Mike Paul's Blog - May 2006

“I firmly believe I'm innocent of the charges against me. We believe that God, in fact, is in control and indeed he does work all things for good for those who love the Lord.”

Comments from Ken Lay minutes after he was found guilty of conspiracy, lying, bank fraud and insider trading in the largest corporate crisis in U.S. history. The collapse of Enron, which wiped out more than $89 billion in market value, also left 5,600 employees jobless and owed at least $1 billion in benefits.

According to A.P. and the San Francisco Chronicle the Enron boys will spend the rest of their lives in prison. From comfy corner offices, they engaged in chicanery that fleeced shareholders and pensioners. When misconduct was exposed, their company unraveled with breathtaking speed. Now, Enron's Ken Lay and Jeffrey Skilling, found guilty of conspiracy and fraud, face hundreds of years in the hoosegow.

They're the last -- and many would say, worst -- of the gang of white-collar criminals who've danced through headlines in the past few years. While Enron is the most visible icon for corporate skulduggery, it was only one of a parade of notorious cases that came to represent to average citizens everything that was wrong with corporate America.

"Skilling and Lay will go down as symbols of the excesses of the 1990s and early 2000s," said Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.

From louche party-thrower Dennis Kozlowski of Tyco to the Rigas family at Adelphia, a rogue's gallery of other top executives also fed public disgust with that excess.

"Hubris very quickly can overtake a business leader," Hanson said. "If you've been on the cover of Business Week or Fortune, you get the idea you can do no wrong. You think if there's evidence to the contrary, it must be an error so you can correct it by falsifying the books."

Cooking the books in order to pocket millions -- or hundreds of millions -- in lucre to fund lavish lifestyles was a theme for a range of top executives who've faced trials in the past few years.

There was Tyco Chief Executive Officer Kozlowski with the infamous $2 million birthday bash for his wife on Sardinia, featuring an ice sculpture of Michelangelo's David that spewed vodka. There was Adelphia CEO John Rigas and his two sons who treated the company as their personal piggy bank to fund dozens of vacation homes, the Buffalo Sabres hockey team and their own golf course. (That family reportedly inspired the late, lamented TV show "Arrested Development," which portrayed the patriarch of a family business doing time for fraud.)

"I'm happy to see Kenny Lay and the Boys -- as Howard Dean used to call them -- get strung up," said David Krikorian of Cincinnati, who was inspired by the cavalcade of corporate crime to create a deck of playing cards called Wall Street's Most Wanted. "I hope they go to jail for a long time."

Lay was the deck's Ace of Spades -- "the worst of the worst," Krikorian said -- and Skilling was its King of Spades. To Krikorian's surprise, the deck struck a nerve, with securities lawyers, accountants and business professors snapping up copies as a fun way to broach the subject of corporate ethics.

Some high-profile cases were more modest in scope. Domestic doyenne Martha Stewart and star investment banker Frank Quattrone were tried for obstruction of justice rather than financial wrongdoing. Stewart has emerged after serving five months of prison time as successful as ever. Quattrone's guilty verdict was overturned in March and his lawyers are in negotiations to avert another trial.

Santa Clara University's Hanson said the corporate greed was the flip side of the success of the stock market's go-go days at the turn of the millennium.

"When the bubble burst, a certain percentage of corporate executives tried to hang on by their fingernails through cooking the books and outright fraud," he said. "The critical moment was really the third quarter of 2001, when the earnings of many high-flying companies dropped. When that occurred, you had some executives who said, 'I don't want my wealth to evaporate' and they began to manipulate things, although the Enron manipulations were much earlier."

Sadly, another series of abuses has recently come to light, he said, with revelations that at least a score of companies may have backdated stock options to give top executives instant paper riches.

But ultimately, the Enron fallout has yielded some positives, too, spurring the tough new Sarbanes-Oxley regulations that tighten controls on how companies and executives handle finances.

"I think the developments over the past four years are good for American capitalism," Hanson said. "Sarbanes-Oxley impresses upon every corporate board member and every corporate executive that they personally are accountable."

-- The case: Energy giant Enron went from the country's seventh-most-valuable company to a colossal bankruptcy filing in late 2001. Prosecutors said Lay and other executives schemed to hide Enron's debt and inflate its profits, fooling investors about its house-of-cards frailty so they could reap millions from its inflated stock.
-- The verdict: Guilty on six counts including conspiracy, wire fraud and securities fraud. Guilty on four counts in separate bank-fraud trial.
-- Current status: Free until Sept. 11 sentencing. Faces maximum 165 years in prison.

