Saturday, April 03, 2004 8:40:27 PM
Disgraced White-Collar Crooks Say It's Not Too Late
To Start Doing Good
By JEFFREY ZASLOW
Staff Reporter of The Wall Street Journal
Hartley Bernstein used to be a prominent New York attorney, a self-described “rainmaker.” But he represented stock-manipulation schemers who were cheating investors out of $150 million.
He became aware of certain aspects of their crimes, didn’t tell regulators, and in 1999 pleaded guilty to perjury and conspiracy to commit securities fraud. He has since paid court-ordered restitution of $850,000, returning his profits from several deals. Because he helped prosecutors nab bigger fish, he avoided jail and received two years probation.
Hartley Bernstein
So what is Mr. Bernstein, a 51-year-old disbarred lawyer, doing with his life? At his sentencing hearing in June 2001, Assistant U.S. Attorney Richard Owens said Mr. Bernstein is doing “a great public service” that is “unique in all of my experience as a federal prosecutor.”
For three years, Mr. Bernstein has run a free Web site, StockPatrol.com, that warns investors away from the kinds of crooks he once served. “I’m now trying to make a different type of restitution, by helping people,” he says. He has no illusions. “I know that reclaiming my reputation will be a lifelong process.”
‘Look People in the Eye’
As a growing parade of reviled white-collar bad guys marches into court this year, those who’ve already done wrong and done time caution that a sentence never really ends. How do you look in the mirror each day and face up to what you did? How do you make amends to shamed and disheartened loved ones?
“To redeem yourself, the first step is to accept full responsibility for your offense,” says David Novak, a former flight-school operator who served nine months in prison for staging a plane crash to collect insurance. “Look people in the eye and say, ‘As a result of poor choices I made, I was imprisoned. Thank goodness I’ve re-evaluated my value system and I’m putting my life back together.’”
“It’s never too late to start doing what’s right,” says Barry Minkow, 36, who in the 1980s defrauded investors of more than $26 million through a sham carpet-cleaning company. “My mother says the best day to plant a tree is 20 years ago. The next best day is today.”
Mr. Minkow served seven years in prison and is now a pastor at a San Diego church. He encourages the guilty to stop fighting the charges and fess up. “When you’re digging yourself deeper and deeper, the first thing to do is put down the shovel.” Be prepared for loved ones to doubt you for years, he says. “Truth plus time equals trust.”
Such talk doesn’t impress attorney Philp Aidikoff, president of the Public Investors Arbitration Bar Association, which represents individual investors. “When someone lies, cheats and robs innocent people,” he says, “just one thing can redeem them—if they give all the money back.”
In prison, Mr. Minkow vowed to pay back everyone he cheated. But he has so far delivered less than $200,000 of the $26 million. He says he is still working at it.
Mr. Novak, who now runs a business helping white-collar felons prepare for prison, says he made full court-ordered restitution of $78,000. That included $28,000 to cover a search by the Coast Guard, which assumed he had died after he ditched his small plane in Seattle’s Elliott Bay in 1996. Like many of his clients, he says, he suffered from greediness and an egocentric sense of entitlement.
Such observations remind me of my 1984 visit to a federal prison to interview Gary Lewellyn for The Wall Street Journal. A former broker from Iowa, he embezzled money from a bank run by his father, and used it to engineer a stock-manipulation scheme. When the scheme ultimately collapsed, he ended up losing $18 million. He then spent three desperate weeks in a Nevada casino, trying to win the money back.
From prison, he vowed to pay back at least a nickel or dime on each dollar stolen. “More than anything,” he said at the time, “I feel a responsibility for restitution.”
Joe Dodgen, then chairman of First National Bank of Humboldt (Iowa), lost $3 million and the bank as a result of Mr. Lewellyn’s embezzlement. But he died in 1995 without receiving a penny or even an apology, says his widow, Dorothy. “Joe spent what was supposed to be our golden years trying to make us right after the devastation Gary caused. It was a deep, deep hurt.”
Paroled in 1988, Mr. Lewellyn has since been a Texas businessman who had a serious regulatory run-in with the SEC, as well as the Food and Drug Administration. He declined to comment for this article.
Judged Every Day
In New York, Mr. Bernstein knows people will be judging him every day for the rest of his life. He once led a firm with a dozen attorneys. Now, 13 of his former clients are in jail, and he spends 45 hours a week alone at his computer, tending to StockPatrol.com. His wife, an attorney, pays the bills.
In 2001, their three-year-old daughter, Raine, had a severe asthma attack, and died in Mr. Bernstein’s arms. Because he had been disbarred and wasn’t working, he spent a great deal of time with his only child in her short life. The collapse of his career, he now realizes, gave him the gift of those years with Raine.
