Why do people commit white-collar crimes? And how has the way we think about — and prosecute — white-collar criminals changed over time? As part of the background research for his next book, which is about Sam Bankman-Fried and FTX, Michael Lewis wants the historical view of financial fraudsters, embezzlers and Ponzi schemers. So he speaks with Eugene Soltes, professor at the Harvard Business School and author of Why They Do It: Inside the Mind of the White-Collar Criminal.
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Pushkin. Hey, there, Against the Rules listeners, I appreciate you indulging me while I record some background interviews from my next book, which is mostly about Sam Bankman Free, the founder of the cryptocurrency exchange FTX. Last year, while I was on the scene, FTX collapsed dramatically. As I record this, Sam Bankman Freed is under house arrest and awaiting what looks like a very complicated trial. The whole thing feels like it could become the white collar criminal event of our age. But if you took the long view, the historical view, maybe this whole affair would look a little different. Welcome back to on background from Against the Rules. I'm Michael Lewis. As i've been writing about Sam backman Fried's case, I've also been wondering about how this would all have gone down fifty or a hundred years ago. Of course, there wasn't any crypto back in the day. But I find myself curious to hear an historical perspective on white collar crime in America. I've been wondering, have we gotten more lenient about it tougher? And what is prison like for white collar criminals these days compared to what it used to be. Fortunately I found someone who could answer these questions and more. Eugene Saltis. He's a professor at the Harvard Business School, or HBS as it's also known. A lot of his students have gone on to populate boardrooms and c suites superachievers. But at some point Saltis got interested in the type of superachiever who achieves bad things. He sought them out, usually in prison, an interview them, and he published their accounts and his analysis in an excellent book called Why They Do It Inside the Mind of the White Collar Criminal. I kind of just want to start by asking you how you business school professor got interested in white collar crime? So I began quite accidentally, I think, probably like anyone that gets involved in I heard thinking about white collar crime. Who was up at three in the morning watching actually a show called lock Up on MSNBC, And I was imagining, if I had half an hour with the white collar criminals, these former executives who were in the news, what would they say what led them there to their current predicament, which is generally a medium security prison. And so that night I actually wrote some letters to individuals who I had been following the news then loan behold. A couple of months later, some volunteered that I could come visit them in prison. One thing led to the next. A couple of years later, writing a book, and now my entire world is immersed there and it's found at home. In the Harvard Business School, you actually teach a course I do. I teach a second year of course called Borderline that titles very descriptive. It's on conduct that somewhere between legal, illegal, moral, immoral. It's all the things in business that fall in between the cracks of business. What we spent a lot of time focusing on are actually entrepreneurs. And I think that in the best case, entrepreneurs who for a while you might engage in something like puffery, you don't actually put in a lot of internal controls. I mean, this is what we do see in a case like FTX, and then you go from this little working out of your garage the next thing running a multibillion dollar enterprise, and then bad things happening and you look back and say, how did that occur? Could that have been prevented? And so that's in the best case what we look at. We look at other instances of people's circumventing rules thinking it's very clever. This is very enron esque. You see a law and you think of a way of going around it because the law doesn't say you can't, and you have the mentality show me where it says I can't. Sometimes it works and people come very wealthy because of that. Other times you get a lot of trouble. So the students when they're coming to the class, they sort of in a frame of mind of what do I do to prevent this happening to me? Everyone starts in what I call them more moral mode, almost like an ethics class. How ought you behave in these situations? That's not how these decisions are made. No one spends half an hour pondering them. You don't have all the information. You're not bringing diverse viewpoints, and that's why a lot of times smart people make, with the benefit of hindsight, poor decisions. As your class paid any attention to FTX, We're absolutely going to get there because FS is fascinating. Would interest you about it? So I will say two dimensions. The first is again and I'm relying on the publicly available information is separating on the two narratives. The one that the prosecutors and sec and other agencies are describing, which is this is a fraud since its inception, which is story one. In story two is these are these are are set of very very smart kids effectively who built actually in a pretty remarkable business that frankly would have benefited from a couple of weeks at HBS about internal controls and compliance systems, and never set any of that up. So it wasn't someone overnight decided to take ten billion dollars in transfer from one entity to another. But it's the fact that they never actually spent the time to put together ways of not coal mingling funds. So it's not this egregious, deliberate fraud. It's just a