Posts

Background Checks

I had posted about Roger Duronio in June of 2006. He was convicted by a federal jury and found guilty on one count of securities fraud and one count of computer fraud. The details can be found here.

Duronio was a systems adminstrator for UBS PaineWebber. He was angry because his bonus was not as large as he expected. He disseminated a logic bomb which took down 2,000 servers. His actions cost the company over $3 million dollars.

Turns out that he was hired without a background check. According to Information Week:

Using only publicly available information, Hershman found three incidents, including drug-related charges from 1980, the disposition of which is unclear, and a tax violation, within 24 hours. Within three or four days, he says investigators found information on a conviction and incarceration from the early 1960s related to aggravated assault and burglary charges. A presentencing report from the Probation Office in U.S. District Court also lists charges against Duronio from the 1960s, 1970s, 1980s, and 1990s.

“This is one of the most egregious examples that I’ve seen of behavior that probably could’ve been predicted had PaineWebber known about the background of this individual,” says Hershman. “If I was a potential employer, based on our searches that took place in less than 24 hours, I would’ve had enough information to have said I’m not sure this is a good hire for us.

Putting an individual in a trust position for a financial services company warrants a background check. The cost is about $500. Cost cutting without due consideration of the potential impact is the new reality in business today. In this case, UBS did selective background checks presumably to save a few dollars. Duronio wasn’t checked.

Jeff Skilling

Jeff Skilling, former CEO of Enron, received a 24-year sentence.

After a 56-day trial ending with a jury verdict on May 25, 2006, Skilling was found guilty of 19 out of 28 counts: conspiracy, insider trading, false statements to auditors, and securities fraud.

He is 52 so the sentence is pretty much a life sentence. I read Eichenwald’s book, Conspiracy of Fools, last month. The book is an intriguing presentation of the rise and fall of Enron. I was quite upset as I read the book. How could such people rise to the top leadership ranks in a corporation?

Ken Lay, Jeff Skilling and Andy Fastow. Terrible leaders. Even worse managers. And no character other than pursuing their narrow personal agendas of self-enrichment and self-promotion.

After reading the book, I think both Skilling and, in particular, Fastow, got off with light sentences. Both men should have been jailed for life. Ken Lay was convicted but died of a heart attack. His conviction was voided.

Skilling

Labour Day

This week-end is the labour day week-end.

Labour Day was an outcome of the eight hour day movement. This movement, which began in the mid 1800s, proposed a system which advocated eight hours for work, eight hours for recreation, and eight hours for rest. Some interesting background on the eight hour day can be found here, here and here.

Stonemasons and building workers in Australia held an organized protest in 1855. They were successful in achieving an eight hour work day with no loss of pay. That event is generally recognized as the inspiration for labour day.

And so what have we achieved since then? Most people I know have no real separation from career and the concept of an eight hour day is simply out of context with the expectations of the modern work environment.

Household Survey

I am sure that this happens to you as well. You are at home, likely close to dinner time, and the telephone rings. Carpet cleaning, doors and windows, canvassing for donations, and, my favourite, the household survey.

Sometimes the household survey is a front for selling vacuum cleaners. And sometimes the survey is part of an elaborate multi-level marketing scheme.

Last night, I did not bother to find out. Let’s listen in on the call.

The telephone rings. Right before dinner.

“Hello.”

“Hello. Is this Mr. or Mrs. Cleaver?”
Note to self, must lower voice when answering the telephone: “This is Mr. Cleaver.”

“Hello, Mr. Cleaver. This is Nancy calling from KRS Research and we are conducting a household survey. Would you be able to spend a few minutes answering some questions?”

“That depends. Where is your company located?”
“Um, we are located, um, we are in, um, yes, we are in Saskatoon.”

“You don’t seem convinced.”
“No, we are definitely in Saskatchewan, I mean, Saskatoon.”

“And who is the survey for?”
“KRS Research.”

“No, I meant who is paying for the survey. Who is going to use the data from the survey and for what purpose?”
“Um, the survey is being paid for by, er, um, I’m not sure.”

“Let’s see. You are not sure of your location and you do not know who is paying for the survey. Would you give out your personal information under those circumstances?”
“You have a point.”

“Have a pleasant evening.”

Another telemarketer stumped.

GameStop

Yesterday I received an email from Electronic Arts advertising a new xbox 360 game called Army of Two. I sent the email over to my son to see if he had heard anything about the game. His response? Let’s buy it.

I went on to the Best Buy website and they had the game featured on their site. The release date was March of 2007.

What I did not know was whether the Electronic Arts email was pre-announcing the game or releasing the game. The Electronic Arts website was a bit vague as you can see here. The date on the email implied that the game was released to market August 1st. So, was the game out or was it simply being pre-announced?

We thought that we would go and find out.

I had an interesting encounter with a salesperson at EB Games. Let’s set the scene.

EB Games is owned by GameStop, a U.S. company which claims to be the world’s largest video game retailer with over 4,400 stores. From their website:

Everything that we offer our customers — from our expansive selection of new products, to our knowledgeable associates and our value-added pre-owned products — is geared to deliver customer satisfaction.

I entered the store with my son and we looked at the expansive selection of new products. The game was not there. We waited for a knowledgeable associate to help us. A mere ten minutes or so.

