. Looking at the world map in the TI The IBE scores are both higher (less corrupt) societal acceptance – such as a fraudster who Psychology of Embezzlement. Free Press: Glencoe, IL. 2017 Corruption Perceptions Index, we see that and less variable than TI scores. The median for undergraduate entrepreneurship felt financial pressure to attain higher status. For reds and oranges dominate (higher corruption country score per IBE for the set was 84 vs. Countries Countries Covered Covered by IBE by Survey I.B.E. and TI Survey Scores and T.I Scores programs by USASBE in 2016. example, even though many people may want to levels), with islands of yellows and golds (lower a median score of 52 for TI Among the major Ins:tute for Business Ethics Transparency Interna:onal own a Ferrari, most people will not commit fraud corruption levels). Both government and private differences in scores was Russia, Mexico, Brazil, =less corrup:on: 0-­‐100 score higher where Score

2 3 4 THE UnivErsiTy of Tampa A Publication of the Center for Ethics sykEs CollEgE of BUsinEss FALL 2017 ENRON AND ANDY FASTOW side of the story. As business students, it was We believe his outreach in speaking to SUSTAINABLE BUSINESS AWARDS ETHICS SPEAKER SERIES OUR PERSPECTIVE a great experience listening to him. We, as a students like us, without receiving any financial collective group of individuals, have the ability compensation for doing so, is his way of helping by Jessica Luce by Jessica Luce by Alaina Butler and Duncan McGarry to ensure the business world functions without atone for his negative actions. Businesses the center On June 7, 2017, the UT Center for Ethics, with its community partner the Sustany Foundation, corruption and fraud, with ethics and morals. As operate every day in the gray area, making it each Fall Ethics Speaker Series: “Rules hosted the 9th Annual Sustainable Business Awards luncheon. Seven businesses were honored versus Principles.” See review, page 5. we listened to Fastow speak, we saw the world individual’s responsibility to make the ethical for their contributions to building successful companies that positively impact the community. The through his eyes. Although he now admits doing choice; therefore, at any moment an executive businesses were recognized for their contributions in building a sustainable economy in Tampa for ethics wrong and feeling great remorse for harming so can choose poorly, beginning the spiral to fraud. Bay, while embracing the “triple bottom line” — advancing the interests of people, planet and Fall Ethics Hot Seat Series: “Ethics many individuals and families, he admitted that Fastow helped us see just how thin this line can profit through innovative practices, products and services. The 2017 winners include Suncoast from the Outside In and Inside Out.” On “The Best Way to Rob a Bank is to Work for One” at the time of his arrest he did not believe he be in business; explaining how he crossed that Federal Credit Union (NFP), Doubletree, INETICO, Jones Potato Farm, Safer Home Services, Atelier Wednesday, Nov. 8, Earnest Broughton, – Joke Punchline had broken any rules. Today, Fastow admits that line helped us to understand what we can do to Architecture and Kenyon Energy. AACSB International, The Association to Advance Collegiate while he may have technically followed the rules prevent making unethical decisions. senior advisor for the Ethics and Schools of Business, was awarded the Jan Roberts Leadership Award. For more information go to and therefore less threatening than of the time, his actions were unethical because Fastow’s presentation brought the UT Compliance Initiative, was on the hot WHITE COLLAR www.ut.edu/centerforethics/sustainablebusinessawards. violent crime. Our laws, police, and they violated the principles upon which the rules community together for a unique experience, seat. He brought a sold-out crowd on CRIME Alaina Butler Duncan McGarry courts prioritize addressing violent were based. giving us the opportunity to hear the Enron story B.S. Management ‘20 B.S. Finance ‘21 an interactive journey that explored the by Robert Marley, Ph.D. crimes, dealing with white collar Fastow’s perspective was explained through from the perspective of somebody at its core. emerging science behind why we act Although the above quote is a crimes more leniently. Perhaps Boom and bust. Enron flourished and inspired a discussion of loopholes. At Enron, he found If put in a position similar to Fastow’s, would one-liner commonly delivered during unsurprisingly, white collar crime many Americans leading up to the year 2000, loopholes in the rules, being proud of his today’s business students behave similarly? the way we do, especially when our stand-up comedy routines, we continues to increase, while violent and then plummeted once the nation discovered creativity at the time. He helped to create the Those who attended his presentation likely have behavior runs contrary to the values we chuckle because it holds several crime has decreased by 30 percent the truth behind the company’s “success.” illusion of billions of dollars in profits for Enron, a better understanding of right and wrong and hold dearest, and what we can do about