Of all malicious act abhorr'd in Heaven,
The end is injury; and all such end
Either by force or fraud works other's woe.
But fraud, because of man's peculiar evil,
To God is more displeasing; and beneath,
The fraudulent are therefore doom'd to endure
Fraud, that in every conscience leaves a sting ,
May be by man employ'd on one, whose trust
He wins, or on another, who withholds
Seems as the latter way
Broke but the bond of love which Nature makes,
Whence in the second circle have their nest,
Dissimulation, witchcraft, flatteries,
Theft, falsehood, simony, all who seduce
To lust, or set their honesty at pawn,
With such vile scum as these.
The other way
Forgets both Nature's general love, and that
Which thereto added afterward gives birth
To special faith. Whence in the lesser circle,
Point of the universe, dread seat of Dis,
The traitor is eternally consumed. 
If the 1980s were the “decade of greed" for the insider trading scandals that embroiled Wall Street and ended in the demise of Drexel Burnham Lambert and the incarceration of Michael Milken, we are presently living through an "era of fraud" for the restatements, suspect research analysis, and financial collapse that has engulfed the entire business community and already resulted in the demise of Arthur Andersen and the conviction of Frank Quattrone.
Despite the immeasurable good that flows from business, and noble behavior under stressful circumstances that generally characterizes the activity of its practitioners, this epoch (like that of the 1980s) has come to be associated with those who gained advantage at the expense of others by deceitful or unfair means. From the elaborate deceptions at Enron and Dynegy, to the deliberate misrepresentations at WorldCom and Global Crossing, to the false claims at Citigroup and Merrill Lynch, to the shredding of documents at Andersen and CSFB, to the concealment of information at Merck, Pfizer, and Shell Oil, the public has been assailed with too much news of truth defeating, truth deforming stratagems from business men and women of insufficient character who are caught in tight spots.
What Might Have Been
Consider how differently the landscape would be had these business leaders and companies faced the truth and acted accordingly, rather than to circumvent it. Imagine, for a moment, that Andy Fastow, Enron's CFO, had not created a maze of Special Purpose Entities in order to make Enron look like what it was not: a highly profitable company unburdened by debt on its balance sheet. Bernie Ebbers and Scott Sullivan at WorldCom capitalized line costs – lease fees to use other companies' networks – thereby spreading costs over longer periods rather than deducting the expense from earnings al lat once. The result was higher than achieved earnings on operations. They also raided reserve accounts in order to boost quarterly earnings at the expense of future periods. The net effect was to make WorldCom look like what it was not: a highly profitable telecomm company able to resist the steep downturn that the rest of the industry was experiencing.
The WorldCom fraud is especially instructive for the lessons it teaches about the crucial importance of character, how to get and lose it, and the human costs of failing to live by truth. Betty Vinson was a senior manager in WorldCom's corporate accounting division whose cooperation was needed in order to execute the fraud. When instructed by her supervisor to make a first questionable transfer of reserves, she balked and protested threatening to resign rather than lose her integrity. She was assured that it was a one-time request that would never happen again, and persuaded to comply, though she eventually began to work on her c.v. It was again necessary for her to make false accounting entries the following quarter, and for several quarters thereafter, of an even more questionable and complicit nature: She backdated entries and selected accounts in order to convert operating expenditures into capital expenses. Her protests grew progressively mute and eventually ceased altogether, and she did nothing about seeking new employment, as she came to rationalize her situation. She was the family's chief breadwinner. They needed her insurance coverage. She had a prestigious job in her hometown. And, her company's CFO, Scott Sullivan, was heralded throughout the land as one of the best and brightest of his profession. Who was she to question and judge him?  Nobody, she “reasoned.” Betty Vinson pled guilty to criminal securities fraud and conspiracy charges on October 10, 2002, and agreed to cooperate with prosecutors. She was released on bond (secured by equity in her home) and still awaits sentencing, facing up to 15 years in prison. She has prepared her husband and teenage daughter, who figured so prominently in her rationalizations, for that possibility.
