New Warden Is Finally Here

What difference does it make when we get a new warden?

Monday, July 9th, 2012 |

The new warden started last week. He is a young white man that looks to be in his early 30’s.  This is quite a change, and not one I was expecting.  The Camp has an administrator which is the equivalent of an assistant warden.  The camp administrator reports to the warden at the Medium, since the Camp is a satellite of the Medium.

We don’t have much contact with the warden, but the warden’s policies and personalities affect our daily lives.  Accordingly, it is vitally important to have a warden that is reasonable, fair and competent.  I can’t say we have been that lucky at Butner.  This is a reason why inmates have been anxious for the new warden to arrive.

Wardens tend to work their way up the BOP system.  Consideration is also given for race and gender, as much as for experience and politics.  The Low recently got a female warden.  The complex warden is also a female.  My first warden was an older white male who retired.  I never saw the warden when I was at the Low, and wasn’t there long enough to care.

New wardens tend to bring in their cronies from the past.  But, this guy is so young that I am not sure he has anyone to bring in.  The rumor mill is that he is politically connected and is on the career fast track.

The new warden walked through one of the other units so I didn’t see him. He was accompanied by the assistant warden and a man of about 40 who was not identified. The warden was pleasant with the inmates and asked how they were doing. I doubt if anyone told the truth with the AW there.  We will know soon enough if this guy is worth anything.

Detainers Delay Inmate Releases

How can detainers delay your release from prison?

Sunday, July 8th, 2012 |

Many inmates have been in and out of jail over the course of their lives.  Some still have outstanding charges against them.  Detainers are requests from other jurisdictions to have the inmate sent to the requesting jurisdiction when the inmate is released.  Often, inmates don’t know they have detainers filed against them.  The case manager determines if there are outstanding detainers when they are processing the inmate’s file for release.

The case manager looks for unresolved cases and warrants in the federal criminal database.  A lot of this information is wrong or outdated.  Some inmates have been down so long that the other jurisdictions may have no information on the inmates.  Jurisdictions update their systems periodically.  Old information may not get carried over into their current system.

In other words, the case manager is looking at possible outstanding charges and warrants that the jurisdiction cannot confirm are valid or not.  The case manager will inform the inmate that they will have to prove the negative – that there are no outstanding detainers if there is any doubt in the case manager’s mind.  This is a virtual impossibility from the confines of prison!

Examples of Detainers Delaying Releases

One of my friends was scheduled for release next week but he was informed of a pending charge that he knew nothing about. How devastating for him! I don’t know if he can get it worked out in the next week or so.  They will hold him until he serves his full sentence, or until he can prove that the charge is bogus.  If the charge is real, then he will be transferred to the other jurisdiction.

I saw another guy that had his release delayed because of an outstanding charge from 1968!

This happened to another friend.  The case manager said he had a pending charge from Flint which was delaying his release. It took his sister two months to get the evidence from the city that there was no pending charge. The guy knew it was the same charge that he had already been convicted of by the Feds.

From Adversity to Authenticity

What happened to me and what did I learn from my prison journey?

This blog post is based on my “From Adversity to Authenticity” speech I gave this week. I discuss the circumstances of my criminal charges and my personal and spiritual transformation. I thought I would share it in the blog.

My World is About to Change

Imagine being on a plane landing after a business trip. Like everyone else you turn on your phone and notice numerous missed calls, and then your phone rings almost instantly.  It’s your corporate attorney. He tells you he needs you to shut up for minute while he reads a press release to you.

The press release states that the State Attorney General just sued the company that you work for and all its officers, WHICH INCLUDES YOU, for alleged fraud.  The press release also states that there is a criminal investigation. A criminal investigation run by a U.S. Attorney’s office.

You know that your life will never be the same. There is a good chance that you will lose everything that you worked so hard for.  Now, imagine having to tell your wife all this.  Well, this happened to me in June 2007.

For Better or For Worse

My wife’s name is Christine. She picked me up from the airport to go to pre-arranged dinner with an overseas guest.  In the car, I told her about the lawsuit and the criminal investigation. I also told her that the whole ordeal will go on for 10 years – our lives will never be the same.