it. truths. First: knowledge is power. since 1990. What can be done to stem Three leaders of the company — Kenneth Lay, but his motives were corrupt. Thus, instead of how the gray zone can lead to unethical choices. By working for a bank, a would- the rising tide of white collar crime? Inside this Issue: Jeffrey Skilling, and Andrew Fastow — released breaking the rules outright, he subverted the Thus, our moral compass was strengthened be robber acquires knowledge not Robert Marley, Ph.D. An appropriate starting point seems financial statements that created the appearance spirit of the rules to avoid their intent. Fastow due to this event. With our ethical awareness Associate Director, Page 1... available to the public, giving him to be understanding what motivates of a financially successful, innovative company. stated that there will always be a gray area heightened, we are in a better position to learn Center for Ethics • White Collar Crime more opportunity to steal from the individuals to commit white collar These misleading statements were approved in any business decision, between what is the rules of accounting, keeping in mind the bank without holding it up at gunpoint. Second: crime, so that is precisely what this issue seeks • Researchers Find Security Loophole by Enron’s own accounting department and by technically allowed and what is right. He stated principles of right and wrong. Having gained society views white collar crime as non-violent, to provide. for Square e-Payment App its independent auditor. The actions of these that he lacked the moral compass required new perspectives from Fastow’s presentation, three executives lead to the largest corporate to make the right decisions. We came away we hope that UT graduates will work towards Page 2... accounting scandal in America. believing that Fastow regretted his unethical improving business ethics, perhaps even • Congratulations Rebecca White On Monday, Oct. 16, 2017, over 400 UT actions. When asked by a student what he ensuring that harmful scandals like Enron never Winners of the 2017 Sustainable Business Awards faculty, students and alumni had the opportunity would do today if he were a CFO again, Fastow occur again. RESEARCHERS FIND SECURITY LOOPHOLE FOR SQUARE • Why Does Fraud Occur? to meet Andrew Fastow, the only Enron executive said that he fears the corporate world because E-PAYMENT APP Page 3... who has admitted doing wrong, and hear his he is afraid to go near the gray area again. by Claudia Rodriguez • Faculty in the Spotlight Most people have mobile individuals’ personal information • Global Perspectives on Corruption payment applications on their easily stolen. From Equifax to Target Page 4... TAMPA BAY smartphones these days. Mobile data breaches, the public has become ETHICS AWARD CENTER FOR ETHICS ADVISORY BOARD payment applications such as Venmo, aware that hackers can do pretty • Ethics in the News by Jessica Luce Christine Dever Homack Jessica Luce Square, and PayPal offer easy and much anything from the other end of a Page 5... affordable e-payment solutions to computer terminal. Lorna Taylor, president and CEO of Principal, Accountabilities Consulting Services LLC Associate Editor, Center for Ethics small businesses, allowing customers Recently, during a Black Hat • Enron and Andy Fastow Premier Eye Care, received the 27th The University of Tampa C. Lee Essrig to make payments with the click of a security conference researchers Our Perspective annual ethics award on Friday, Oct. Principal, Lee Essrig and Associates LLC Robert Marley, Ph.D. button. Square, a very popular mobile figured out a unique way to hack Square • Tampa Bay Ethics Award 6, 2017, at a breakfast ceremony at Associate Director, Center for Ethics Brent Fernandez payment application, offers e-payment readers. Adam Laurie and Zac Franken, UT before her friends, supporters and Assistant Professor, The University of Tampa Project Manager, IDSTC processing services for a small fee Claudia Rodriguez directors of Aperture Labs, created Page 6... Premier Eye Care employees. Sandra Moscovic, Ph.D. of 2.75% per transaction. You have Certifed Fraud a code that let them feed magnetic • Sustainable Business Awards Taylor is an accomplished leader, William “Bill” H. Geiger Examiner Director, Corporate Ethics and Compliance probably seen Square in small shops, stripe data from stolen credit cards both in directing fast-growing Premier Jessica Luce Retired, formerly Corporate Counsel and Group • Ethics Speaker Series Associate Editor TECO Services Inc. farmers’ markets and salons. Square into a microphone, converting it to a and in making an impact in the VP-Compliance, Transamerica/AEGON • Center for Ethics Advisory Board “readers” are easy-to-use payment facilitators sound file. They then played that sound file—a community. Premier, ranked as one of “Florida’s Award recipient Lorna Taylor (third from left), stands alongside Dr. Dan Verreault, Dr. Robert Marley, Brianna Reeves ‘19 First lady Renée Vaughn, President Ronald Vaughn and Dean Frank Ghannadian F. Frank Ghannadian, Ph.D. that snap into the end of a smartphone and read series of beeps—into the Square reader via Best Companies to Work For” for