matter of really incredible sloppiness, which still has the extraordinary detrimental consequences that we've seen. I'm surprised that you've been able to discern that much that the first narrative is so powerful in the media right now, that you've even heard the second narrative. I spent a lot of time thinking, probably always about what these other narratives are, because I think there's this simple story that we like to tell, and it's also the same story that enforcements and prosecutors they need to tell. But I will say, having spent a lot of time with a lot of very smart people that have found themselves, you know, facing these circumstances, I think it's much more complicated when it starts digging down. Why do you think people don't like to see that? I bet you when you when you find yourself at a dinner party and you start to explain that Bernie Madoff was much more complicated than you know. I bet people bridle at that it was fraud. You're welcome to being my like wingman at any dinner party when this pops up. Yes, when you get to know any particular messy situation where maybe some illegal stuff was done, and and you start to really understand it, and then you try to explain it as in as complicated a way as it actually happened. People who are watching it from the distance that most people watch these things, reading, reading the newspaper, you know, whatever, whatever news, whenever it gets to them, they're not they're not they don't really want to enter into that conversation. I'm empathetic because there are a lot of victims. I mean, FPX, there's a million people roughly that are wondering, am I going to get my money back? It? Did I just lose everything? As it down to zero and anything? But I will say the kind of strong, vilified argument I understand, and if I was in their position, I wouldn't want to hear any other explanation. But but simultaneously, it doesn't go a long way to explain underlying root causes, the psychology about what happened and how can we stop this from happening again. Yes, it's not very helpful. It's not it's not very helpful at improving us. So the ANLJA I've often thought of is when there's an airplane crash, yep, immediately what happened? You call, oh, you call the airlines in, you call you know, FA, you call a pile of agencies. They come in and a manufacture and their first and foremost goal is let's get to the bottom of this. Is it whether is it air traffic controllers? Is it the pilot? And they really want to know what happened here? That's not true with white collar crime. Everyone has what I call an agenda. You know, the people that prosecutors, their job is to get people, send people to jail, the people working on you know, the claimants in bankruptcy, they're trying to get money back, the defense counsels, trying to explain why this is not the story that you hear in the news, the promise there's no independent third party that's sitting there. Interesting. I want to know why this happened and what can we do to make this not happen again. That's what I'm supposed to do. That's what your book is. I mean, there is a there are players in the society who have an incentive to play this role, right, and that's that's it's sort of what a writer is supposed to do. Who walks into this situation. One of the things I've noticed is that when someone gets into this kind of trouble, whether it's Dan Ryan People or Bernie made Off or Sam Bankman Freed, their point of view becomes kind of taboo that they're not actually allowed to offer their point of view. They try, but people don't want to hear their point of view anymore. And so I think that part of the problem is just like who's allowed to speak once one of these things blows up, and who's allowed to have any kind of credibility, and the cases got me wondering a little bit about just the history of white collar crime, like when even the term was invented and why, and sort of like who's the original white collar criminal? What's the history of the subject. So the term white collar crime is actually comparatively new. We can actually point to a sphysific person sociologist named Edward Sutherland, and this is back in the nineteen thirties. He literally created a book white Collar Crime that coined the term and raise the idea at the time that there were a lot of things that companies were doing that ought to be criminal, but simply because there were no laws on the book, we're not criminal. What were the kind of things? Was he talking about? A lot of basic fraud, A lot of stuff that we look pretty conventionally it's pretty criminal today. Anti competition was a big area, but there were i'll say massive gaps that you could do some pretty awful things. I mean, at this point we were pre sec This is pre to a lot of our modern securities laws. We've come a long way since. I mean I was looking back at like Occupy Wall Street where people were saying, you know, no one's held accountable, and I appreciate where people were coming from. I take a long window. Let's go back decades in fifty and seventy five years. We've come a long way and people are held to account, maybe not perfectly by any means, but we're not another Southerland's time. And why did this problem exist? Explain why there was room for someone to come in and write a book that said, look, there's all this bad stuff going on and it should be illegal. It's not illegal. We need this whole category called white collar crime. When you say crime, people thought it meant a street offense. It's a violent offense of someone you know, hurting you or taking your pocketbook. White color crime bides very nature, much more amorphous. If there's a murder, you have a body and the question is who did it, it's unquestionable that had happened. If you think