I don’t know how much more of this I can stand.
It is becoming increasingly clear to me that ethics rot is galloping through U.S. society and culture faster than I or anyone can match in efforts to curb it, and my wan attempts to sound ethics alarms are futile. This story is more proof.
Last fall, Robert F. Smith, the billionaire founder of Vista Equity Partners, a private equity firm, paid $139 million to federal authorities to settle one of the biggest tax evasion cases in American history. The tax evasion that sent gangster Al Capone to federal prison (where he died) was peanuts in comparison. Smith, a billionaire (and who knows how much of his wealth was acquired by unethical or illegal means, since he tried to cheat his own country out of taxes while butchers, bakers and candlestick-makers were paying their fair shares) could pay a $139 million with the ease you or I could pay an over-due parking ticket.
Yet despite this admission of criminal activity on a grand scale,
- Investors in Smith’s equity funds didn’t pull their funds out.
- His company took no steps to remove hi, as they might have if, for example, he had been white and used a “racial slur” in an over-heard private conversation, or if he had been accused of engaging in sexual harassment.
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Carnegie Hall, where Mr. Smith serves as chairman, took no action to remove him.
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Morehouse College, the historically Black college, reaffirimed its support for Smith, who had announced in 2019 that he would pay off $34 million in student loan debt of the 400 members of the college’s graduating class. David A. Thomas, president of Morehouse, said Mr. Smith could have moved on after making his commitment in 2019 but instead had started an initiative to relieve the debt burden of students at other colleges and universities that are historically Black.
“Robert’s passion for solving problems with solutions that scale, and his continued engagement beyond writing big checks, is what sets him apart from just about any philanthropist,” Mr. Thomas said in response to questions regarding Smith’s tax evasion scheme.
But the man is a criminal. Harvard and Yale decided they had to give back the contributions of Jeffrey Epstein, though his money was unrelated to his sex-trafficking activities. What kind of message does Morehouse send with its “Hey, if you give us enough money, we don’t care that you’re a crook” attitude? [Note: Smith’s generosity to Morehouse made him an Ethics Alarms Ethics Hero in 2019]
Meanwhile, the news media barely publicized this nauseating tale, certainly not to the extent that they blugged his Morehouse gesture. Why not? The Times, deep in its B-section, had an article last week headlined “A Buyout Fund C.E.O. Got in Tax Evasion Trouble. Here’s Why Investors Shrugged” months after Smith paid off the government. Yet it doesn’t have a valid explanation for “why.” The man, the article makes clear, deliberately set out to defraud the government. The article says that “Investors are often willing to overlook the misdeeds of money managers if they’re posting solid returns.” But why? Are they stupid? Are they so corrupt themselves that proof of absolute untrustworthiness isn’t seen as a problem? Why would anyone continue to trust a fund run by someone who deliberately evaded the federal income tax?
The Times headline is even equivocal: Smith didn’t “get into trouble,” he deliberately committed felony tax fraud, and was allowed to buy his way out of it. Smith’s nonprosecution agreement in October showed that Smith knew he had violated the law. The Feds had an ethical obligation to lock him up, just like they did Capone. A more perfect enactment of “laws are for the little people” I could not imagine.
Excuse me, I have to take a break to throw up.
There, I feel better.
A little.
Vista, says the Times, convinced investors that Smith’s tax evasion had nothing to do with the firm, calling it a “personal tax matter.” You know, like Bill Clinton inducing a young intern to play sex games and then lying about it under oath was “personal private misconduct,” having no bearing on his trustworthiness as the official pledged to “preserve, protect and defend the Constitution of the United States.”
I’ve been an ethicist for almost 30 years, and the culture is more ethically bankrupt now than when I started.
Ethics Alarms 
Smith apparently got let off the hook in exchange for ratting out a co-conspirator, incidentally another billionaire.
I can’t help but wonder whether race played a factor here (the co-conspirator is white). It couldn’t have been a good look for the Biden adminstration to lock up one of the rare Black billionaires in this country.