-- The case: Same as above
-- The verdict: Guilty on 18 counts of conspiracy and fraud and one (of 10) counts of insider trading.
-- Current status: Free until Sept. 11 sentencing. Faces maximum 185 years in prison.

-- The case: Same as above
-- The verdict: Pleaded guilty to two counts of conspiracy. Sentenced to maximum 10 years. Agreed to testify against Lay and Skilling.
-- Current status: Due to start sentence in July. His wife, Lea Fastow, pled guilty to misdemeanor tax charges and completed a one-year sentence in July.

-- The case: In the biggest corporate fraud in history, WorldCom imploded in 2002. The bankruptcy wiped out stock in a company worth $115 billion at its peak. Prosecutors said Ebbers cooked the books to the tune of $11 billion in fake earnings.
-- The verdict: Guilty on all nine counts of conspiracy, securities fraud and filing false reports with regulators. Sentenced to 25 years.
-- Current status: Free pending appeal.

-- The case: Prosecutors said Kozlowski, along with former Tyco CFO Mark Swartz, looted some $600 million from the manufacturing conglomerate to fund their lavish lifestyles. Testimony about opulent parties and $6,000 shower curtains enlivened the trial.
-- The verdict: Guilty on 22 counts of grand larceny, conspiracy, securities fraud and falsifying business records. Sentenced to eight years, three months to 25 years in prison. Swartz also guilty.
-- Current status: Incarcerated in Mid-State Correctional Facility, Marcy, N.J. With good behavior, eligible for parole six years, 11 months from September 2005 start of sentence.

Frank Quattrone, 50 | CONVICTION OVERTURNED
Investment banker, Credit Suisse First Boston

-- The case: Prosecutors said Quattrone obstructed justice when he encouraged his employees to clean up files while the firm was being investigated for allegedly dispensing shares in IPOs to important clients.
-- The verdict: Guilty of obstruction of justice; sentenced to 18 months in prison in second trial after first ended in hung jury. Conviction overturned in March by appeals court, which said judge gave erroneous jury instructions.
-- Current status: Has remained free during appeals process. Case assigned to new judge for retrial. His lawyers filed papers this month asking for a delay while they negotiate with prosecutors to avert a third trial.

-- The case: Prosecutors said Rigas and sons Timothy and Michael looted $100 million from the TV cable company and hid $2.3 billion of debt. Adelphia ran so low on cash that it declared bankruptcy.
-- The verdict: Guilty of 18 counts of conspiracy and securities and bank fraud. Sentenced to 15 years in prison.
-- Current status: Free, pending appeal. Timothy, sentenced to 20 years, is also free pending appeal. Michael pleaded guilty to making false financial entry; sentenced to 10 months home confinement.

-- The case: Chain of rehabilitation and medical services centers overstated earnings by $2.7 billion over seven years starting in 1996. Scrushy blamed 15 former HealthSouth execs who pleaded guilty.
-- The verdict: Acquitted on all counts of conspiracy, false reporting, fraud and money laundering. Former HealthSouth CFO Bill Owens was sentenced to five years in December.
-- Current status: On trial for allegedly paying $500,000 bribe to former Alabama governor in exchange for seat on state board. Remains one of HealthSouth's largest shareholders.

-- The case: Stewart sold stock in biotech company ImClone just before it nose-dived. Prosecutors said she was tipped off by her buddy, ImClone CEO Sam Waksal and then lied about it.
-- The verdict: Guilty of conspiracy, obstruction of justice and making false statements.
-- Current status: Released March 2005 after five months in Alderson Federal Prison Camp in West Virginia. Served five months and three weeks of home confinement.

Both Lay and Skilling have been freed on $6.5 million bond ahead of sentencing on September 11, 2006 and are set to appeal.

Thou shall not steal.
Ken Lay needs to remember this important commandment before he tries to spin the world with his false pride masked behind his broken faith. God will ultimately hold him accountable for his many corrupt lies and years of immoral and unethical decisions.

It is time for Ken Lay to stop lying to himself.
In my opinion, Ken Lay has been lying to himself and others for many, many years. He now has to live with the consequences of his actions. Prison will bear down on him and give him many years to face the truth head on. It will eat at him like a disease until he faces reality.

A lesson for us all.
The entire Enron tragedy and the corrupt leaders within it offer valuable lessons for us all. It is an excellent time to review our own hearts and decisions because the slippery slope is a short ride away. What are you doing to avoid becoming a Ken Lay?