I said, “Honey, I love you too much to put you through all that is ahead. It will be agony. I will give you a divorce and everything we own. You can have it all.  And she replied, “For better or for worse”. Now, that is true love. At least I knew that I was doing something right. But, for better or worse sums what our lives were like for the next 10 plus years.

Case Background

To give you a little more background, I was a financial executive for a real estate company. One of our projects was a large mountain land development in North Carolina that failed – for a number of reasons.  However, the company and its officers were accused of defrauding lot investors and banks.  I was not involved in the sales and marketing, or in the lot financing – but I was an officer, and I was listed as the “Treasurer” on the North Carolina corporations’ registration filing. The state Attorney General simply picked up my name from the public registration.  The FBI and the US Attorney’s office assumed the criminal investigation.

This was a project that I had been trying to save, and we had a shot to save it. But, investors complained to the state authorities, and, now, there was no chance to save the project. The state shut us down. My time, and that of the other officers, needed to be spent defending ourselves.  Since there was national press on the case, my reputation was shot.  I was now unemployable and all I had had to go to paying for my defense.

The state case was problematic, but, the big problem was the federal criminal investigation.

Criminal Investigation

Criminal investigations drag on for years, and you feel helpless in the meantime.  The fact is a prosecutor can find some charge to stick you with, no matter how small, just to make an example of you. They will bleed you dry in the process.  Conspiracy and obstruction of justice are the two most popular charges that white-collar targets fall into.

I wasn’t being accused of directly defrauding anyone. Instead, the feds were accusing me of conspiracy. Their claim was, as an officer of the company, I should have known that there was fraud being committed and therefore I must have participated in the overall scheme.

The law doesn’t differentiate between someone who actively defrauded someone and someone who conspired with them. The penalties are the same. The feds only had to show that I “touched” the conspiracy in some way to charge me with the entire conspiracy.

To give you an idea of the gravity of this accusation: There were about 345 lot sales totaling $100 million. The feds said that each of those 345 lot sales were fraudulent, and each carries a separate criminal count with a five-year prison term.

Time to Decide

Two years into the investigation, and $250,000 in legal fees later, the feds told my attorney that I had to plead guilty to one count to avoid an indictment.  So, I had two options:

My first option was to go to trial.  I wanted to prove my innocence, but the odds didn’t look very good.  My attorney advised me that he would charge me an additional $1 million.  He wanted $350,000 now and I had to prove that I had the other $650,000.  If this wasn’t enough, he also thought that my chance of acquittal was less than 5%.  I was looking at 20 to 30 years in prison.  Given my health problems, I would probably never get out of prison alive. Even if I wanted to accept these odds, I couldn’t afford the legal fees.

My second option wasn’t very appealing either. But, I could cut my losses and stop the bleeding.  I could plead guilty to one count with a likely prison sentence of five years.  With good time and a little luck, I would serve 36 to 50 months.  Even though I believed in my innocence, pleading guilty would stop the stress of uncertainty and the bleeding of legal fees.

I decided to plead guilty to one count. It was the best business decision I ever made in my life.

Seven months later on March 1st, 2010, I stood in front of a federal judge with my whole family present to have my sentence imposed. The judge said, “Five years in prison!” It was the most humiliating day of life.

Time to Report to Prison

Two years after pleading guilty and four years after the initial complaint, I would report to the Low security prison in Butner, North Carolina.  It was surreal. I felt like Alice dropped down the rabbit hole. Strange land, strange people and strange customs, but this would be new my home.

Slammed into the Hole

About two weeks after entering prison, I was placed in solitary confinement for “protective custody”. This was the “hole”. It was a cellblock that looks much like this.

Inside the cell was dreary and sparse. Only a small window to the outside. I had no one on either side of me but could hear voices of other inmates down the hall.

 

The only interactions I had was with the morning guard to ask for an additional milk carton. Being very lonely and totally out of my element, I was mad at the world, at the justice system and at myself. I was literally going crazy and my mind couldn’t keep up with all the negative thoughts.