He vows to be the sort of law-abiding citizen she would have been proud of had she lived. “I plan to never screw up again in any way,” he says. “I make sure I wait until the light changes before I cross the street.”
http://www.classroomedition.com/archive/03jan/POLI.htm
To Start Doing Good
By JEFFREY ZASLOW
Staff Reporter of The Wall Street Journal
Hartley Bernstein used to be a prominent New York attorney, a self-described “rainmaker.” But he represented stock-manipulation schemers who were cheating investors out of $150 million.
He became aware of certain aspects of their crimes, didn’t tell regulators, and in 1999 pleaded guilty to perjury and conspiracy to commit securities fraud. He has since paid court-ordered restitution of $850,000, returning his profits from several deals. Because he helped prosecutors nab bigger fish, he avoided jail and received two years probation.
Hartley Bernstein
So what is Mr. Bernstein, a 51-year-old disbarred lawyer, doing with his life? At his sentencing hearing in June 2001, Assistant U.S. Attorney Richard Owens said Mr. Bernstein is doing “a great public service” that is “unique in all of my experience as a federal prosecutor.”
For three years, Mr. Bernstein has run a free Web site, StockPatrol.com, that warns investors away from the kinds of crooks he once served. “I’m now trying to make a different type of restitution, by helping people,” he says. He has no illusions. “I know that reclaiming my reputation will be a lifelong process.”
‘Look People in the Eye’
As a growing parade of reviled white-collar bad guys marches into court this year, those who’ve already done wrong and done time caution that a sentence never really ends. How do you look in the mirror each day and face up to what you did? How do you make amends to shamed and disheartened loved ones?
“To redeem yourself, the first step is to accept full responsibility for your offense,” says David Novak, a former flight-school operator who served nine months in prison for staging a plane crash to collect insurance. “Look people in the eye and say, ‘As a result of poor choices I made, I was imprisoned. Thank goodness I’ve re-evaluated my value system and I’m putting my life back together.’”
“It’s never too late to start doing what’s right,” says Barry Minkow, 36, who in the 1980s defrauded investors of more than $26 million through a sham carpet-cleaning company. “My mother says the best day to plant a tree is 20 years ago. The next best day is today.”
Mr. Minkow served seven years in prison and is now a pastor at a San Diego church. He encourages the guilty to stop fighting the charges and fess up. “When you’re digging yourself deeper and deeper, the first thing to do is put down the shovel.” Be prepared for loved ones to doubt you for years, he says. “Truth plus time equals trust.”
Such talk doesn’t impress attorney Philp Aidikoff, president of the Public Investors Arbitration Bar Association, which represents individual investors. “When someone lies, cheats and robs innocent people,” he says, “just one thing can redeem them—if they give all the money back.”
In prison, Mr. Minkow vowed to pay back everyone he cheated. But he has so far delivered less than $200,000 of the $26 million. He says he is still working at it.
Mr. Novak, who now runs a business helping white-collar felons prepare for prison, says he made full court-ordered restitution of $78,000. That included $28,000 to cover a search by the Coast Guard, which assumed he had died after he ditched his small plane in Seattle’s Elliott Bay in 1996. Like many of his clients, he says, he suffered from greediness and an egocentric sense of entitlement.
Such observations remind me of my 1984 visit to a federal prison to interview Gary Lewellyn for The Wall Street Journal. A former broker from Iowa, he embezzled money from a bank run by his father, and used it to engineer a stock-manipulation scheme. When the scheme ultimately collapsed, he ended up losing $18 million. He then spent three desperate weeks in a Nevada casino, trying to win the money back.
From prison, he vowed to pay back at least a nickel or dime on each dollar stolen. “More than anything,” he said at the time, “I feel a responsibility for restitution.”
Joe Dodgen, then chairman of First National Bank of Humboldt (Iowa), lost $3 million and the bank as a result of Mr. Lewellyn’s embezzlement. But he died in 1995 without receiving a penny or even an apology, says his widow, Dorothy. “Joe spent what was supposed to be our golden years trying to make us right after the devastation Gary caused. It was a deep, deep hurt.”
Paroled in 1988, Mr. Lewellyn has since been a Texas businessman who had a serious regulatory run-in with the SEC, as well as the Food and Drug Administration. He declined to comment for this article.
Judged Every Day
In New York, Mr. Bernstein knows people will be judging him every day for the rest of his life. He once led a firm with a dozen attorneys. Now, 13 of his former clients are in jail, and he spends 45 hours a week alone at his computer, tending to StockPatrol.com. His wife, an attorney, pays the bills.
In 2001, their three-year-old daughter, Raine, had a severe asthma attack, and died in Mr. Bernstein’s arms. Because he had been disbarred and wasn’t working, he spent a great deal of time with his only child in her short life. The collapse of his career, he now realizes, gave him the gift of those years with Raine.
He vows to be the sort of law-abiding citizen she would have been proud of had she lived. “I plan to never screw up again in any way,” he says. “I make sure I wait until the light changes before I cross the street.”
http://www.classroomedition.com/archive/03jan/POLI.htm
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
