Posted by Marc Hodak on April 19, 2008 under Scandal | 
What began as a story about an abusive Mormon sect is quickly turning into a one about abusive Texas authorities. So far, 416 children have been shorn from their mothers on the rationale, or perhaps pretense, of protecting them. The state says the children were abused; the adults and the children say they weren’t. The judge, in a court proceeding that unflatteringly evoked the Wild West, ordered the children be placed into foster care.
Here is what a psychiatrist testifying on behalf of the state had to say:
He also conceded that the children, taught from birth to believe that contact with the outside world will lead to eternal damnation, would suffer if placed in traditional foster care.
“If these children are kept in the custody of the state, there would have to be exceptional and innovative programmatic elements for these children and their families,” he said. “The traditional foster care system would be destructive for these children.”
CPS (Child Protective Services) spokeswoman Marleigh Meisner said the department was pleased with the judge’s ruling and believes that the children will now be safe.
This kind of self-satisfaction is what gives fuel to CPS critics, undermining public confidence in the whole system.
BTW, as soon as the story broke, I was skeptical about “Sarah,” the 16 year-old girl who made the call from the ranch triggering the Texas raid. The size and scope of the raid seemed disproportionate to the nature of the call, even as bad as that was. Once the raid was completed and they claimed not to have found “Sarah,” it began to smell like the WMD justification for Iraq. At this point, it’s becoming ever clearer that “Sarah” was a hoax. My bias against conspiracy theories tells me it’s unlikely that the hoax was perpetrated by the state, but I wouldn’t be surprised if, like the WMD justification, neglect combined with an itchy trigger finger such that proper skepticism–or any sense of restraint–failed the authorities.
Finally, I tend to give more credence to reports about the action from people close to the action:
Local opinion on this is kind of mixed. By and large, people are in support of breaking up a group that was engaged in the systematic sexual abuse of teenage girls. People also have some real qualms that the state went too far in taking all the kids.
I can’t imagine why the state took all the boys. I haven’t heard anything indicating any boys were abused, but the state argues that they were being raised to be abusers. I’m not sold that this meets the legal standard for “harm or imminent risk of harm.”
I don’t know why the state separated the kids from their mothers. I haven’t heard anything indicating the mothers were abusing anyone.
Its rather odd that we now have the purported victims suffering and/or in custody (mothers and kids) while the perpertators (the men) are still walking around free.
There are almost certainly severe due process problems going on in the hearing on all this. The kids aren’t getting individualized hearings and the hearing itself are a total clusterfuck.
The gossip is that the judge is pretty much taking the state’s side in all this.
Posted by Marc Hodak on March 12, 2008 under Scandal |
“I hope the arrest can ease the minds of some in the community,” District Attorney Jim Woodall said.
I truly hope they found her killers, and that they pay dearly for their crime. But I’d just as soon get this kid a decent attorney to keep the system down there honest. One thing I learned about Durham police and ATM evidence is to reserve judgment.
I’m reminded by one hilarious, braided commenter: “If this is how the DA treated three white Duke lacrosse players, I don’t even know what he woulda done to my black ass.”
Update: One of the suspects in Eve Carson’s murder has now also been charged with the January murder of Duke student Abhijit Mahato. He’s the second person who has been charged with that murder. Two people charged with the same murder, you say? Yea. That’s what I’m wondering.
Posted by Marc Hodak on March 10, 2008 under Scandal |
So, Eliot Spitzer has had to publicly apologize for having sex with someone who wasn’t his wife. For money, that is. The pandemonium has begun, because everyone knows that sex-money-politics is the very best headline-grabbing mix.
Like most places, johns are rarely prosecuted in New York, according to Michael Bachner, a former prosecutor in the Manhattan District Attorney’s Office:
To the extent Mr. Spitzer is charged it would likely be under the Mann Act, which prohibits transportation of people across state lines with the intent to commit prostitution.
But “the Mann Act really was designed more towards those who get someone to travel against their will,” Mr. Bachner said. “If Spitzer gets indicted, it would seem to me he would be indicted based on who he is rather than what he’s done.
Oh noes. We wouldn’t want to selectively prosecute someone just for who he is rather than what he’s done. Why, that would be so unfair, so political. Mr. Bachner goes on to say:
Those who frequent prostitutes are very, very rarely the subjects of a federal prosecution when clearly it’s commercial and consensual.”
Why, that would be like seeking criminal sanctions for what are generally treated as civil cases.
As for possible state charges, he said “customers are rarely prosecuted in the state” and charges that are brought are typically disposed of with a plea to disorderly conduct, “which is akin to a traffic ticket,”
I, for one, would like to go on the record opposing the politicization of the state’s attorney’s office by hounding Mr. Spitzer in any such fashion. I think that would be a dangerous road to travel. It would create a power subject to horrible abuse.