After about two weeks, my case manager came to see me and I blew up at him. I yelled all sorts of vile things at him. He looked at me like I was crazy, and I was.  He walked away. I knew I had to change. This was not me. How could I go on living and thinking the way I was?

I decided to reframe the experience and imagine myself in a silent retreat.  Shifting my thinking to finding meaning for my experience calmed me considerably.

Transferred to the Camp

 

Finally, I was transferred from the hole to the minimum-security prison camp at Butner. This is what I looked like after the 28 days in the hole. It looks like I could have a starring role in Breaking Bad. Pretty gruesome, huh?

Chris visited me shortly after my transfer. Don’t I look much better?

I would spend the following 36 months at the prison camp and I devoted myself to finding purpose in my journey.

How Does My Adversity Relate to Others

You just read my story of adversity. But, you have all probably had your tough times, right? And, you do look for meaning in your life, don’t you?  In many ways, my physical incarceration is a metaphor for those who have been imprisoned by circumstances in their lives, such as addiction of any kind, troubles at work or in a marriage. You name it.

In my search for meaning, I had to look at myself first.  It became clear to me that I was operating out of the ego. I had scared myself when I was in the hole, so ego was a good place to start.
Does anyone know what ego is? ………….how about, “Edge God Out”.   By this, I mean some believe we are separate from God.

Meaning of Ego

In our society, many of us define ourselves by what we have and what we do. Before going to prison, I defined myself by my job, the money I was making, my houses and cars, the size of my bank account, my relationships with others – who I knew and who knew me. These things were all important to me, and they seemed to give me a sense of purpose – mostly to perpetuate more of what I already had, but bigger and better. Notice that none of this included any real form of spirituality. I had done a pretty good job of edging God out of my life.

The problem was that I could no longer to lay claim to anything in my pre-prison life. It was all gone except my marriage and family.

I knew that I had a false sense of myself from my distorted ego.  Everything that was once true in my life was now a lie. I had a feeling that I needed to make a shift, and that shift had to be something greater than myself and it had to have spiritual meaning.  Most of us probably don’t know how to make a shift to a meaningful phase for our life, and I certainly didn’t. My legal problems forced me to kickstart my shift – a shift that never would have occurred unless I reached the abyss that I was now in.

Hero’s Journey

Not long after I went to the camp, I met a fellow camper who introduced me to Joseph Campbell’s book “The Hero with a Thousand Faces”. Campbell was a 20th century mythologist who found a hidden pattern in every story ever told ….. that includes our personal stories.

Campbell’s pattern is an archetype of the human condition.  Sometimes that human condition involves suffering. I found that life is not about avoiding suffering, life is about finding purpose in spite of, or through suffering.  It is in this human abyss that we find our true self, our treasure of life – that part of us that we never really knew existed.

Life doesn’t always work out how we planned it.  Campbell is telling us that we must be willing to change, to grow. As such, this growth is beneficial. Campbell also used to quote the Native American saying, “a snake must shed its skin or perish”.

On this spiritual path, doors will open for us that are closed for others. We will meet people and be introduced to experiences that are synchronistic. There are no accidents or coincidences in life, only synchronicity. This is what happened with me on my prison journey.

I was where I had to be. All my life events brought me to this point for a purpose.

Life Conspires With You, Not Against You

What I learned was that life conspires with you, not against you. Belief that life conspires against you paints you as a victim. Who wants to be a victim?  This was a difficult lesson for me. I wanted to blame everyone but myself. It was convenient and my ego would not allow me to blame myself.

The Course in Miracles teaches us that we either move towards fear, which is a feeling of loss, or towards God, which is love. God longs for us to move closer to him, and we do that by moving towards love.  All that happens, good or bad, provides valuable lessons, that if learned, advance our souls. We then become our true authentic selves as God intended.

But, being a victim keeps us in a state of fear, and I was in a constant state of fear.

In my case, life conspired for me to bring me to prison. It was in prison that I could transform my old-ego self to my new authentic-self. So, the irony is that I had to be incarcerated to find my freedom.