Knowledgeable Associate, with the I-find-customers-so-annoying tone: “What are you looking for?”
Me: “We are looking for a new xbox 360 game from Electronic Arts called Army of Two.”
Knowledgeable Associate, with this-is-my-final-answer tone: “I have never heard of it.”
Me, thinking to myself: “I did not ask this guy if he had heard about it…”
Me, out loud: “We just received notice about the game and I was wondering if you had it in stock.”
Knowledgeable Associate, with the I-find-customers-to-be-idiots tone: “I have never heard about this game and I follow ALL the xbox 360 games.”
Me, thinking to myself: “What is it with this guy? Is he telling me that I am making this stuff up?”
Me, out loud: “I received an email from Electronic Arts about the game and the game is also listed on the Best Buy website.”
Knowledgeable Associate, with the I-find-customers-have-no-clue tone: “I have never heard about it. There is no such game. I follow the xbox 360 line VERY closely.”
Me, clearly exasperated with the condescending and arrogant Knowledgeable Associate: “Then you should not broadcast your ignorance.”

As I left the store, upset with having been treated as a moron, I wondered why the Knowledgeable Associate had not said the following: “I have not heard about this game and so it probably has not been released. I’ll check our computer to see if we are carrying the title and, if not, I can arrange a pre-order or let you know when the game comes in.”

Perhaps the Knowledgeable Associate from GameStop had a different objective: to demonstrate his superior knowledge of all the xbox 360 games, pending and released, regardless of fact.

GameStop has a new meaning for me. I will stop buying games from that store. GameStop. Mission accomplished.

10 People Who Don’t Matter

Business 2.0 just published their list of 50 people who matter. You can read through the list here. Steve Jobs comes in at number 5.

They also published their list of 10 people who do not matter here. First on the list? Steve Ballmer, CEO of Microsoft.

From the Business 2.0 website:

Let’s face it: The head of the world’s biggest software company is a lame duck. Sure, Microsoft’s board still backs Ballmer as CEO, and he still has a core of loyal executives within the company. But with longtime partner Bill Gates stepping away from his day-to-day role to focus on saving the world, and Ray Ozzie playing the role of resident visionary, the CEO job just won’t be as much fun. And with employees and investors still in a froth over the company’s low share price, it will be increasingly tempting for Ballmer to follow Bill’s lead, and make boosting the shares someone else’s problem.

Logic Bomb

Sometimes IT workers do strange things.

A former systems administrator of UBS PaineWebber was a bit unhappy about his compensation. His bonus came in about $15,000 less than expected. He demanded a contract for the full $175,000, salary and bonus, or he would resign. UBS did not give him the contract so he walked out. That was February. A few weeks later, when the stock markets opened for trading, a logic bomb went off taking out about 1,000 servers and bringing down the UBS network. It cost the company more than $3 million to repair the damage.

Roger Duronio, the former systems adminstrator, is charged with securities fraud, which carries a maximum penalty of 10 years in federal prison and a $1 million fine. He is also charged with Fraud and Related Activity In Connection with Computers. That charge carries a maximum prison sentence of 10 years and a fine of $250,000 or, alternatively, two times the gain made by the defendant or the loss suffered by the victim.

Duronio tried to make some money by buying about $21,000 of put options on UBS after he walked out. A put option generates a profit for the investor if the stock price goes down.

So let’s see. A 63-year old IT manager gets annoyed with a $15,000 gap in a variable bonus payout and walks out. A logic bomb goes off shortly after he leaves. A search warrant of his home finds segments of the malicious code in his personal computers and on hard copy. He buys put options on the company. He is then charged with crimes that, if he is found guilty, could result in fines over $1 million and 10 years in jail.

An interesting retirement plan.

More background here.

Big Ministry, Small House

I was looking at this site on tele-evangelist lifestyles. Most of the names were no surprise. There are a number of tele-evangelists who treat religion as a business and they spare no expense in ensuring that they live the “good life”.

One surprise though. James MacDonald of Harvest Bible Chapel in Chicago just bought a $2 million house. Not too bad for a kid born in London, Ontario.

I guess ministry work can pay really, really well. The attached is from chicagomag.com:

Farewell, Fitz
With a home””and a banking business””in Virginia, former senator Peter Fitzgerald sells his house here and says goodbye to Chicago

The former U.S. senator Peter Fitzgerald has sold his house in Inverness, severing his lifelong ties with that northwest suburb. He now lives with his wife, Nina, and their 13-year-old son, Jake, in McLean, Virginia, where he is busy investing in new banks””much as his father did years ago.

Letting go of the house “broke my heart,”? Fitzgerald says. “We just weren”™t using it enough anymore to justify the considerable expense of keeping it up.”?

Fitzgerald and his wife paid $452,500 for the place in 1994, when he was a state senator. It has a designer kitchen commissioned by the Fitzgeralds, a two-story family room, and five bedrooms, each with its own bathroom. The backyard has a pool and a multilevel series of decks overlooking a private lake.

Fitzgerald says that when he and his wife decided to sell the house last year, they did not state an asking price. Instead, their agent, Sheila Morgan of ReMax Unlimited Northwest, showed the property to five prospective buyers. James MacDonald, who is the senior pastor of Harvest Bible Chapel in Rolling Meadows and who also delivers a weekly sermon on a Christian radio broadcast, offered $1.9 million””“My minimum,”? says Fitzgerald””and the deal closed this past October. “It”™s a very exciting house,”? says the Rev. MacDonald, “and it”™s even better in the backyard.”?