six consecutive UT Student Dean, Sykes College of Business a customer’s credit card information, making stereo cable. The researchers found these beeps other mechanisms to detect fraud. However, I years, has also ranked as one of the state’s Award from the Sustany Foundation and Center Directors (MMD) Board, Preserve Vision The University of Tampa Daniel A. Verreault, Ph.D. Square very attractive to business owners who permitted a Square user to perform electronic sure feel like many big fraud stories started with fastest-growing companies two of the past three for Ethics. The Business Observer named her as Florida, Florida Coalition Against Domestic Director, Center for Ethics Mark Harmon want to simplify their point of sale process. payments! What does this mean? It means that one person trying to tell the world “Hey, there is years by the Florida Business Journals. one of its 2015 top entrepreneurs of the year, Violence Foundation, Arts Conservatory for Associate Professor, The University of Tampa HR/Training Risk and Control, Citigroup However, letting someone else swipe hackers could potentially use individuals credit a problem!” (Madoff anyone?). As a past chair of The Spring of Tampa Bay, and she was recently named as a Florida finalist Teens and Tampa Bay Businesses for Culture Caitlin Whetstone ‘19 your credit card from a tiny card reader on cards without physically cloning them, knowing We can hope that Square is correct and Taylor was honored with the organization’s Angel in the prestigious EY (formerly Ernst & Young) and the Arts. She also serves on UT‘s Board John Hindman UT Student their smartphone may raise questions for you. their PIN, or being physically present during a they indeed have the necessary tools to detect Award, and was named a Woman of Distinction Entrepreneur of the Year 2017 Award. of Trustees. Taylor is a graduate of Princeton CEO, H&A Consulting Partners LLC Is the other person storing your credit card purchase. These researchers presented their and prevent this type of fraud. In my opinion, by the Girl Scouts of West Central Florida in Personally, Taylor is involved in a wide Theological Seminary and earned a master’s Edgel “Ed” Lester information? Can your credit card information findings to Square, but the company did not see prevention is the preferred option when it comes 2013. In 2014, she received the Light of Sight variety of community and charitable causes. degree in divinity, concentrating in social ethics. Chair, Shareholder, Carlton Fields, P.A. be hacked? We’ve all read enough news to know this as a significant threat, stating instead that to fraud. Time will tell how this story plays out. Award from the Lion’s Eye Institute Foundation, Taylor serves on the Board of Trustees for For more information go to www.ut.edu/ (813) 258-7415 • [email protected] that almost everything can be hacked, leaving they have the necessary traffic analytics and and the Jan Roberts Sustainability Leadership The Dalí Museum, and on the Moffitt Medical TampaBayEthicsAward. continued on page 2

5 6 1 THE UnivErsiTy of Tampa A Publication of the Center for Ethics sykEs CollEgE of BUsinEss FALL 2017 ENRON AND ANDY FASTOW side of the story. As business students, it was We believe his outreach in speaking to SUSTAINABLE BUSINESS AWARDS ETHICS SPEAKER SERIES OUR PERSPECTIVE a great experience listening to him. We, as a students like us, without receiving any financial collective group of individuals, have the ability compensation for doing so, is his way of helping by Jessica Luce by Jessica Luce by Alaina Butler and Duncan McGarry to ensure the business world functions without atone for his negative actions. Businesses the center On June 7, 2017, the UT Center for Ethics, with its community partner the Sustany Foundation, corruption and fraud, with ethics and morals. As operate every day in the gray area, making it each Fall Ethics Speaker Series: “Rules hosted the 9th Annual Sustainable Business Awards luncheon. Seven businesses were honored versus Principles.” See review, page 5. we listened to Fastow speak, we saw the world individual’s responsibility to make the ethical for their contributions to building successful companies that positively impact the community. The through his eyes. Although he now admits doing choice; therefore, at any moment an executive businesses were recognized for their contributions in building a sustainable economy in Tampa for ethics wrong and feeling great remorse for harming so can choose poorly, beginning the spiral to fraud. Bay, while embracing the “triple bottom line” — advancing the interests of people, planet and Fall Ethics Hot Seat Series: “Ethics many individuals and families, he admitted that Fastow helped us see just how thin this line can profit through innovative practices, products and services. The 2017 winners include Suncoast from the Outside In and Inside Out.” On “The Best Way to Rob a Bank is to Work for One” at the time of his arrest he did not believe he be in business; explaining how he crossed that Federal Credit Union (NFP), Doubletree, INETICO, Jones Potato Farm, Safer Home Services, Atelier Wednesday, Nov. 8, Earnest Broughton, – Joke Punchline had broken