When you look at your problems in life, these are opportunities to grow. As I look back on the past 10 years, it really wasn’t as bad as I thought it would be. In reality, how often has it happened to you that the fear of the moment never materialized to the extent you thought it would?

Embrace all that happens to you. Embrace everyone you meet. They are all there for your growth. God bless you all.

Botched Inmate Releases

What to do if a racist case manager changes your release date?

Saturday, July 7th, 2012 |

Bob got a shot because his released cellie left their cell a mess when he was departing to go home. It turns out that Bob was working when the cellie left and was unaware that the inconsiderate cellie left the cell in bad shape.  This happened on a day of an inspection – a stroke of bad luck.  This will result in one of many botched inmate releases that I have seen.

Bob was punished by having some privileges taken away from him, but the counselor said they would not take any halfway house time away from him.  Now, the case manager took three months of halfway house time away from him for “excessive shots”. He, in fact, had two shots, hardly excessive.

Bob got real aggressive to fight this decision. He has already written her up on a BP-8 and has contacted his attorney. In addition, he had friends and family bombard the regional office with phone calls, emails and letters. Bob said that you don’t need to take the grievance case all the way to DC. There is another route that may be faster and more effective.

Ethics Filing Against a Racist Case Manager

His attorney is filing an ethics complaint against the case manager.  The case manager can make a unilateral decision to take this halfway house time away. This is the same case manager that took another friend’s halfway house time away. Bob said that she (black) made some racially insensitive remarks against him (white) that will be part of the ethics charge.

We have noticed that this case manager has treated white inmates differently from black.  This is especially true to white, white-collar inmates. Bob’s attorney has also requested a meeting with the new warden. It would have been much easier on everyone for the camp administrator, or case manager, to just give the guy what he was due. The ethics complaint will be part of her permanent personnel file. She could be disciplined including being given unpaid leave.

So, in a nutshell, he has been having family complain to region, wrote her up on a BP-8, filed an ethics complaint, and is having the attorney meet with the new warden. All this for three months of halfway house!

Halfway House Time Changed When Transferred to the Camp

I can think of many more instances where the camp has taken good time or halfway house time away on a whim. For just one example, a guy came to the camp from the Low to spend some time with his brother before being released.  The Low had approved his going home in six months. He gets to the camp, and the camp said that they are changing it to 12 months.  The reason given is that six months was “too short”. The camp is always screwing around with guys’ halfway house time.

Butner’s Wonderful Food …. NOT!

What food do I eat?

Thursday, July 5th, 2012 |

I haven’t mentioned food in a while. I’m still eating every breakfast which, depending on the day, is cereal, oatmeal, cake (yes, even chocolate cake sometimes), pancakes, French toast and fruit.

Lunch is still iffy. We had hamburgers today (mostly on every Wednesday though).  Other lunches include chicken (at least 2x/week), tuna fish (again at least 2x/week in the evening or lunch), hot dogs, pizza (very soggy) and some other stuff that I would just as soon forget. I make it to three or four lunches in the dining hall per week.

I miss more dinners than anything else. They served some disgusting pork chops and a sweet potato tonight. The chop was greasy, fatty and paper thin. I took one bite and went back to the cell for a PBJ sandwich. I am getting about three servings of fruit a day, primarily bananas, grapefruit, oranges, apples, and prunes or figs that I buy in the commissary.

On another note, we had a very generous 4th of July meal yesterday. We got BBQ chicken, hamburgers, hotdogs, potato salad, watermelon. baked beans, lettuce and pasta (must have been left over from another meal). Rec also had the popcorn machine going for the holiday.

It’s very hot so my outside activities have been limited to my walk and weightlifting this morning.  I had a short 20-minute walk this afternoon. I’m going to try for another 45 – 60 minute walk at around 7 pm when it cools down.

More on Inmate Medical Care

What are some examples of inmate medical care?

Wednesday, July 4th, 2012 |

My friend whom we thought had a heart attack was back today.  He had a heart catheterization that showed nothing abnormal.  It could have been something like acid reflux or food poisoning.  He is going to continue with the complaint filed against medical.  It could have been much worse than it was but I’m glad he is ok.  This reminds me of other stories regarding inmate medical care.

