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Consequences of Unethical Leadership Behavior

Consequences of Unethical Leadership Behavior . William Tiemann & Mary Stephens Online Leaders International. ChrisTian Milton American International Group INSURANCE Company. 2000, transaction between AIG and General Re showed $500 million in revenue premiums for AIG.

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Consequences of Unethical Leadership Behavior

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  1. Consequences of Unethical Leadership Behavior William Tiemann & Mary Stephens Online Leaders International

  2. ChrisTian MiltonAmerican International Group INSURANCE Company

  3. 2000, transaction between AIG and General Re showed $500 million in revenue premiums for AIG. • Fourth quarter 2000, AIG showed $250 million in claims reserve. • First quarter 2001, AIG showed another $250 million in claims reserve. • More than a $500 million cost to shareholders/investors after AIG restated their earnings statement. (Francis, 2005) & (Ruquet, 2009)

  4. 1982 Mr. Milton began working for AIG. • 2004 AIG agrees to pay $126 million in penalties and disgorgement to SEC and U.S. Department of Justice. • February 2005 U.S. Attorney General Elliot Spitzer and SEC filed Subpoenas, stock prices decreased by 15%. • March 2005 released from AIG as the reinsurance executive for unethical behavior and refusing to cooperate with authorities. (“AIG,” 2009) (Greenwald, 2005) (“Ex-AIG,” 2009) & (Richardson, 2005)

  5. Brought up on charges for conspiracy to commit fraud. • February 2008 found guilty of manipulating AIG financials, conspiracy, securities and mail fraud, and falsifying statements to the SEC. • Faced up to 210 years in prison and fines of up to $46 million. (Richardson,, 2006) (Ruquet, 2009) & (“Ex-AIG,” 2009)

  6. Judge Christopher F. Droney received 70 plus letters from colleagues of Mr. Milton stating that he is an extraordinary and compassionate man. • Mr. Milton sentenced to four years in prison for each count, a $200,000 fine and an additional two year supervised release. (“Gen Re,” 2009) & (Ruquet, 2009)

  7. August 2011, 2nd U.S. Circuit Court of Appeals overturned sentence due to Prosecutors using prejudicial line graph of AIG stock prices. • U.S. District Court Judge Vanessa L. Bryant set new trail to be held January 22, 2013. (Hofmann, 2012) & (“Gen Re, AIG,” 2012)

  8. Mr. Milton’s attorney asked Judge Droney to think about Mr. Milton and his family as the risk of deportation after his prison sentence since he is a British citizen. • More than likely Mr. Milton will be deported to United Kingdom according to U.S. authorities. (“Gen Re,” 2009)

  9. Bernard L. MadofFBernard L. Madoff Investment Securities LLC

  10. Bernard L. Madoff • Swindled $65 billion in investments • Considered the “greatest criminal in history” • Rocked financial markets on 5 continents • Bernard L. Madoff Investment Securities LLC (Fishman, 2011)

  11. Ponzi Scheme Definition: an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Reality: Madoff’s firm created fake client statements indicating modest returns and he moved huge sums of money between banks creating appearance of active trade. (“Ponzi Schemes,” n.d.) & (“Bernard L. Madoff ,” 2012)

  12. Highly Regarded Leader in Investing • Former chairman of NASDAQ • Member of Board of Governors for the National Association of Securities Dealers • Member of Board of Governors for NASDAQ • Member of Executive Committee for NASDAQ (“Ponzi Schemes,” n.d.)

  13. Conviction & Sentencing • Arrested on 12/11/2008 • Pleaded guilty on 3/12/2009 to all charges: • 11 felony counts • Securities fraud • Money laundering • Perjury • Sentenced to 150 years (“Bernard L. Madoff,” 2012)

  14. Consequences of Unethical Behavior • Caused financial losses for thousands • In prison for the rest of his life • Son Mark committed suicide • Wife refuses to speak to Madoff • Son Andrew is estranged from both parents (Fishman, 2011)

  15. LORD Conrad BlackHollinger International Inc.

  16. 1996, Conrad Black took control of Southam Inc. giving him control of 56% of the Canadian newspapers and 41% of the daily circulation. • Ran Hollinger International Inc. which included major papers like Britain’s Daily Telegraph, Chicago Sun-Times, Canada’s National Post, The Jerusalem Post and the Sydney Morning Herald. (Soderlund, 2002) & (“Deposed,” 2011)

