Professor soltes, good morning. Good morning. Its a pleasure to have this opportunity to speak to you about your book, why they do it. Let me start with asking you, how is it that you came upon deciding to write a book about the perspectives and backgrounds and thinking of white clar criminals . Im a financial economist by training. This book began when i was a graduate student working on large Empirical Data sets, up at 3 00 in the morning and came across a show called msnbc lockup, the kind of thing that you watch at 3 00 in the morning. And on the show, they had a crew go into various prisons and they were interviewing convicted fellons, mostly for murder, assault, rape. I started to think about the kinds of people that i wonder and think about, the people who are the industries and finance of what we saw on the color of fortune, the commencements, donating generously and wondering what happened to these guys . The people that many people respected. They were convicted for offenses. Then they disappear. And so this project began as really a personal interest, that i saw the headlines. This is 2008. Still very much in the headlines. And that evening, out of personal curiosity, this isnt a scholarly project at all at this point, what a lot of people had in the back of their minds reading the wall street journal and New York Times stories, i thought maybe if i could do what they were doing on the show a little bit, i could spend time talking to them and see a different perspective. So give us a kind of a sampling or list of who it is you spoke to. Over the course of the last seven years, roughly 50 people, most of which were convicted criminally, and in a couple of cases that have been overturned. The executives from enron, the former ceo of tyco, people convicted of ponzi schemes, madoff, largest ponzi scheme in recent history. How did you approach them . And more importantly, why do you think they agreed to talk to you . Thats a great question as an attorney asking that. So i approached them with a i think a as an educator. Im someone that teaches this material to my students at Harvard Business school. And this is not something that a student would ever sanction. Ever think they would face. I wanted to see, how did some of these individuals, some of which are alums of the school of which i teach at, what happened along the way. So write a short letter. I would like to better understand your perspective. Could we spend some time together. So that first night when i sent those first ten questions out, i received a number of responses. Some people actually someone from global head of sales from Computer AssociatesSteven Richards described some of the challenges he faced. Others like sam wasosky say come visit me. I started taking them up on this offer. What started as maybe a half an hour here, a letter there, an email, federal prison email, back and forth through a special system, began something that became more apparent to me that it was interesting. Actually quite humbling speaking to some of these quite extraordinary and intelligent individuals that face consequential sanctions, to hair their perspective. As to why they spoke with me, i think one thing that im quite privileged in being an academic at hbi is that i can commit to spend as much time as i really needed to to try to understand their perspectives. Im not going to try to write something or teach something in my class at the end of the week, the journalists might have a deadline, i could spend weeks, months, and some people spent years trying to understand how they see the world. Because thats the ultimate goal of the project. Also, i think many of them simply just missed their business world. And i teach finance. We can talk about the financial crisis. We can talk about whats going on in other firms. Much of our conversation was not about their case. Much of the revealing aspects of my conversation was talking about Everything Else, what was going on in the wall street journal. I would send them books i was reading and assigning in class and hearing what they had to say versus my colleagues and students which oftentimes is fascinating. Did you talk to Family Members, victims, others that were sort of around these individuals and the crimes that were committed . I did. Much more of my focus was on the individual. But in a number of instances, theyre Family Members. And many of the cases im actually on much of the correspondence that is sent among the family. I think its very easy, and i think i approach this like many people externally, when you see this extraordinary crime that causes such devastation to say someones going to get a year in prison, or two years in prison, that doesnt seem very much. To see what that does to a family, what to kids, its really quite extraordinary. And i think humbling. Even if the sanction is, quote, short. Thats seen from their perspective of their family. But also seeing now that people started to get out of prison, i spent time, how people are finding Different Things to do. And in some cases flourishing in different ways. And other people are stuck, having these sanctions on them, for something they can never overcome. And victims, especially cases like madoff. Some people were just really truly devastated by his actions. And part of my goal of speaking to victims is actually to go back to someone like Bernie Madoff and say, i just had this conversation, can you help me try to understand why this doesnt seem to be resonating with you . Thats where i think i learned something about their personalities. How some cases didnt seem to settle in, that there was really people on the other side that lost everything. And i guess i would ask the question of whether or not you thought they were truthful with you, although perhaps the way you describe it, you werent necessarily in the business of trying to determine what the truth was and confronting them with it, is that right . The broader goal, ill say there are subjective views of the world. I wanted to be able to put myself in their shoes, and see how they viewed the world. Now, their own cases, and i think any prosecutor knows, the defense knows that peoples memories, even