FMC Inmate Medical Care

I heard a few more horror stories about guys in the FMC. I have a friend that spent a year in the FMC for cancer treatment. He had two roomies die while he was there, but neither died from cancer. I’m glad he is not my cellie!

One of the guys went to sick call every day for a week complaining that he wasn’t feeling good. Medical never let a doctor examine him, and did nothing to diagnose the problem. They just sent him back to his room. Finally, one day he looked terrible and couldn’t really function. My friend put him in a wheelchair and took him to ambulatory care. They finally examined him and sent him to an outside hospital.

My friend saw the nurse later in the day who matter-of-factly told him that his roomie had passed away earlier that afternoon. He knows they did an autopsy but doesn’t know the cause of death. My friend gave the guy’s family the story of BOP’s treatment neglect and told them that they probably had a reason for a lawsuit. Get this – BOP would not release his body to the family for 60 days!

Busted Gall Bladder

Another guy in our unit had his gall bladder burst a few weeks ago. He was taken to an outside hospital for emergency surgery. He was clearly in danger of dying. His family was not notified of his condition for a few days, and he was not allowed to talk to them. The BOP would not tell the family what hospital he was staying so there was no way they could visit him.

Not telling the family the name of the hospital is common because BOP fears the security risk (i.e., that he might escape). He was eventually released one evening and got to the unit at about 11 pm. He looked terrible. The next morning, they took him to the FMC to recuperate. He probably should have been transferred directly to FMC because his condition was so fragile. It is a miracle he is still with us!

A Botched Inmate Transfer Results in Solitary!

Did the feds put pressure on the BOP to transfer an inmate?

Tuesday, July 3rd, 2012 |

I have an older friend from Chicago who was put in the hole today after a botched inmate transfer.  Victor said that he was involved in a Chicago bribery case involving BP Petroleum and a local politician.  He also said that he is good friends with the former Illinois governor Blago and Rahm Emanuel.  Victor claims he was a bag man in paying bribes to other Illinois politicians.  Victor claims that the feds have been pressuring him to give them information, but he has refused to do so.  His story is so bizarre that I can’t believe a word he says.

He had been in two previous camps before coming to Butner.  Victor was told by his case manager earlier this year that he was being transferred to a Low because his care level was reduced to a 2 from a 3. He got the camp doctor to order more tests which stopped the transfer.  His care level was subsequently raised up to a 3 again. That should have solved his designation right there.

How to avoid an inmate transfer

Victor was called to the front yesterday afternoon around 1 pm and was told to pack his stuff. There was a plane waiting for him to depart at 3 pm. The case manager wouldn’t tell him where was going.  The camp cut off Victor’s phone and email so he couldn’t call this family, which is SOP at the BOP on an inmate transfer.

The previous camp doctor told Victor to have the case manager call him if the issue of transfer came up again. So, Victor went to medical trying to get them to call this doctor who is now at the FMC. The nurse refused to make the call, and said that there was nothing she could do. He got into the nurse’s face so she called for emergency help. This is the same nurse that was involved in the inmate death.

The COs rushed the building and handcuffed him. We know that they took him to the hole. We are not sure why they were going to transfer him. Victor recently refused to talk to the feds so we think that they may be trying to pressure him to talk. One of the COs said that he would be in the hole for about a week.  The COs did not pack him out.

Dog Program Offers Opportunity to Female Inmates

Guest Post by Saige, FPC Danbury

Saige is currently an inmate at the Federal Prison Camp in Danbury, CT. She learned valuable skills and life lessons in several BOP-sponsored dog programs.  Saige is scheduled for release in August 2021.

There is one thing that I have done since I started my time in the Bureau of Prisons over four years ago, train dogs. I was lucky to get into the dog program at my first facility, Waseca FCI in Minnesota. I spent 15 months in Waseca before I became camp-eligible and moved closer to home in Texas.