Here is what I’d like to see instead.
Read more of this article »
Posted by Marc Hodak on February 29, 2008 under Scandal |
Mrs. Kroes has emerged as arguably the world’s most-feared antitrust enforcer.
Yay. Someone looking after my interests in Europe.
Mrs. Kroes announces big fines — €329 million on a cartel of zipper makers, for example — with relish at news conferences and denounces with bombast corporations she believes are trampling consumers.
Well, I guess enthusiasm can be a good thing. I mean, she’s not bombastically announcing huge fines just because she’s a media whore, right?
While U.S. regulators are more likely to wait and see what happens after a company becomes dominant, Mrs. Kroes is predisposed to pre-emptive action. If a company is “just blocking competition, then at the end of the day, there will be a type of monopoly,” she says.
Wait, how exactly does she distinguish aggressive competition from “blocking competition?” And how does she know which aggressive competitor is likely to become a monopoly? Even seasoned investors with a huge interest in knowing these things, and in a market like the U.S. without this kind of enforcement, can’t tell that. I mean, she must be super brilliant.
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Posted by Marc Hodak on February 26, 2008 under Scandal |
I believe that most scandals have perverse incentives at their root. In the case of Health Net canceling the policies of ill patients, the incentives had an intended effect, but they couldn’t survive the sunshine rule:
During arbitration, Bates’ attorneys produced internal company documents that showed that Health Net was rewarding employees with bonuses based on the number of cancellations they got.
Employees were asked to meet cancellation quotas and were also rewarded based on the amount of money they saved the company. Bates’ lawyers argued that Health Net had saved more than $35 million by rescinding policyholders between 2002 and 2006.
I don’t know if I agree with those who don’t think $9 million is a sufficient penalty for Health Net. Don’t forget the enduring penalty of bad publicity. For instance, Health Net is our insurer, but probably not for long.
Posted by Marc Hodak on December 17, 2007 under Scandal |
Isn’t that what everybody wants?
No.
First of all “The Whole Story” is more boring than the story based on selected facts and biased interpretations. Any time a reader has a choice between a “whole story” and a “good story,” guess which one they’ll buy and which goes into the stack of unread manuscripts?
Second, “The Whole Story” is uneconomical to produce. Most stories are outlined based on facts that have already captured people’s interest (“good story” facts) before they are written up. Once the story is outlined, the story-writers job is to get the interviews and documentary support before a deadline. The worst thing that could happen under deadline pressure is uncovering information that undermines the impact of the story by providing nuance or inconsistent evidence. So, given their limited time and energy under a deadline, how much time will a writer spend chasing down the “other side” of the story, even if contrary evidence is left in their inbox? Especially if that evidence will be met with skepticism by the reader, anyway?
Third, “The Whole Story” is impossible to obtain. Even if a journalist had plenty of resources and time, and they were able to amass all the information into a plausible time line with all of the player’s motives candidly volunteered in a blizzard of interviews, it would not be the whole story. Every historical event or figure has an almost unlimited amount that can be written about them. A historian tracking a recent event, where all the players are still alive, will invariably miss witnesses who have no incentive to volunteer their version, which may offer a valuable perspective. A historian tracking a distant event or figure will invariably miss a welter of material that might have provided key insights. Every time we discover a cache of letters by the relative of some major historical figure, we end up with a new take on the past.
Of course, most people producing words and images for mass consumption aren’t even trying.
Posted by Marc Hodak on December 7, 2007 under Scandal |
Let’s say your boss walked into your office and asks you to backdate a letter so that a decision looks like it was made earlier than it really was. You don’t feel perfectly comfortable with this, but you say, “OK.” If you had stopped in your busy day to think about this particular act, and realized that neither you nor your boss would be personally enriched by it, and that the company and its shareholders may very well benefit from it, you’d probably wouldn’t think it’s such a big deal. You wouldn’t think that you’d end up with a criminal conviction leading to up to 20 years in jail. But that’s what basically happened to Stephanie Jensen.
Here is the prosecutorial logic. When someone says “OK” to her boss’s improper request, that’s conspiracy. 10 years. When one signs a letter that is ultimately used to misstate accounting results, even if you have no control over the accounting or understanding of the intricate rules involved, that’s fraud. 10 years. Normally, criminal fraud requires that someone personally benefit from their deceit, but in securities law, any impact on disclosed financial results can be presumed to lead investors astray to their detriment.