if theyre trying to be truthful, theyre involved in change, particularly in their cases. Even the best Case Scenario they were trying to be truthful, its hard to remember all the details. But on top of this, most of them are convicted fellons. So to rely on truthfulness would be naive on my part. This is why i did try to rely on much more of the information going around at the time. We have a lot of email. In some cases they would show me that. In one case, for enron, they werent worrying the night after they signed the papers. They were actually going out and celebrating and described how they went out with their spouses. That piece of information is more powerful, not something that was widely reported, or if you know what people are doing after, you can kind of back up probably what they were thinking a little bit better, or their immediate reaction. Thats what i was trying to do is piece it together. In a different way. But ultimately subjective. The suggestion by some of them was, i didnt run to my defense lawyer that night. I went out and had a party. So, therefore, i wasnt really intentionally doing anything wrong. I dont want to say intentionally. But they werent worrying about what they were doing. Which i think is Something Different. We all do things that are wrong, and this is kind of one of the things in the book. We all speed. Driving a car. We know thats wrong, but we still do it. But if we know that somethings actually harmful, is going to create some kind of significant harm or devastation, we generally have a much deeper pause before going ahead. I argued many cases this is what prevents us from considering a different option in the first place. I think in many cases, they know they were pushing something aggressively, which is wrong. But it could lead to a slap on the wrist. This wouldnt lead to the consequence that is we see described in this book that would really offend and otherwise a privileged life in a lot of cases. Let me ask you, what is the what do you think is the difference, if there is one, between the white collar criminal on the one hand and those who commit other types of crimes, be they physical crimes, like burglary, or drug crimes, or assault . Is there a fundamental difference between the profile of the perpetrator . I think it links to the profile of the perpetrator and the crime itself. The thing thats different with white collar offenses you dont have to get close to the victim. The victims themselves are distant, oftentimes amorphous. Its difficult to identify the actual name of the individuals that we can say its more broadly, more systematic. Creates a harm to the Financial System as a whole. More anonymous persons on the other side of the trade. Anonymous persons on the other side of the trade, thats true. They exist. No doubt. This is not to say it doesnt exist. But you cant pick them out. And actually see their picture. In other cases, even when there are, you can say identifiable victims, the timing in which theyre actually going to be identified actually offsets. Think of a ponzi scheme. At the time youre actually harming the individuals by investing in some nonexistent investment scheme, like Bernie Madoff, people were clambering to give him more money. They were trying to give him more leadership positions in industry. He could come home and actually most of the day look pretty good. Its only when its revealed later that all this starts to unwind and it becomes so clear that there were actually people being harmed rather than so this is why i always find it interesting that i could spend, and i did spend hundreds of hours with individuals in a room, i never once worried about one of these guys if i turned around, going into my back pocket and stealing 20 out of my wallet. About you many of these individuals through, you know, funds that i owned, retirement account, actually have actually taken far more than 20 from me. The question is, well, why do i never need to worry about them stealing 20 from my wallet but many of them without very much remorse steal a couple hundred from my account . And i think thats the fundamental difference in terms of these crimes. That you can actually do some devastating things and not have that gut feeling of actually doing something harmful. Even a reasonably socialized person. As opposed to putting a knife at somebodys throat and demanding a wallet. I think it takes a different kind of person, or a different kind of desperation or circumstances. You also point out in the book, in addition to the anonymity of the victim, and the sort of longer period of time it takes for the victim to be revealed, its the act itself, i think you in the book talk about how the crimes are often create committed by the click of a mouse or erasing and putting in a new number on a balance sheet. Is the nature of the act also something that distinguishes the white collar criminal from others . Thats a great point. I mean, you can actually create extraordinary devastation. Theres one case in which someone actually uses the white font feature in excel and is able to make changes that would cause hundreds of millions of dollars in a loss for the firm. And thats pretty nice, it takes three seconds. It doesnt feel all that harmful at the time. I mean, its really the click of a mouse or signing the paper. One of the people that was prosecuted after the passages, steven garfunkel, a former cfo. He described how he was ultimately prosecuted for signing a significant amount of false collateral. In that he was actually comfortable, not comfortable but didnt feel that bad about signing many, many documents attesting to a false letter of collateral. It didnt seem that big of a lie. Youre signing a sheet of pape. So what . It was only once he actually was actually confronted by someone, actually it was a banker who didnt think the numbers made a lot of sense and confronted him, these numbers dont line up, that he was forced to lie to someone facetoface, that was at that point, its a lie, it doesnt make sense and thats when everything so the most subtle distinction of lying on pape are is very easy. Lying to someone to their face is harder and we can keep