Remember, do the right thing when your reputation is in crisis and seek the counsel of an experienced reputation management expert. It will be a major challenge, but ultimately the rewards of repairing your reputation will be great. Why? Because Your Reputation Is Everything! ™

Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.ReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches, senior counseling or other business opportunities with Mr. Paul, call 212-595-8500 or email info@mgppr.com.

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Royal Caribbean’s Reputation In Further Crisis – Another Person Goes Overboard and Presumed Dead!

Comments from Coast Guard Petty Officer Dana Warr on learning Royal Caribbean’s digital cameras saw Daniel DiPiero go overboard about 8 hours before officially contacting law enforcement.

According to the Associated Press, the air and sea search for a 21-year-old cruise ship passenger who fell overboard while the ship steamed from Florida to the Bahamas was called off Wednesday afternoon.

Security camera footage from the Royal Caribbean ship Mariner of the Seas showed Daniel DiPiero falling overboard about 2 a.m. Monday. A review of ship camera footage last showed DiPiero Monday on the fourth deck, leaning on a rail near the front of the ship, Coast Guard Petty Officer Dana Warr said.

Warr said search efforts for DiPiero, 21, of Canfield, Ohio, ceased at 2:47 p.m. Wednesday. “We found no evidence of survival.”

DiPiero's friends notified ship personnel at 11 a.m. Monday that he had not slept in his stateroom.

Warr said the Coast Guard received the "man overboard" report around 7 p.m. "I don't know why the eight-hour difference," he said.

Royal Caribbean spokesman Michael Sheehan said Royal Caribbean waited to alert the Coast Guard because it first wanted to make sure the missing passenger was not on board the Mariner, which can carry up to 3,100 passengers, or on the company's private Coco Cay island, where the ship docked Monday.

"It takes time to determine the person isn't on ship or on a known location," he said.

Two planes - a C-130 and a HU-25 Falcon jet - along with the Dolphin, a Coast Guard cutter, had been searching for DiPiero since Monday evening with the help of the Bahamian Air and Sea Rescue Association.

Trace Kirk, FBI resident agent in charge on St. Thomas, boarded the ship with four agents and four U. S. Coast Guard officers when it docked at 9 a.m. Wednesday at Havensight.

"The area we searched based on the time the camera recorded is deep ocean. There's no island out in that area," Warr said.

The team spent four hours on board interviewing DiPiero's six friends who boarded the ship with him at Cape Canaveral, Fla.

They reviewed the digital footage from the ship's security systems. The recording showed DiPiero alone on the starboard side of the ship on Deck 4 between 12:12 and 2:16 a.m. Monday. Investigators confirmed that the young man went overboard at 2:16 a.m. Monday.

During the interview process, investigators learned that waiters served DiPiero five drinks between 8 p.m. and midnight. During dinner, DiPiero shared one and a half bottles of wine with friends.

The young man and his friends brought additional liquor aboard the ship, Royal Caribbean spokesman Michael Sheehan said.

Sheehan said DiPiero and his three roommates took three bottles of liquor aboard the ship concealed in their luggage. The alcohol was transported in two large mouthwash bottles. A bottle of rum hidden in luggage also was brought aboard. Sheehan also said the smuggled liquor was a violation of Royal Caribbean policy.

The four men began drinking the alcohol after they boarded Sunday and captured the private party on personal video, investigators said.

The FBI boarded the ship Wednesday to review the case and close the cruise line's investigation, Sheehan said.

Members of the DiPiero family were to arrive Wednesday evening and meet with officials aboard the ship before it departed for St. Maarten.

Ed Thomas, CEO of ship's agent West Indian Co., said the Mariner of the Seas changed departure time Wednesday to 11 p.m. from 8 p.m. to wait for the arrival of DiPiero's parents and two younger sisters.

A few comments from the Reputation Doctor regarding Royal Caribbean’s latest crisis:

• Time is precious when a person is missing on a moving ship and 8 hours is far too much time to wait to inform law enforcement of a man overboard.
To best build trust, credibility and a lack of cover-up, Royal Caribbean should have contacted law enforcement within the first hour of searching for the missing passenger, especially after being in a crisis for a similar tragedy within the same year. If Royal Caribbean's current security takes more than an hour to determine life or death, they need help.

• Perception is reality. Do the right thing to avoid a lack of trust and a reputation in crisis.
Where were the security officers or alarms when he went over board at about 2 am? Drunk or not, why did the passenger go over board? Why isn’t there better technology to help located passengers outside on the deck, especially at night? How much alochol did Royal Caribbean serve him and why didn't security find the smuggled alcohol befroe they entered the ship? What kind of security is that? These questions must be answered honestly and humbly by Royal Caribbean to best improve their reputation.