Jensen is only lucky that she’s not facing the full fury of post-Enron sentencing madness. The political appetite to punish what most sane people would consider marginal behavior became completely unhinged during the Enron/WorldCom scandal. Here is a taste of the unchecked attitude toward the sketchiest business behavior by Senator Leahy, Chairman of the Senate Judiciary Committee in 2002:
Today’s report includes a tough new crime of securities fraud, which will cover any scheme or artifice to defraud investors. Working with Chairman Sensenbrenner, we were able to retain the provision as I wrote it with a higher 25 year maximum jail term. That will cause scam artists to think twice. (Their emphasis)
Taken to the extreme, that means saying “OK” to your boss’s request to do something you may not quite understand is illegal, and may not actually harm anybody. Now, even the most self-righteous, ambitious prosecutor would be unlikely to actually pursue a low-level employee on something as simple as an “OK.” But the prosecutor would have this tool as leverage against this employee in getting their cooperation.
One could only wish that congresspersons were held to anywhere near the same criminal standards. Unfortunately, the media promotes the political vanity that lawmaking is a noble exercise in power free from conspiracies, while business is a messy financial affair where conspiracies abound.
Larry Ribstein makes another excellent case for the fact that Jensen merely lost the criminal backdating lottery.
Posted by Marc Hodak on November 14, 2007 under Scandal |
The cases covered in my History of Scandal class are designed to highlight forces behind the evolution of our markets. But many of the questions I raise about the coverage of scandals apply just as well to non-business stories. Take the death of Kanye West’s mother after plastic surgery in light of new findings that her semi-famous surgeon had DUI and malpractice judgments against him. Since the facts are presented without much context, this story provides the illusion of objectivity. But these facts are editorially selected to create a set of predictable inferences by the reader:
a) This guy was a bad doctor
b) Mr. West should perhaps have checked into his background before entrusting his mother to his care
The mainstream media is too careful to make those accusations explicit. They are, instead, taking advantage of their readers’ hindsight bias to connect the dots. Of course, what the reader doesn’t have in this connect-the-dots exercise are all the facts that either weren’t selected, or were deemphasized according to the inverted pyramid model or reporting. Here are some facts I would have liked alongside the ones that were presented:
1) Was Ms. West’s death related to the surgery?
2) If it was related to the surgery, was it related to actions or decisions made by this doctor?
3) If it was related to the doctor’s decisions or actions, was he drunk or otherwise impaired at the time of the operation?
4) Is the number of malpractice judgments against a doctor (at least in the number this doctor has had) a reliable indicator of a doctor’s competence?
The first question, which one might think is pretty important before a person’s reputation is trashed, was sort of answered in 12th paragraph out of 15 in this story–there is no conclusive evidence that this doctor had anything to do with Ms. West’s death. A negative answer to this question would, of course, make the rest of these questions moot, meaning that the “facts” selected for this story would be meaningless.
Read more of this article »
Posted by Marc Hodak on September 23, 2007 under Scandal |
Whenever I get down to Maryland, I’m re-exposed to the WaPo, often to my dismay at how a scandal sheet looks dressed up as a respectable paper. This morning, I was pleasantly surprised when I saw this story. Key paragraphs:
Congress passed a law, triggering a little-noticed worldwide war on human trafficking that began at the end of the Clinton administration and is now a top Bush administration priority. As part of the fight, President Bush has blanketed the nation with 42 Justice Department task forces and spent more than $150 million — all to find and help the estimated hundreds of thousands of victims of forced prostitution or labor in the United States.
But the government couldn’t find them. Not in this country.
You and I might be embarrassed to cry wolf, only to lead the town to an empty field. But not so those who benefited from making a Federal case out of what, in nearly every instance, turned out to be ordinary pimping. One of Bush’s moral crusaders drawing his ludicrously over-sized sword:
Tony Fratto, deputy White House press secretary, said that the issue is “not about the numbers. It’s really about the crime and how horrific it is…
“We have an obligation to set an example for the rest of the world, so if we have this global initiative to stop human trafficking and slavery, how can we tolerate even a minimal number within our own borders?”
Here’s how GloboCop: spend maybe $2 or $3 million to see how much of a difference you can make, before ramping up to a frenzied enforcement effort–not $150 million.
It may sound kinda cheap to argue that so much tax money shouldn’t be wasted on virtually non-existent problems if they exist at all. But I’m constantly mindful that those taxes were coerced away from us. We worked for it, and it went to someone else. By threat of violence. $150 million. How much forced labor does that represent?
Posted by Marc Hodak on June 4, 2007 under Scandal |
Well, my material on the Enron scandal is up on SSRN for review and critique. Warning: This is not the Enron story presented as morality tale. This is intended to provide graduate students practical information for evaluating business and regulatory policy.
Michael Jensen has been trying to open up SSRN to these kinds of materials, and encouraged me to submit this. This fully sourced material on Enron is for my “History of Scandal” class starting next Fall at NYU. I will be preparing other cases for this class in a similar format throughout the summer, including Credit Mobilier, the Erie scandal, Kreuger & Toll, etc.
This is the next evolution from a seminar I taught over the last couple of years on corporate meltdowns, taking it to the next level. I’d love to hear what people think.