escalating from there. So does the fact that does this give you some insight potentially into how one might better deter White Collar Crime knowing how it is different from other types of crime, does that then give you any insight or did you reach any conclusion about how best to prevent it . This is the big challenging question. I mean, the one thing that did initially surprised me but then over time became something i came to expect is that most of these people, even when theyre doing something pretty egregious, the kind of thing that is going to land you in prison. This isnt any gray this isnt if we hire great lawyers were getting out of this thing, this thing is once detected you go away for a period of time, still found ways to see that they werent going to go to prison. Even if you do something really wrong that you never see that outcome happening, it suggests that maybe a different regulatory approach, a way we need to think about that. If this isnt a deliberate cost and benefit calculation. Because if its a cost benefit calculation, theres two ways to increase the cost, increase the probability of being caught or we increase the sentence once caught. And i think the historical approach that weve taken over the last several decades has been lets increase the cost associated with being once youre caught. So rather than a potential sentence of one year, it goes from three years or five years or in some cases theres several that argue that the sentences look potentially too long when we compare them to serious personal yes, there was one cite in your book that, you know, about a 12 million fraud that impacts shareholders in the 1980s was punishable by approximately 3 years in prison whereas by the early 2000s that had increased four fold to 15 to 16 years in prison for the same offense. Obviously a drastic increase in penalties and sanctions and fines, but your point seems to be that may not have much of an impact on deterring White Collar Crime. I think if it was many of these people and were talking about the most privileged people here, so it is a specific type of individual. But whether you go to prison for six months or go to prison for three years, that idea is not resonating in most of these cases. You still think thats for someone else. Its those guys that go to prison, not me. How about the fact of prison as opposed to the length of the term . This goes the other way and this goes to a much broader set of norms. If this stuff is wrong, its going to have really serious sanctions associated with it, which could be, you know, very heavily financial penalties but could be prison. But thats something that people normalize if that this is what happens to people that do this kind of thing. If that was in peoples minds, i think that would change. But thats not a cost benefit calculation anymore. That strikes me that becomes part of our norms and culture and what actually is appropriate and not appropriate. You need resources, too. In order to detect more cases, especially some of the more difficult cases, you need the amount of resources to police, which is challenging because this is, obviously, a political consideration of how much resources do investigators have . What about if white collar criminals you find dont really make that cost benefit analysis, then do you or in your book do you have any suggestions on how it is that this crime can be better deterred . So i go back to the individual at the end, which is my view and this is my view of human nature is that the people in here are not predisposed or have any inclination to actually want to do something criminal. These are the things that happen because of the settings theyre exposed to, the norms, the cultures in the firm and the pressure that they face. I think of a standpoint, for example, a Business School student. Theres not one Business School student when theyre about to leave a prestigious Business School is my goal is to go out and become a titan in the industry, become wealthy, improve the industry, speak at a commencement, donate to a lot of wonderful organizations then maybe at the end of my career, i might engage in some fraud or insider trading. No one thinks like that. But what we find is cases of people doing exactly that. Roger cooper is a prime example of this. Tell us about roger cooper. The most extraordinary careers, one of the most well respected firms in the world. Potentially ceo. Yes, managing director. Became the lead person of one of the most celebrated firms or his culture and what it means, then you look soon after his retirement, hes on the board of a number of prestigious firms, Goldman Sachs, one of them, and at one point 23 seconds after a Goldman SachsBoard Meeting, hes calling a well known Billionaire Hedge Fund and divulging confidential information. I mean, this is against everything that he did in his life to become successful. I mean, you dont become the head of mckenzie by not being thoughtful, reflective, intelligence and protecting client confidences. Let me stop you right there for a moment because i was going to say the cynic, but maybe not limited to cynics, might suggest that exactly the kind of approach and conduct that gets you ahead in the business world. Its not a place necessarily where ethic and morality prevail but those persons that operate in the gray area and maybe even cross the gray area that get ahead. What he did was an extension of how he operated at mckenzie. It could be. Its impossible to fully rule that out. But the cases of raja gupta and the partner at mckenzie is one of the most cherished values at a place like mckenzie is client confidentiali confidentiality. This is place that you dont talk in the elevator about your clients. You dont tell your spouse, you go to st. Louis but you dont tell your spouse which firm. Its remarkable to be in that culture and teach it, lead it and do it successfully around client confidentiality and ill say not respect that and still succeed. At least how i look at both of these cases, gupta and kumar. They were exposed they were successful when they were in the confines of mckenzie culture. Strong culture reinforcing the norms that we protect client co