Utah State Prison inmate Reggie Peck is training Jet, a rescued shelter dog, to be a therapy dog for war veterans with post-traumatic stress disorder. (Photo: Derek Petersen/KSL TV)

The dog program gave me purpose.  It gave me comfort, and it offered an opportunity to do something amazing and rare. Through this program I realized I could heal not only myself, but someone else out there in the world who needed the independence and the strength that a service dog could offer. This program gave an amazing feeling of accomplishment to me and the other women in it.

I continued in a similar program at FPC Carswell in Ft. Worth Texas for two years.  I was transferred to Danbury and was happy to become a part of the dog program here.

Instead of training service dogs, we were socializing shelter dogs who had a tough time getting adopted. Giving them a lot of love and a few manners made all the difference. Every shelter dog that came here was adopted into a loving and forever home.

In July 2016, a local NBC affiliate news program did a story about the second chances the dogs were given and how that translated into second chances for the women in the program.  After the segment aired, many of the officers and staff members told me how it brought tears to their eyes.  It really made them appreciate the dog program and how it worked in the best interest of all parties involved. I was so happy and so proud of myself. I was also proud of the dogs who left here and went on to make someone else happy.

My Dog Days End

We suddenly found ourselves dog-less one day after a Clear the Shelters event in town 15 months ago.  All of our dogs were adopted and no dog has stepped foot in here since. Why, you might wonder, would the BOP take away such a wonderful program that did so much not only for inmate and staff morale, but for the community as well?

The answer is one I do not truly know. It is hard to get a straight answer out of the powers that be.  The one thing I can say is that it is heartbreaking. This program was something that taught me, and many others, valuable lessons that are needed in life and skills to use upon re-entry.

For a few months, I was given the chance to go on unescorted furloughs three days a week to the Tails of Courage dog shelter. A shelter volunteer picked me up at 8 am on those days. I worked there taking care of the animals, helping with the adoption process and learning some vet tech skills. This was an amazing and wonderful opportunity … and it was taken away from me. The BOP said that there was too much time left on my sentence to be in the community doing volunteer work.

Female Inmates Seek Opportunities to Improve Ourselves

My point to the above is this: we need more inmate programs to change ourselves for the better. Many of the women here have college educations and had very successful careers before whatever it was that brought them here. Sadly, I feel that many women in prison who are uneducated are unprepared to go back home into the world that they failed in before.

I feel every time something good happens for us, there is a setback or a let-down. We are thirsty for something fulfilling and worthwhile, something that will make a difference in our lives now as well as later.

The dog program is just one example of something good that was pulled from us.  Sadly, it will not be the last. As women, we need more programs to keep us busy.  These programs keep us on the right track for when we get out. I want to go home and prosper. Most women here want the same thing for themselves. I am serving a ten-year sentence.  All I ask is for opportunities to enhance my skill set, and the chance to change.

Medical Turns Away Inmates Seeking Help

Why won't a nurse help inmates that are ill?

Monday, July 2nd, 2012 |

A guy in our unit had a heart attack, or so we thought.  He was complaining to medical about chest pains for three or four days prior to going to an outside hospital on Sunday.

Medical told him each time he went for help that there was nothing wrong with him.  They told him they would file an incident report against him for being “out of bounds” if he came in again. The inmate wrote Medical up on a BP-8 on Saturday for refusing to treat him.  This was the day before he went to the hospital.

We haven’t heard how he is doing, but we are assuming he is still alive.  A guy late last year had the same experience. He complained about pain in the gut and was consistently told by medical to leave. It turned out to be very serious.  I can’t remember the problem, but I do remember that he nearly died.

Even yesterday, a new inmate went to medical for the third time to complain about a serious cold or infection that was causing him severe discomfort. He was also told to leave medical and that they were not going to do anything for him. This guy is legally blind so I help him with his typing. He is writing up Medical this morning.  Alan is also seeking help from a rabbi that specializes in helping Jewish prisoners.

These incidents involved the same nurse involved in the inmate death. She is dangerous! It shows you that you really must fight for decent medical care.

What are the Ethical Implications of the Equifax Data Breach?

How a company and its leadership adheres to its core principles and responsibilities during a crisis speaks volumes about its ethics. The Equifax data breach that exposed the personal data of about 143 million U.S. consumers is a crisis of epic proportions.

