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Learn About Ethics - In Prison

February 6, 2017

I was the chief financial officer at HealthSouth, based in Birmingham, Ala., which I co-founded in 1984. By 1996 it had grown into a Fortune 500 company. In June of that year, we were not making our numbers. My boss said, "You guys need to do something to the books to get the numbers where they need to be."
 

He really put our backs up against the wall. It wasn't like he said, "Go home and think about this and come back and tell me what you've decided." That night my chief accountant and I went into the books. He had worked for auditors and knew their thresholds. So he made entries that were small enough, spread through 2,000 ledgers, that they would not be detected. And that’s how it began.
 

As soon as I walked out of the room I felt awful. I wanted to undo it. I knew I had screwed up. And from that day forward, my life totally changed. All of us who got involved with it were like, what have we done? How do we get out of this trap? I started to drink heavily. I hated going to work. The following June I left the company – with a good bit of money. I bought 25 acres in South Alabama, planted gardens, and built a big house. I lived a very good life. At first, every time the phone or doorbell rang, I thought it was the FBI. But 1998 went by, then 1999, 2000,2001, 2002.
 

Then in 2003, I was watching the news, and the announcer said, “We open tonight with a breaking story out of Birmingham, Ala. Massive accounting fraud uncovered at HealthSouth. Almost $3 billion in phony numbers on their books.” I blacked out for a second. The next day, I called a criminal attorney. I knew I could go to prison for 10 or 15 years. I knew the government would take restitution against me, which they did. They took nearly all my assets.

In the end, I got only three months. My wife drove me there. I walked in and said, “Here I am.” They issue you three sets of clothes. All you bring in is your wedding band. For a guy like me, the CFO of a Fortune 500 company, it’s very humbling. When you’re in prison, you’re nobody.


After I got out, no one would hire me. I was a felon. I needed money immediately, so I started mowing lawns. A quarter-acre would take me an hour and a half, and I’d get $40 or $50. When I was at HealthSouth I was making about $500 an hour. And it was hard work: In June, July, and August it’s 90 degrees and as humid as you can imagine. I did that for three years. I didn’t make a lot of money, but I kept my head above water. Then when the subprime debacle happened, and all of America started stressing ethics, I started speaking about my experience.


When I was riding those lawn mowers, I was sort of writing books in my head. When you go to prison and lose all your materials wealth, you ask yourself: How could I have made such bad decisions? I participated in one of the largest corporate frauds in the history of the United States. Why did I do it?
 

When I look back, I was weak. I did not stand up to my boss. I let him convince me that cooking the books was OK. It was really just not having courage. To be ethical, to do the right thing every day, takes a lot of courage. You have to practice being ethical. If you do it every day, you’ll be ready when the going gets rough.
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Aaron Beam is the author of Ethics Playbook: Winning Ethically in Business.
contact@aaronbeam.net

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