of white collar crime, in almost all the instances, it's the prosecution not only has to show that X did it, but they're trying to show that it was a crime in the first place. Because how do you separate sloppiness or a mistake or an adverse market change from someone deliberately tried to take a company under for their own benefit gain. White color crime is messy and harder to dramatize the victims. So this book gets published. Does it have an effect? No, no, it didn't get a lot of press outside of more obscure academic circles, and a lot of people said, whoa, whoa, this guy is saying all these people are doing things that are criminal. Let's look at the law. The law says these are not crimes. And so it kind of looked like, in some kind of ultra progressive argument that I'm going to call people a criminal who are not. But they missed the broader point which he was making is that maybe we need to think about all the institutions that protect these entities and powerful individuals. Let's take a quick break. I'm back with Eugene Saltis on background. Before the break, we heard how the term white collar crime didn't really get much traction when it was first introduced in the nineteen thirties, but in the nineteen sixties, during the Kennedy administration that started to change. There was a massive case of price fixing in the electrical space ge and Westinghouse. This is the first time you had senior level executives at major companies being criminally prosecuted. Actually front page of Life magazine. It was an executive, a well known an executive literally going into jail. So the main arguments that the lawyers were making in defense of their their their clients were this is a fine gentleman. You should not send this fine gentleman in a prison with I believe they actually used the word pimps and prostitutes, and so it wasn't they didn't do it, but like, why would you send this fine gentleman? That's not where gentlemen go? So class class distinctions were being made. Yeah, and was there a place to send them other than the places where pimps and prostitutes were were their white collar prisons? I don't believe there were. Since they weren't bringing these people to book, that wasn't really a special place to put them. No, no, not at all. But I mean these senses were shut. I mean we're talking like a couple of months. Because what happened immediately when the Westinghouse executives got out, the president of Westinghouse actually noted again about these fine gentlemen, and they were rehired back in their exact same positions. I mean, it's really it's interesting how the ulture is moved, right, I mean, it really is different. It is really different. I'll give one other spin that's interesting. I will say the person who probably had the greatest impact, Actually we go to the eighties. We have to jump all the way to the eighties. Yeah, we gotta go all the way to the eighties. But the person who led it is the part that's interesting is Rudy Giuliani. When he was a US Attorney of the Southern District of New York, he did over fifty prosecutions. He's the one that we now think of the purp walk is like that's standard affair now. That was Giuliani's innovation. And so you know, Giuianni's had a really a storied career and he's the one that created that. I'll say, the modern senior prosecutor who holds senior executives and and doesn't mess around, you know, prais them through the office and handcuffs and uh, you know, puts them in the back of the car. You know, it's interesting about that. I mean, there's a lot that is interesting about that, but that that first, it doesn't happen till then. So the question is like why then, I mean, if that approach becomes the standard approach afterwards, it is because it worked. I mean that it worked for Giuliani, it made it more popular, people liked it. But what is it about that period that leaves it open to this innovation. I mean, I think because a prosecutor him or herself makes a name, and I think there is an element of the personality in building up you know, the career of the individuals who are holding people to account. Is it a uniquely American phenomenon. Yeah, there's no country that that that is even close. It's challenging to hold individuals accountable. You indict an individual, they fight for their life because there's nothing left other than trying to protect their reputation. So they will go to court. They will spend every penny they have. The white color criminels. Many of the ones that you interacted with had long sentences, and we're not in minimum security prisons. They were in what looked like a real jail. Yeah. Yeah, you have a year plus sentence, which means you're you're not getting lighter touch facility, You're getting the real deal. I mean, they're dangerous and so this is where we hear them hiring consultants and other people to kind of inform them about what their experiences like and how to quote, you know, survive during their their sentence. So once you're up and you have a couple of years sentence, you're you're not going to a prison camp, which would be I think what most people think of as the white collar prison. Yea. I mean you're you're in oftentimes a medium security prison. You know, it's it's not a pleasant place, I will say. I mean, they're loud, noisy, dirty, They're they're exactly what people think. Who did you? Who did you? Who did you visit? By the way, anybody I would have heard of My first visit probably was one of the more prominent Dennis Kolswalski, the former CEO of Tycho. I remember him, yep, one of the most highest paid executives in the country. A rock star by any account. I mean, he was the next up and coming Jack Welch and uh yeah, he was the first person that went from you know, flying