But perhaps I am being ignorant. I am not sure about anything anymore.
The deal was cut in the Trump administration. Yeah, I wonder about the race angle too…
Nothing changes people’s ethics quicker than money.
To be fair, would Al Capone have gotten the sentence he did if he wasn’t also a notorious gangster? My understanding was they came down so hard on him for tax evasion because it was the only thing they could pin on him.
That’s really his own fault though. If one chooses a life of crime they may get caught, they may not, such is life. If one chooses a life of crime and then decides to draw tons of attention and rub it in everyone’s faces, what do you expect? The evidence will be there when someone with the power to act goes looking.
I wasn’t arguing the logic behind Capone’s sentence, just wondering if he’s a fair comparison with Smith, who as far I know isn’t a mafioso.
In the entire picture he is not, Capone did a lot more than not pay his taxes. However, in terms of the crime before the court, he is because the charges were similar, and he stole a whole lot more. Unfortunately, the government was never going to be able to pin more than tax evasion on Capone, who carefully set up his criminal activity so that nothing could ever be traced back to him. Had there not been the tax evasion angle, I wonder if he might not have just gone into legitimate business and become Illinois’ version of Joseph P. Kennedy. Frankly, THIS Italian-American is glad that didn’t happen. Guys like him get us all a bad name.
True. But the Feds had all the leverage with Smith. They could have made him leave his fund, for example. Yeah, they through to book at Al because he was a gangster and killer. And Smith tried to steal millions from the US government. People get 20 years for a fraction of that, if the victim is a bank. Stealing from the government is worse.
“ I’ve been an ethicist for almost 30 years, and the culture is more ethically bankrupt now than when I started.”
And congratulations on a job well done!
-Jut
Ha. That’s almost exactly what I was going to write, and left it out…
If it makes you feel any better, I mulled the proper joke all afternoon. The runner-up had to do with the post hoc ergo prompter hoc fallacy.
Still not sure which joke would have been better.
-Jut
Except it doesn’t feel like a joke to me. Which is silly…
Jack
I wrote what is in quotes below a day or so ago as an explanation for Biden’s win. It is equally appropriate here. Any person or government that delivers on promises to provide cash or cash equivalents to a given population or group will never be found at fault by the recipients of such payments who will look the other way when horrific acts are committed by the provider.
“You forgot about the promise to shake the money tree for uninformed.
There is no white privilege but there is an expectation of privileges among a majority of Americans who believe they are entitled to something. Promises of opportunity fall on deaf ears when promises of cash payments or equivalents are offered by the opposition.”
I could rewrite that second part to say there is an unspoken expectation of obedience and loyalty for the money given. No one must upset the gravy train. In my opinion, a certain president threatened to destroy that gravy train which is why so many in government – especially in the military – sought to undermine him.
Many gangsters are beloved in the very communities they are pillaging. Localized philanthropy is how they command loyalty and silence and it does not matter if you practice your behaviors with or without government sanction.
In Colombia they call it “plata o plumo,” silver or lead. You can benefit from the cartels in exchange for your loyalty, or you can be a target.
Ben Franklin said,
“When the people find they can vote themselves money that will herald the end of the republic.”
Not only have the people learned that they can vote themselves money they have learned how to blame others for their own irrational narcissistic self-interests. I fear the republic will soon be beyond our ability to repair.
The only thing that can stop and turn this runaway train around is a massive dose of hyperinflation and the middle class scrounging for work to provide some meager scraps of food. For all those who believe in following the science why don’t they ever examine the correlation between the growth of entitlements and the distribution of wealth to which they seem so concerned.
Theft is no longer a criminal act in many places. We will see less and less prosecutions imo.
I think it has some small part as to why Amazon and online retailers are so profitable. Only the employees can regularly steal from them, not the customers. Can’t say the same for a box store, where they can’t shoplift whatever they want.