Equifax, like its two rivals, is the gateway to consumers’ access to financial credit. Equifax’s customers also include the users of this data to make credit decisions. If you had to boil down the two most core ethical principles that were required of Equifax given these unique roles, it should be integrity and security.

Ironically, Equifax updated and reissued its corporate code of ethics in July, about the same time it discovered the breach. Equifax’s code touts the importance of honesty and fair dealing in maintaining appropriate business relations, protecting the privacy and confidential information of others, advising employees to watch out for company property that is not secured, and prohibition of insider trading. Former Chairman and CEO, Richard F. Smith has an introductory message to the code discussing his commitment to the code and compliance.

So, how well did Equifax’s executives live up to its own code of ethics? Several things strike me about the ethics of Equifax’s handling of the situation.

Equifax had an ethical duty to its customers to maintain personal data with utmost security.

Equifax used an open-source software tool known as Apache Struts that supported Equifax’s online dispute portal web application. The company believes that the hackers gained access to its data through a vulnerability in Apache Struts. This vulnerability was known to Equifax since March 2017. The hackers gained access to Equifax’s data from May 13 through July 30th, when Equifax took down this web portal.

Why didn’t Equifax take down the web portal as soon as it knew the software was vulnerable, and not brought the portal back up until the security flaw was patched?

Companies lacking in internal controls tend to be more exposed to ethical failings than companies with strong internal controls. We normally think of accounting processes when we discuss a company’s internal controls, but its internal controls over its computer systems are equally important, especially for a company whose product is digitally maintained.

Equifax had an ethical duty to inform its customers of the breach as soon as the breach was discovered.

Equifax has not said why they waited until September 7th before announcing the cyber incident. Could it be that the hacking was too embarrassing for a proud company to announce, or was there another reason?

This delay deprived its customers the opportunity to take early actions to mitigate the potential damage from the exposure of their personal data. Credit freezing and monitoring could have started months ago.

The creditors and financial institutions that rely on Equifax were considering credit applications and approving loans for this period.  They were totally unaware that the applications they were processing could be fraudulent and contain personal information stolen from Equifax. These companies were unable to consider whether they required other forms of identification and information to verify that they were not processing credit applications for fraudsters.

Was it fair to these customers that Equifax did not tell them of the breach? What losses will result from this lag in reporting the breach?

Equifax executives who knew about the data breach had an ethical duty to inform all “covered insiders” not to sell any stock until the pending material information about the breach was made public.

The CFO and two other executives sold a combined $1.8 million in Equifax stock in the days following the company’s discovery of the breach. Equifax stated that these three executives did not know about the breach. Really … Why not?

Equifax’s ethics code requires that Human Resources, the Corporate Ethics Officer, or the Audit Committee of the Board of Directors be notified of any suspected fraud or theft of company assets. Given the size of the breach, were these people notified? Whether the answer is yes or no, why didn’t the CFO know?

We know that the Chairman and Chief Executive Officer, the Chief Information Officer and the Chief Security Officer knew about the breach.  All three have since left the company in the wake of the fallout. Certainly, other employees working in the offices of the three since-resigned executives had to know.  Did they follow Equifax’s ethics code reporting requirements, even if their bosses did not?

An SEC investigation into the stock sale is pending. These three executives will be incurring major legal bills, whether they are guilty of insider trading or not. They may be subject to criminal penalties, including incarceration. How fair and honest was it on the part of the executives in the know not to inform the other executives to hold off on any stock transactions?

Summary

Ethical conduct of companies and executives is a hot-button topic in corporate America precisely because ethical failures are commonplace. Equifax is one example of many. An ethics policy or code is only as good as the leadership implementing it. People are fallible and do things that others will simply say, “What were they thinking?”, when unethical conduct is exposed, as it almost always is.

Equifax’s problems could have been prevented if certain executives had followed the company’s code of ethics, their individual personal values and common sense. But, this is a prime example how a lapse in ethics can have a significant adverse impact on 143 million consumers and countless institutions that rely of quality credit information to conduct their business.