in a Gulf stream to you know, being in actually a prison in upstate New York. Described visiting him. What was it like? I was really nervous coming in. I will say, it was this pretty off place and there's you know, downs Koswalski there wearing a polo shirt. The warden was kind enough to give us effectively a lawyer visiting room, which sounds like it was nice. But it had like a one of those flashing lights that was like half flashing and it and it felt very very small and again kind of dirty and cold. But what was amazing is immediately I remember, you know, kind of the I would say, almost the grace that mister Kolzwalski had when we started the conversation. And I appreciate how quickly people can evolve. You can go from flying into G six to prison and it's not immediate, but you learn how to evolve and adapt, and we're surprisingly adaptable creatures. Did you go visit Bernie made Off? I was never actually permitted by the prison. Every Wednesday night, actually I would speak to him at seven pm in my office. You would call collect my Harvard office and we would speak and hundreds of pages of correspondence. What did he want to talk about? Did he acknowledge that he had done something wrong? Yes, he absolutely did admit that he did something wrong, But he did have the ability to rationalize and justify why the adverse impact that that had on on so many victims was not what people were making it out to be. I call he had they put all their eggs in one basket. That's like investing one on one failure. He had these interesting ability to kind of explain or provide a different way of seeing the world. Did he feel wronged? He would have preferred obviously to not have been in prison. But I think for a long time he thought that was the end of the road. I mean, at some point by its very nature, whether you know, he admitted it, which is what he did, or he died and those pieces would have been exposed, it was inevitable in some way, and I think he knew that getting to know these people, did you find the more you got to know them, more sympathetic you were with their plight. I'm empathetic and the basis of you know, this is not what they wanted to have their career. And as I became a husband and had some kids during the course of the project, so you know, missing your kids growing up, that would matter. But at the same time, what they did deserve the sanction that they're getting and it's harsh and it's difficult, but that's what we demand. Did you have the sense that in most cases these were not people who were kind of born criminals, that they circumstances and their personality had interacted in such a way they kind of found themselves at the top of a slippery slope and slid down. It exactly made off. I don't think he was a born criminal. I think he had a lower ability to empathize with others. So it's the extent that he found himself in a position engaging in behavior that ultimately was taking advantage of people. He didn't have the compunction to stop in a way that maybe other people might may have. But he was not destined to create a massive pyramid scheme or Ponzi scheme. It just made a series of mistakes, and rather than pulling back from those mistakes, he I would say double down and triple down, and you know, it starts as something much smaller and grows to something much more significant, and often starts as something very legitimate. I mean, a lot of great entrepreneurs start with creative ideas that do push the bounds of law. We can think of uber and airbeing b You know, they looked at zoning laws, they looked at taxicab laws and thought they're outdated, or they're antiquated, or they don't fit the modern world. Just kind of ignoring them for a while until quote the law catches up or you're able to lobby and change them. Sometimes that works very well, and sometimes it ends very badly. If you to get your students in a room and say here's what you need to watch for to prevent you becoming the next Bernie made Off or whoever, what tips would you give them? I've had sinstead of run into two issues and problems later on. Who are savvy and smart and I think thoughtful people by by all accounts from all my interactions. We go through all the exercises, all do the training, we all talk about how we're high integrity, moral people, but we never really are able to step back and look at our organizations and look at ourselves at what I call it an unbiased way. Something that I always struggled with is while I'm talking to people that are literally sitting in prison, people were still reflecting how they were high integrity. You know, businessmen or attorneys are entrepreneurs, who made a mistake, but otherwise they're high integrity people. And I always reflected, well, that's the same thing we all do, you know if we you know, when we make mistakes, it's not like we change our view of ourselves. Why should we expect someone that does it one hundred times more and would view it differently. And so humility, I guess the characteristic that I'm most fearful of when people are so confident in themselves that they can't see others. They don't want to surround themselves by people who may have different views and opinion because that isolation is what leads to poor decision making. So it's interesting you're identifying the condition in the person in the environment that might lead to this sort of thing, lack of humility being one of them. What else are there other signs that this is like fertile ground for white collar crime. Individuals can engage in almost a degree of mindlessness. They are not internalizing the broader ramifications, the lack of a feeling of harmfulness. And that's because most of the victims and white color crimes are they're distant, they're morphous. I