• Admit mistakes and take full responsibility for poor security or continue to be in crisis.
Royal Caribbean has a few simple choices to make: admit your mistakes and fix them or continue in crisis. Also, reputations are not built with laws, reputations are built with excellent reputation management experts who help both individuals and businesses to be more transparent, accountable and honest. It is time to realize these facts today before it is too late. The truth will set you free.

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The Da Vinci Code: Reputation As Fact-Filled Book Irritates Some Biblical Scholars

“My hope for The Da Vinci Code was, in addition to entertaining people, that it might serve as an open door for readers to begin their own explorations and rekindle their interest in topics of faith.”

Experts agree: Dan Brown got most of his facts wrong. According to the Dallas Morning News, yes, it’s fiction, but author’s “fact” claims irritate scholars.

Religion scholars have been whacking The Da Vinci Code like a low-hanging piñata. The swings have come from establishment Christianity – the Vatican and the Archbishop of Canterbury – and from the fringes of the faith – a member of the liberal Jesus Seminar and the agnostic historian Bart Ehrman.

At least 44 books debunking The Da Vinci Code are for sale at Amazon.com, several written by serious academics or well-known pastors. And with the movie starring Tom Hanks scheduled to open in a little over a week, surely more are in the pipeline.

Why do serious people take the book so seriously? The Da Vinci Code is fiction. A novel. It says so right on the cover. That means the writer is allowed to make stuff up.

The critics have at least 46 million reasons to want to set the record straight. That's the number of copies Mr. Brown has sold worldwide. And the movie may play to an even larger audience.

But popularity alone can't explain the cascade of criticism, even if you figure that many of the authors are trying to sell their own books by hitching their wagon to Mr. Brown. Star Wars was an international blockbuster, and physicists didn't fill bookshelves explaining that there's no such thing as a light saber.

George Lucas never claimed there was anything real in Star Wars, though. Mr. Brown has tried to have it both ways. Charles Gibson, host of ABC-TV's Good Morning America, pressed the author on the point in 2003.

"If you were writing it as a nonfiction book," Mr. Gibson asked, "how would it have been different?"

"I don't think it would have," replied Mr. Brown, who almost never grants interviews.

"I began the research for The Da Vinci Code as a skeptic. ... [A]fter numerous trips to Europe, about two years of research, I really became a believer ... "

A believer in what? The book's plot revolves around a centuries-old conspiracy to hide the marriage of Jesus and Mary Magdalene – and their descendants. The conspirators included Sir Isaac Newton and Leonardo Da Vinci, who cleverly hid clues to the secret in his paintings. (Hence the title.)

The very first sentence in the book implies this is more than a mere tale. "Fact: The Priory of Sion – a European secret society founded in 1099 – is a real organization." This arcane society, according to Mr. Brown's telling, has been the keeper of the secret about Jesus and Magdalene.

But the "fact" is almost certainly wrong. Last month, 60 Minutes piled up evidence that a Frenchman – an anti-Semite with a history of criminal fraud – "created" the Priory as a hoax in the 1950s.

The book reeks of truthiness and smartiness – the appearance of being truthful and smart without necessarily being either. The protagonist is a Harvard professor (in a department that doesn't exist). The fast-moving plot is propelled by a series of clever puzzles based on famous works of art.

The glass pyramid at the Louvre has 673 glass panes, not 666. The Dead Sea Scrolls were written by Jews and say nothing about Jesus. They were discovered in 1947, not the 1950s. The irrational number Phi is not precisely equal to 1.618.

If the figure to the left of Jesus in The Last Supper is really Mary Magdalene, as the book claims, then Leonardo left out an apostle. If it's really John, as most art historians claim, Leonardo was neither the first nor the only artist to paint him as a beardless, long-haired young man.

Mr. Brown's best "proof" of a romance between Jesus and Mary Magdalene comes from the Gospel of Philip, one of the Gnostic gospels. In The Da Vinci Code, the quote reads: "The companion of the Savior is Mary Magdalene. Christ loved her more than all the disciples and used to kiss her often on her mouth."

But Dr. Ehrman, a text scholar, says the only manuscript we have of that gospel is full of holes. And that all we have of that passage is "The companion of the [gap] Mary Magdalene [gap] more than [gap] the disciples [gap] kiss her [gap] on her [gap]."

If Mr. Brown can't get inarguable facts right, the experts say, what faith can readers place in his conclusions about the nature of Christianity?

Some critics say they're intent on tearing down the credibility of the book because many people, mostly ignorant of what is known of the early years of Christianity, accept Mr. Brown's fictions as gospel truth.