  17. 2000, gave up Canadian citizenship to become British Lord. • Sold National Post and Southam’s other daily newspapers to CanWest Global Communications Corp. (Edge, 2010)

  18. 2005, charged with eight accounts of fraud while CEO of Hollinger International Inc. • Lost position as influential media baron • The charges brought up were for “Non-compete” payments of $80 million which Lord Black and others received during the sale of Hollinger International Inc. • Typically non-compete payments go to shareholders and not individual executives. • Each charge carried a five year sentence and up to $250,000 in fines. (Cherney & Brat, 2005) & (Cherney, 2005)

  19. Dec. 2005, four additional charges were brought against Lord Black, facing up to 95 years in prison. • Misused company funds to take wife on vacation to Bora Bora, held surprise birthday party for his wife at a New York French Restaurant, estimated cost $540,000. (Cherney, 2005) (Steel, 2007) & (Cherney & Brat, 2005)

  20. Hollinger Inc. struck deal with U.S. Authorities to provide documents and witnesses to the case against Lord Black. • Dec. 2005, Lord Black was released on $20 million bail and ordered to have $5.8 million received to be put in escrow and $13 million of the $16 million received from sale of Canadian newspapers to go towards the lien on Florida home. (Cherney, 2006) & (“Judge,” 2006)

  21. Conviction • 2007, found guilty and sentenced to six and a half years in a Florida Federal Prison for fraud and obstruction of justice. • Served 29 months of original sentence and was released because “Honest Law” was thrown out. • 2011, Resentenced to 42 months for the obstruction of justice charge. (Edge, 2010) & (“Deposed,” 2011)

  22. Attempts to Clear Himself • Has consistently fought to maintain his innocence • Trying to retain Order of Canada award • Appealed court decisions up to U.S. Supreme Court • Attempting to clear U.S. criminal record in Canadian courts • Fighting to clear his name (“Conrad Black Asks,” 2012) (Lemieux, 2011) (“Conrad Black May Try,” 2012) & (“Conrad Black Wants,” 2012)

  23. Current Status • Living in Canada on a temporary permit until May 2013 • Considered re-entering newspaper business • Limited opportunities (Payton, 2012) & (“Conrad Black Hints,” 2012)

  24. References for Christian Milton AIG under fraud spotlight. (2009). Oprisk & Compliance, 10(3), 7-7. Retrieved from http://search.proquest.com/docview/219975571?accounti d=28644 Ex-AIG official receives four years in prison for role in scheme to manipulate financials. (2009). Accounting Policy & Practice Report, 5(3), 145-146. Retrieved from http://search.proquest.com/docview/220398879?accounti d=28644 Francis, T. & McDonald., I. (2005, Mar 22). AIG fires two top executives as probe intensifies; finance chief, vice president decline to answer questions from Spitzer's office, SEC. Wall Street Journal. Retrieved from http://search.proquest.com/docview/398906878?accounti d=28644

  25. "Gen Re, AIG execs retrial scheduled in 2013." Reactions [UK] Feb. 2012. General OneFile. Web. 14 Oct. 2012. "Gen Re fraud judge lenient with Milton; Four-year sentence may signal short terms for other defendants." Business Insurance 2 Feb. 2009: 1. General OneFile. Web. 11 Oct. 2012. Greenwald, J. (2005). Greenberg out as AIG chief. Business Insurance, 39(12), 1-1, 23, 27. Retrieved from http://search.proquest.com/docview/233528669?accounti d=28644 Hofmann, M. A. (2012, June 4). "Charges could be settled in sham reinsurance deal." Business Insurance: 0004. General OneFile. Web. 14 Oct. 2012. Richardson, K., McDonald, I., & Pulliam, S. (2005, Apr 13). AIG, General Re officials knew of deal's risk. Wall Street Journal. Retrieved from http://search.proquest.com/docview/398907239?accounti d=28644

  26. Richardson, K. (2006, Feb 02). Executives on trial: Former AIG, General Re executives are indicted for roles in 2000 deal. Wall Street Journal. Retrieved from http://search.proquest.com/docview/399031086?accounti d=28644 Ruquet, M. E. (2009, Feb 2) "Milton sentenced to four years in AIG-Gen Re financial scheme." National Underwriter Property & Casualty-Risk & Benefits Management: 8. Business and Company ASAP. Web. 11 Oct. 2012.