mean, some crimes like insider training, we can't even identify the victim. We say it's the interior the market. That's not something that resonates in our gut, and so you can go ahead with the decision without feeling it. Have you ever had one of your students end up in jail? I have had, I have had. It's one of the last slides I actually show in my last last lecture. It's a picture of the class cards of former Harvard Business School students that are either currently or recently been in prison. Roger cooped out, the former head of McKinsey, just skilling the former CEO of Venron. But I make the point that no one on their last day at HBS is thinking of doing anything else but going out doing something productive. Maybe it's, you know, to change the world in some way. Maybe they just want to make a lot of money. But no one is ever thinking, you know what, I'm gonna go out make a pile of money, change the world, get on the cover of a magazine. You know what, Then I'm going to try that. You know that wire fraud that I heard about her engaging insider trading. No one's ever thought that, right, But we look at the data and we see people like Roger Coop. I mean, he's as celebrated as you can get. I mean, you don't become the managing director of McKinsey and Company by being anything but a incredibly thoughtful, strategic, respected leader for literally decades. And so to see someone of that position, you know, literally twenty seconds after a Goldman sex board meeting divulging information to a hedge fund. Some people think of that as damning and just kind of indictment on business. I actually look at the other way. That's humbling. To see someone that we could rightfully respect in so many ways do something that is so incredibly myoptic. Should make us all sit down and think about ourselves and how what limitations and capacity that we might make these simple myopic decisions that have these extraordinary ramifications. Do you get a sense that your students internalize this and are terrify that it might happen to them. You see at the wheels turning. And I've had a lot of i'll say, deep, like heartheart conversations with students sometimes of facing difficult decisions and trade offs. I've seen many instances. Now I don't want to call it crime in progress, but people getting into situations that, depending on how it goes, are going to go from a tough business decision to potentially books and records kind of like called regulatory violation too. If that continues down the same slippery slope, it's going to turn to something that a prosecutor would become interested in. What do you think it is about American culture that has encouraged the prosecution of white color crime. I think there is something as people become more and more powerful in companies, become more and more powerful, the desire to hold those an account, which I believe is only appropriate. I mean that's a byproduct of inequality. Yeah, I'm playing by the rules and you're not, and you're getting something because of that. This is probably like wild West justice too. It's like cheating at cards. We might all be equal at the card table, but if you see someone cheating and you take you know, they take your chips from you, you know you're gonna you know, this is like you take them out back. This is the more civilized professional form with our institutions. We want to hold people to account that cheat and deceive us, because in the end, what is what color or crime about? It's about deception. I mean, that's at the heart of everything you deceive me, and because of that you should be held to account. After a break, Eugene Soltis and I talk about the worst or of any white color convicts life, and it's not the year they get convicted and go to prison. I'm back with Eugene Saltis, the author of Why They Do It Inside the Mind of the White Collar Criminal. Do you have any sense of what happens to white collar criminals once they get out of jail? Like, how do they get on with their lives? It's hard having a felony conviction, a criminal conviction on your record changes your life. One thing I've observed is they're married, they have kids. While they're going through the trial, everything is held together. Failing this family grows stronger. I actually came to admire many of their relationships I saw with their family while they're in prison. And then what happens they leave prison in a year later, it all falls apart. Almost everyone I see getting divorced. It's not because the spouse is not supportive. But you're frustrated because you say, I did my time, I paid the cost that I was supposed to. Why can't I move on with my life, and you realize your friends don't want to associate with you. You can't get a job, you can't do a lot of things actually, once you have a criminal conviction, and that's incredibly frustrating to especially type A people who want to go forward and if you're you know, you're forty and you're right and move on forty five right and move on, you can't. So there's two groups. There's the one group that has a lot of money still left even after they paid all the lawyer bills and all. You become an entrepreneur because you're not beholding anyone, so you can reinvent yourself. There's a second group that if sometimes will find I will say the Middle East, sometimes Southeast Asia, but I've seen quite a few people going to the Middle East or other jurisdictions in Asia where, if anything, you had a criminal conviction. But then you describe the improper American justice system, people say, yes, you know, they kind of agree that that's you know, those crazy Americans, and you you kind of reinvent yourself overseas where you don't have those same limitations. So the pattern is their marriages and families stick