any rules. Today, Fastow admits that line helped us to understand what we can do to Architecture and Kenyon Energy. AACSB International, The Association to Advance Collegiate while he may have technically followed the rules prevent making unethical decisions. senior advisor for the Ethics and Schools of Business, was awarded the Jan Roberts Leadership Award. For more information go to and therefore less threatening than of the time, his actions were unethical because Fastow’s presentation brought the UT Compliance Initiative, was on the hot WHITE COLLAR www.ut.edu/centerforethics/sustainablebusinessawards. violent crime. Our laws, police, and they violated the principles upon which the rules community together for a unique experience, seat. He brought a sold-out crowd on CRIME Alaina Butler Duncan McGarry courts prioritize addressing violent were based. giving us the opportunity to hear the Enron story B.S. Management ‘20 B.S. Finance ‘21 an interactive journey that explored the by Robert Marley, Ph.D. crimes, dealing with white collar Fastow’s perspective was explained through from the perspective of somebody at its core. emerging science behind why we act Although the above quote is a crimes more leniently. Perhaps Boom and bust. Enron flourished and inspired a discussion of loopholes. At Enron, he found If put in a position similar to Fastow’s, would one-liner commonly delivered during unsurprisingly, white collar crime many Americans leading up to the year 2000, loopholes in the rules, being proud of his today’s business students behave similarly? the way we do, especially when our stand-up comedy routines, we continues to increase, while violent and then plummeted once the nation discovered creativity at the time. He helped to create the Those who attended his presentation likely have behavior runs contrary to the values we chuckle because it holds several crime has decreased by 30 percent the truth behind the company’s “success.” illusion of billions of dollars in profits for Enron, a better understanding of right and wrong and hold dearest, and what we can do about it. truths. First: knowledge is power. since 1990. What can be done to stem Three leaders of the company — Kenneth Lay, but his motives were corrupt. Thus, instead of how the gray zone can lead to unethical choices. By working for a bank, a would- the rising tide of white collar crime? Inside this Issue: Jeffrey Skilling, and Andrew Fastow — released breaking the rules outright, he subverted the Thus, our moral compass was strengthened be robber acquires knowledge not Robert Marley, Ph.D. An appropriate starting point seems financial statements that created the appearance spirit of the rules to avoid their intent. Fastow due to this event. With our ethical awareness Associate Director, Page 1... available to the public, giving him to be understanding what motivates of a financially successful, innovative company. stated that there will always be a gray area heightened, we are in a better position to learn Center for Ethics • White Collar Crime more opportunity to steal from the individuals to commit white collar These misleading statements were approved in any business decision, between what is the rules of accounting, keeping in mind the bank without holding it up at gunpoint. Second: crime, so that is precisely what this issue seeks • Researchers Find Security Loophole by Enron’s own accounting department and by technically allowed and what is right. He stated principles of right and wrong. Having gained society views white collar crime as non-violent, to provide. for Square e-Payment App its independent auditor. The actions of these that he lacked the moral compass required new perspectives from Fastow’s presentation, three executives lead to the largest corporate to make the right decisions. We came away we hope that UT graduates will work towards Page 2... accounting scandal in America. believing that Fastow regretted his unethical improving business ethics, perhaps even • Congratulations Rebecca White On Monday, Oct. 16, 2017, over 400 UT actions. When asked by a student what he ensuring that harmful scandals like Enron never Winners of the 2017 Sustainable Business Awards faculty, students and alumni had the opportunity would do today if he were a CFO again, Fastow occur again. RESEARCHERS FIND SECURITY LOOPHOLE FOR SQUARE • Why Does Fraud Occur? to meet Andrew Fastow, the only Enron executive said that he fears the corporate world because E-PAYMENT APP Page 3... who has admitted doing wrong, and hear his he is afraid to go near the gray area again. by Claudia Rodriguez • Faculty in the Spotlight Most people have mobile individuals’ personal information • Global Perspectives on Corruption payment applications on their easily stolen. From Equifax to Target Page 4... TAMPA BAY smartphones these days. Mobile data breaches, the public has become ETHICS AWARD CENTER FOR ETHICS ADVISORY BOARD payment applications such as Venmo, aware that hackers can do pretty • Ethics in the News by Jessica Luce Christine Dever Homack Jessica Luce Square, and PayPal offer easy and much anything from the other end of a Page 5... affordable e-payment solutions to computer terminal. Lorna