  27. References for Bernard L. Madoff Bernard L. Madoff (2012, June 28). The New York Times. Retrieved from http://topics.nytimes.com/ top/reference/timestopics/people/m/bernard_l_madoff/ index.html Fishman, S. (2011, February). The Madoff tapes. New York Magazine, Retrieved fromhttp://nymag.com/news/ features/berniemadoff-2011-3/ U.S. Securities and Exchange Commission (n.d.). Ponzi schemes— frequently asked questions. Retrieved from http://www.sec.gov/answers/ponzi.htm

  28. References for Lord Conrad Black Cherney, E. (2005, Dec 16). Conrad Black faces new charges; prosecutors seek forfeiture, under racketeering laws, of at least $92 million. Wall Street Journal. Retrieved from http://search.proquest.com/docview/398931223?accounti d=28644 Cherney, E. (2006, May 16). Hollinger Inc. to aid prosecutor in case against Conrad Black. Wall Street Journal. Retrieved from http://search.proquest.com/docview/398967953?accounti d=28644 Cherney, E. & Brat, I. (2005, Nov 18). Conrad Black is charged with fraud; former Hollinger chief and 3 others are accused of plundering publisher. Wall Street Journal. Retrieved from http://search.proquest.com/docview/399037430?accounti d=28644

  29. Conrad Black asks for a say in Order of Canada hearing. (2012, July 12). The Globe and Mail.Retrieved from http://www.theglobeandmail.com/news/ national/conrad-black-asks-for-a-say-in-order-of-canada- hearing/article4403405/ Conrad Black hints that he may be getting back into the newspaper biz. (2012, July 31). Toronto Life. Retrieved from http://www.torontolife.com/daily/informer/black-watch/ Conrad Black may try to reopen U.S. convictions before Order of Canada: federal lawyers. (2012, August 23). The Globe and Mail. Retrieved from http://www.theglobeandmail.com/news/national/conrad- black-may-try-to-reopen-us-convictions-before-order-of- canada-federal-lawyers/article4495490/

  30. Conrad Black wants conviction overturned over asset seizure (2012, June 5). Chicago Sun Times. Retrieved from http://www.suntimes.com/news/12978420-418/conrad- black-wants-conviction-overturned-over-asset-seizure.html Deposed Hollinger chief Conrad Black goes back to prison. (2011). Daily Bankruptcy Review. Retrieved from http://search.proquest.com/docview/887978892?accounti d=28644 Edge, M. (2010). Not a conspiracy theory: How business propaganda hijacks democracy. Journalism and Mass Communication Quarterly, 87(2), 438-439. Retrieved from http://search.proquest.com/docview/750431800?accounti d=28644

  31. Judge refuses to revoke Conrad Black's bail. (2006, Jun 27). Wall Street Journal. Retrieved from http://search.proquest.com/docview/399020072?accounti d=28644 Lemieux, P. (2011). Conrad Black’s American sentence—just or unjust? Two views. C2C Journal. Retrieved from http://c2cjournal.ca/2011/07/conrad-blacks-american- sentence-just-or-unjust-two-views/ Payton, L. (2012, May 1). Conrad Black returning to Canada on temporary permit. CBC News. Retrieved from http://www.cbc.ca/news/politics/story/2012/05/01/pol- conrad-black-canadian-permit.html Quoted: Conrad Black thinks some eye contact could help him keep his Order of Canada. (2012, July 24). Toronto Life. Retrieved from http://www.torontolife.com/ daily/informer/black-watch/

  32. Soderlund, W. C., Gecelovsky, P., & Lee, M. F. (2002). Trends in Canadian newspaper coverage of international news, 1988-2000: Editors' assessments. Canadian Journal of Communication, 27(1), 73-87. Retrieved from http://search.proquest.com/docview/219562906?accounti d=28644 Steel, E. (2007, Mar 21). Conrad Black fights back at trial. Wall Street Journal. Retrieved from http://search.proquest.com/docview/398962201?accounti d=28644

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