together while they're in jail and they get out, they fall apart, moved asia. Yeah, but that's a that's a good, good way of putting it. The hardest people actually are people that are younger like FTX, like Sam Bankman freed, He's thirty years old and faces jail time. Can you think of analogies to him? I mean, Elizabeth Holmes. A lot of the cases you don't hear about when you see the article. I'll say of the trader that is at a you know, the Goldman sachs Or or JP Morgan who's a vice president who had a cousin play some trades, and you have an insider training charge, I mean you're making a couple hundred thousand dollars a year. I mean these are lower key cases than than than SPF. But you know, what do you do even to plead guilty with a reasonable lawyer, you're going to spend a million dollars or more. What do you do after, you know, and you go to prison for you know, six months or a year. No one will hire you. You don't have enough money to create your own business. That's hard. What you're saying is our society judges you by the worst thing you did once you have a criminal record. I mean, this is the same thing if you have a low level drug offense when you were you know, nineteen, or we're talking you know, a trade or a bank. You don't get to participate in insociety in the same way anymore, which is brutal. So Sam Bankman freed, play out various futures for him. You said, there are two narratives, the two narratives that will be spun basically in the courtroom, one by the prosecutors and one by the defense. One of the narratives is that it's is a criminal conspiracy from the start, and this is a born criminal. And the other narrative is this is something that it was an accident. Some kids got sloppy and they kind of should be forgiven and understood. If you want to create like White called the perfect white collar crime, and this is I should be very clear, not what we teach in class. But you don't create any written records. This is what prosecutors use. You look at emails, you look at you know, transcripts of phone calls. There's actual evidence there. And so the perfect white collar criminal the prosecutors have to rely on. He said, she said, where you get other people to turn and they try to recall conversation, and then the defense cast out about the quality of those witnesses, those cooperating witnesses. I think what's really difficult in the case of you know, FTX is I mean there's lengthy in well documented pieces of information. I mean this has also look at the speed of the indictment which it came down. I think prosecutors feel very confident and you know, I don't think there's one council in the entire world that would suggest defending yourself and I'll say the public court while you're going through will help your case. You're talking about Sam Bankman Freed actually talking to journalists while he's going through this. Ye talking, yes, you know, well well respected writers. Yes, But unfortunately, I think this is what happens when you're criminally indicted. You get your time in court to explain why that's wrong, and then if you're not convicted, you get to then you know, write a book and like some people, then explain why prosecutors are wrong too. But doing it in real time that's just dangerous. Yeah, So my view, if prosecutors are not able to make at least one count. I would be pretty shocked actually, just given with the volume misinformation and frankly they you can see prosecutors Off have been very vocal and there's already well known that there are other prominent individuals that were around him that are cooperating, even with the best counsel. That's a high bar to surmount as a defense. So you go to prison. I mean, I think the question is how long. We're talking like, you know, not six months in prisoner or a year. I mean, you're looking like a life sentence. That's scary. The reason why most people don't go to court and put this in front of a jury is you're literally looking at, you know, theoretically one hundred years in prison. What kind of deal do you imagine a prosecutor might offer him? I will say, what makes this case so extraordinary is I mean again, and this is the simplification, but you have one entity that's independent from another entity in ten billion dollars of customer money transferred. That's extraordinary. I mean I will say that that pales in comparison anything made Off did. If you take that simple story, I mean, that would be an equivalent of you know, an owner of fidelity, like the Johnson family transferring it to some other company they own, like ten billion dollars. I mean, you don't that doesn't happen, But it did. There's a million individual claimates. And so I think in the case for prosecutors, they think about victims. You have literally a million victims. You make, you know, eighty thousand hours a year, you lost thirty in FTX. You kind of want blood, so to speak. Yep, And so I think even the deal that they would offer would be something that would have looked so unpalallable. You know we're gonna offer you. I'll just say ten to twenty. He's thirty, thirty thirty, Yeah, I mean you're gonna be in your mid forties. You think some reason that you can avoid that. I will say, I don't see that being possible here. So, if you're a betting man, you're betting he's going to jail for a long time. I'm betting he's going to be in prison for a while. If you had had Sam Bankman freed as a student, and you had a time machine, so you had a sense that he was going to be facing these temptations or difficulties, what would you have told him, what advice would you have given him that would have kept him out of trouble? So I wish the entire team would have spent a month with us, let's say our first month of HBS, let's say, doing some basic