Keep stolen money? Lawyers think yes
We all learned it on the playground. Elvis even sang about it. But some of us -- and by some I mean corporate CEOs -- managed to grow up thinking it was true.
Nothing else explains why Maynard L. Jenkins, former chief executive of auto-parts retailer CSK Auto Inc., doesn't want to pay back the $4.1 million in stock-option gains and bonuses he illegally received when his company's accountants cooked the books.
What makes the Security and Exchange Commission's pending case against him unique is that Jenkins wasn't found guilty himself. So his lawyers contend he's entitled to keep his ill-gotten gains because he didn't know the money was stolen.
But the law is not on his side.
For instance, half of Bernie Madoff's investors actually made money and they are now subject to "clawback" lawsuits, demanding they give up their profits to compensate the other half who didn't realize it was a bad idea to invest with someone whose name is pronounced "made off."
Similarly, actress Anne Hathaway was forced to give back the jewelry she received from her con man ex-boyfriend. Unfortunately, she can't do anything about Bride Wars.
Legal precedents aside, I'd like to think common decency -- or at least common sense -- would prevail. Consider the following true ethical model:
When I was in high school two friends of mine were playing ball in the house. One of them dove onto the couch and broke the back. Realizing that both of their parents would be upset, they solved the problem by inviting me over and standing in such a way that when I eventually leaned on the couch, I thought I broke it. So my dad paid for the damage.
The lesson to be learned here is twofold. The first is that parents are left cleaning up the messes their children make. Jenkins isn't legally liable for his employees' misconduct (any more than Madoff's beneficiaries are responsible for his), but it's not right that he profits from it.
The second lesson is that it's human nature to pass the buck (and that my friends are jerks). Which is why Queens, NY, representative Gary Ackerman has introduced legislation to prevent investors from clawing back funds in cases like Madoff's. Perhaps it's just a coincidence, but Ackerman's district includes Citifield, home to Major League baseball's Mets, which are owned by Fred Wilpon, who earned $47.8 million from -- get this -- Bernie Madoff.
I know, big surprise. Politicians are beholden to their richest constituents.
Nowhere was that clearer than when Texas Representative Joe Barton called the Obama administration's $20 billion escrow account for oil spill damages a "shakedown."
Of course he did. According to the non-partisan Center for Responsive Politics, Barton has received more than $1.4 million from oil interests, more than any other representative. So apparently it doesn't matter to him that BP is vomiting poison into the Gulf of Mexico in the greatest environmental disaster in U.S. history. He's owned by BP.
On the flip side, Obama's critics accuse the government of acting out of its own self-interest, as if the government wants to take on yet another failing institution.
What Barton apologist Rush Limbaugh can't seem to get into his unpatriotic government-hating head is that yes, the government is looking out for itself here because the government represents us, the American people, and we don't want to be stuck holding the bag when BP won't, doesn't or can't pay for the damages and cleanup.
If BP is the kid who broke the couch, the American people are the sucker parents left paying for it. Which is why Obama wisely got the money up front before BP's accountants cooked their books and claimed it was all gone.
So Ackerman answered to the Mets, and Barton to BP. But Obama answered to all of us.
And that, my friends, is The Upside.