Taylor, president and CEO of Principal, Accountabilities Consulting Services LLC Associate Editor, Center for Ethics small businesses, allowing customers Recently, during a Black Hat • Enron and Andy Fastow Premier Eye Care, received the 27th The University of Tampa C. Lee Essrig to make payments with the click of a security conference researchers Our Perspective annual ethics award on Friday, Oct. Principal, Lee Essrig and Associates LLC Robert Marley, Ph.D. button. Square, a very popular mobile figured out a unique way to hack Square • Tampa Bay Ethics Award 6, 2017, at a breakfast ceremony at Associate Director, Center for Ethics Brent Fernandez payment application, offers e-payment readers. Adam Laurie and Zac Franken, UT before her friends, supporters and Assistant Professor, The University of Tampa Project Manager, IDSTC processing services for a small fee Claudia Rodriguez directors of Aperture Labs, created Page 6... Premier Eye Care employees. Sandra Moscovic, Ph.D. of 2.75% per transaction. You have Certifed Fraud a code that let them feed magnetic • Sustainable Business Awards Taylor is an accomplished leader, William “Bill” H. Geiger Examiner Director, Corporate Ethics and Compliance probably seen Square in small shops, stripe data from stolen credit cards both in directing fast-growing Premier Jessica Luce Retired, formerly Corporate Counsel and Group • Ethics Speaker Series Associate Editor TECO Services Inc. farmers’ markets and salons. Square into a microphone, converting it to a and in making an impact in the VP-Compliance, Transamerica/AEGON • Center for Ethics Advisory Board “readers” are easy-to-use payment facilitators sound file. They then played that sound file—a community. Premier, ranked as one of “Florida’s Award recipient Lorna Taylor (third from left), stands alongside Dr. Dan Verreault, Dr. Robert Marley, Brianna Reeves ‘19 First lady Renée Vaughn, President Ronald Vaughn and Dean Frank Ghannadian F. Frank Ghannadian, Ph.D. that snap into the end of a smartphone and read series of beeps—into the Square reader via Best Companies to Work For” for six consecutive UT Student Dean, Sykes College of Business a customer’s credit card information, making stereo cable. The researchers found these beeps other mechanisms to detect fraud. However, I years, has also ranked as one of the state’s Award from the Sustany Foundation and Center Directors (MMD) Board, Preserve Vision The University of Tampa Daniel A. Verreault, Ph.D. Square very attractive to business owners who permitted a Square user to perform electronic sure feel like many big fraud stories started with fastest-growing companies two of the past three for Ethics. The Business Observer named her as Florida, Florida Coalition Against Domestic Director, Center for Ethics Mark Harmon want to simplify their point of sale process. payments! What does this mean? It means that one person trying to tell the world “Hey, there is years by the Florida Business Journals. one of its 2015 top entrepreneurs of the year, Violence Foundation, Arts Conservatory for Associate Professor, The University of Tampa HR/Training Risk and Control, Citigroup However, letting someone else swipe hackers could potentially use individuals credit a problem!” (Madoff anyone?). As a past chair of The Spring of Tampa Bay, and she was recently named as a Florida finalist Teens and Tampa Bay Businesses for Culture Caitlin Whetstone ‘19 your credit card from a tiny card reader on cards without physically cloning them, knowing We can hope that Square is correct and Taylor was honored with the organization’s Angel in the prestigious EY (formerly Ernst & Young) and the Arts. She also serves on UT‘s Board John Hindman UT Student their smartphone may raise questions for you. their PIN, or being physically present during a they indeed have the necessary tools to detect Award, and was named a Woman of Distinction Entrepreneur of the Year 2017 Award. of Trustees. Taylor is a graduate of Princeton CEO, H&A Consulting Partners LLC Is the other person storing your credit card purchase. These researchers presented their and prevent this type of fraud. In my opinion, by the Girl Scouts of West Central Florida in Personally, Taylor is involved in a wide Theological Seminary and earned a master’s Edgel “Ed” Lester information? Can your credit card information findings to Square, but the company did not see prevention is the preferred option when it comes 2013. In 2014, she received the Light of Sight variety of community and charitable causes. degree in divinity, concentrating in social ethics. Chair, Shareholder, Carlton Fields, P.A. be hacked? We’ve all read enough news to know this as a significant threat, stating instead that to fraud. Time will tell how this story plays out. Award from the Lion’s Eye Institute Foundation, Taylor serves on the Board of Trustees for For more information go to www.ut.edu/ (813) 258-7415 • [email protected] that almost everything can be hacked, leaving they have the necessary traffic analytics and and the Jan Roberts Sustainability Leadership The Dalí Museum, and on the Moffitt Medical TampaBayEthicsAward. continued on page 2

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