business internal controls, governance, risk management, the kind of things that clearly lacked. If I gave them a month of what I called the basics and then they went ahead and did what's alleged, then I know which story it is. They ignored that and they went ahead, but to the extent that they were genuinely so ignorant, there's a cost associate with that, and I think there's a an appropriate set of sanctions, but it's a very different set of root causes and how I would think about their actions and their shortcomings as business leaders. Can you think of another white collar case like this? One of the questions I look at this case and I really struggle with is that, you know, there's a million individual claimants that lost money and and feel that they've been defrauded. The question so why did they trust to put their money into FDx given how little governance there was? And we go, well, let's look back. FTX was extraordinarily well funded. It was funded by i'll say many of our former students that work at well known venture capital shops and endowments and other organizations who put money in. And this came out very much in theanois as well. Put in hundreds of millions of dollars with limited to oftentimes summonance, is no due diligence. It's kind of the FOMO. They didn't want to miss out those homes. Literally, it was well known was turning down money if people ask questions. So you throw a one hundred million dollars in or two hundred million in for a venture capital company to write off two hundred million, which is what they've all done. Frankly, isn't that big of a deal. I mean, that's part of the risk business they're in. But the challenge we face right now is by all those venture capital companies and endowments and other organizations putting in hundreds of millions of dollars each into enterprises with little due diligence, what do they do? They actively create credibility for an organization like FTX, and then a million people rush and put money in and really no one's watching the shop and actually helping a company like FTX grow up, which is what could have prevented this. We have money throwed young entrepreneurs that may not have experience or knowledge, and then what happens at the end the investors, institutional investors can write that off and it's not that big of a deal, and then you have a million individual investors that feel deceived by the system. And this is why I think people are critical about business. Why they're critical about places like Harvard Business School is because they don't think business is looking out for them. And this is exactly what makes people, I think a purporately cynical of kind of business is it looks like people are just making money and kind of gambling when it has real consequences on unreal people. Eugene, this was great. Absolutely. Eugene salt Us is a professor of business administration at Harvard Business School and the author of Why They Do It Inside the Mind of the White Collar Criminal. Let's end today by answering a question from one of our listeners, or maybe more than one. Here's the first, Jake, who asks, how do you think of the informative aspects of your books? Do you view it as a dual purpose along with your broader goal of building a large, broader narrative. Is it an ends to the means to be able to have the reader understand the story or do you see it as the core of your works? First off, I don't break it down quite like that. I don't think, oh, I'm going to inform the reader about credit default swaps or baseball statistics or cryptocurrency. What happens is there's an idea, or there's a character, or there's both that I become really interested in, and I realize that I can't get the character or the idea cross without informing the reader more about this or that. So the characters in The Big Short, they were obsessed with the rigging of Wall Street and the crashing of the American financial system, and that involve some really technical financial instruments that they got very obsessed with. So the reader had to understand them in order to understand the character. The same is true of you know, if I'm writing about Sam Bankman Freed, It's very hard to do that and engage the reader in the way I need to engage the reader unless they understand, at least with Sam Bankman Freed understands crypto to be and some other things. So you know, it's just sort of like when you're entering into the world of another person. There's sometimes some complicated things about that world that need to be explained, and I try to explain them in a way that doesn't disrupt the reader's pleasure in the narrative. It's funny when I'm thinking about how to do that, I think my mother needs to understand this. And the funny thing about that my mother doesn't read my books, but I still have that thought in my head. So anyway, I hope that answer your questions and happy to take more down the road. Thank you. If you have a question, let me know, just write me by clicking the link in our show notes or visiting ATR podcast dot com. That's atr podcast dot com. On Background is hosted by me Michael Lewis and produced by Katherine Girardot and Lydia Jane Cott. Our editor is Julia Barton. Our engineer is Sarah Brugere. Our show is recorded by Tofa Ruth at Berkeley Advanced Media Studios. Our music was composed by Matthias Bossy and John Evans of Stellwagon Symphonette. My old friend Nick Brittell composed our theme song. On Background is a production of Pushkin Industries. Define more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts, and if you'd like to listen to add free and learn about other exclusive offerings. Don't forget to sign up for a Pushkin Plus subscription at pushkin dot fm, backslash Plus, or on our Apple show page.