"In our experience, readers are taking it as true," said Dr. Ehrman, a religious studies professor at the University of North Carolina and the author of Truth and Fiction in The Da Vinci Code. "Historians care about what happened in the past, and it's important ... to separate the fact from the fiction."

The U.S. Conference of Catholic Bishops is so concerned about the book that it's created a Web site, jesusdecoded.com, with official Catholic responses to the issues Mr. Brown raises in the book.

"A bishop came to me and said, 'I never had to read a novel because my parishioners came up to me to say I should read it,' " said the Rev. Francis Maniscalco, communications director for the conference.

Mr. Brown is muddling people's thinking in ways that could shake faith and affect the reputation of real institutions, said the Rev. Timothy A. Friedrichsen, a New Testament professor at Catholic University.

"Brown's work only confuses the matter, and in this reader's opinion, intentionally," he said. But Dr. Friedrichsen joked that Mr. Brown need not fear worldly retribution from the Vatican. "He can, however, look at the bright side: The dark chapter in the church's history of the Inquisition is long past."

Last year, pollster George Barna reported that 53 percent of American adults who finished the book said it had been helpful in their "personal spiritual growth and understanding." Whatever that means.

A Canadian survey commissioned last year by National Geographic showed that 32 percent who read The Da Vinci Code believed its theories.

And last week, in a Catholic Digest poll, 73 percent of American Catholics said the book "did not affect their faith or opinion of the church in any way." Which means that up to 27 percent – about 14 million Catholics – may be vulnerable to having their faith affected by Mr. Brown's tale.

"It's a book about big ideas, you can love them or you can hate them," he said in a speech in Portsmouth, N.H., last month. "But we're all talking about them, and that's really the point."
That discussion is good news, even from the critics' perspective.

"As a scholar I'm very grateful to Dan Brown. People like me are in demand right now in a way we have never been before," said Gail Streete, a religious studies professor and expert on Mary Magdalene at Rhodes College in Memphis, Tenn. "Most of the time nobody pays any attention to what we do."

Mr. Brown has made Darrell Bock of Dallas a successful author on several continents. Dr. Bock, a professor of New Testament studies at Dallas Theological Seminary, is the author of Breaking the Da Vinci Code . The book has hit best-seller lists in Australia, Brazil and Germany, he said. He's become a sought-after speaker at church and college events.

"People are finally engaging these topics, and want to engage on the level of substance," he said.

Robert Price is a member of the Jesus Seminar, an academic group that has tried to sift the Gospels for "historical truth" by rejecting accounts of miracles and other supernatural elements. He's also the author of The Da Vinci Fraud. He's not angry at Mr. Brown for casting doubt on the official histories of Christianity. He's mad, he said, because Mr. Brown did it so badly.

For Dr. Price, the success of The Da Vinci Code is evidence that people are willing to entertain doubts about theology. "It must mean people are a lot more open-minded than I ever figured they would be about it," he said.

The Rev. Kendall Harmon, an Episcopal theologian in South Carolina, compares Mr. Brown to Celsus, a second-century critic of Christianity. Celsus inspired early Christians into thoughtful responses, he said.

"A Christian who reads The Da Vinci Code and can explain to his or her friends why The Da Vinci Code is wrong is a more effective Christian," he said. "As Celsus strengthened the early church, so Dan Brown is strengthening us."

• If you liked the book, you should really take the time to read the Bible.
Start with the 4 Gospels in the New Testament: Matthew, Mark, Luke and John. If you are on a spiritual journey and truly seeking the truth, you will really find it here. Do you know what book is the best selling book in the world year after year? The answer is the Bible. More people buy and read the Bible every year than any other book in the world. The Bible makes The Da Vinci Code looks like a rank amateur in overall sales. The history within the Bible is amazing and the truth within it will change your life forever.

• If you haven’t read the book, read it and also watch the movie and then use them both as a research project to dig further into what is fiction and what is truth.
In fact, there are many excellent books that offer the truths not mentioned in The Da Vinci Code book and movie. For example, check out Darrell Bock’s book, Breaking The Da Vinci Code.

• Check out various events around the world discussing the facts and fiction in the book.
For example, in NYC, my firm is providing media relations for a national debate at the NY Hilton and also live video streaming via the Internet on Monday, May 15th at 7 p.m. EDT. For more information, go to www.davincidebateny.com.

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Comments:

Comment from: Jessica Rubin [Visitor]

I agree. So many of us love to read a book of fiction, but won't even take a look at our bibles. I plan to read mine starting this week! Thanks.

May 9, 2006, 7:18 am

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