By way of contrast, Cynthia Cooper worked as WorldCom's VP of internal audit mostly performing operational audits to monitor performance of WorldCom's units, and ensuring proper spending controls. When a subordinate's routine investigation stumbled onto $500 million of undocumented computer expenses, she instructed him to “keep going,” even though financial auditing generally fell beyond her purview. Within a month her team “had unearthed $3.8 billion dollars in misallocated expenses and phony accounting entries”  (mostly logged, incidentally, by Betty Vinson and her co-opted subordinates). When she asked questions, Cooper was brushed off first by the external auditors from Andersen, then by others, and eventually warned off of her investigation by a menacing Scott Sullivan himself. She defied him, worked late into the night on the investigation to complete her other tasks and avoid arousing suspicion, and eventually confronted Sullivan at the Board of Directors with the evidence her team had turned up. The personal costs for her perseverance and courage were high, as she had as many reasons to wish WorldCom's continued success as Betty Vinson. She simply was not willing to sacrifice the truth in order to maintain an illusion.
I mean neither to castigate a complicit subordinate in lieu of her more culpable superiors, nor diminish the importance of Vinson's and Cooper's different responsibilities, positions in the company, and degree of subordination to Scott Sullivan. Rather, I mean simply to contrast the behavior of two employees locked in the maw of beastly circumstances, which called for the urgent exercise of all the virtues, prudence and courage foremost among them. I imagine that Betty Vinson would be the first to acknowledge that Cynthia Cooper chose the better part.
As the list of corporate malfeasance grew, the public got surly. Despite, for instance, the onerous and costly obligations imposed by the requirement that chief executives and chief financial officers certify the adequacy of internal controls and then have that opinion tested by outside auditors, Section 404 of Sarbanes-Oxley is nevertheless law.  It would have been better all around, including for business, had practitioners exercised more interior control in pursuit of “truth” (or the closest, most reasonable approximation attainable given accounting's inherent limitations). Yet, the seemingly endless procession of companies having to restate their financials in 2001 and 2002 – Sunbeam, Waste Management, Enron, Global Crossing, Adelphia, WorldCom, Qwest and more – convinced regulators that interior control was not forthcoming from the business community. Many of these companies are now bankrupt; all suffered steep declines in market capitalization and shareholder equity. Every public company now shares the burden of what one friend on Wall Street calls “amateur regulation.”
Consider also the pitiful case of Jamie Olis, a tax VP at the energy trader, Dynegy, and a defendant with no prior criminal history. He was sentenced in March to 24 years in jail for his low-level role in the scheme to make a $300 million loan look like cash flow, and thereby improve Dynegy's financial appearance. Defrauded investors lost more than $100 million in market capitalization; Olis now sits in jail without possibility of parole.
Finally, consider that home decorating queen Martha Stewart also sits in prison, as will the king of the dot-com investment boom Frank Quattrone. Both were convicted of obstructing justice: for not only declining to face the truth, but for also conspiring to prevent others from discovering it.
As Dante's passage at the head of this essay communicates, and as the long list of convicted business executives have learned the hard way, fraud is not a “victimless crime.” It is a soul-marring, socially devastating act against truth that harms both those who engage in it – whether caught or not – and those who rely upon the representations of fiduciaries. Fraud snags the fabric of trust that weaves through the business world from finance and operations to investors and consumers. Business is a dignified calling that entails tremendous responsibilities, not least of which is the obligation to pursue and do truth if for no other reason than to maintain that dignity.
 Dante, The Divine Comedy of Dante Alighieri: Hell, trans. Henry F. Cary, The Harvard Classics, (New York: P. F. Collier & Son, 1969), Canto XI.
 Susan Pulliam, “Over the Line: A Staffer Ordered to Commit Fraud Balked, Then Caved--Pushed by WorldCom Bosses, Accountant Betty Vinson Helped Cook theBooks--A Confession at the Marriot,” Wall Street Journal, June 23, 2003.
 Susan Pulliam and Deborah Solomon, “Uncooking the Books: How Three Unlikely Sleuths Discovered Fraud at WorldCom--Company's Own Employees Sniffed Out Cryptic Clues And Followed Hunches--Ms. Cooper Says No to Her Boss,” Wall Street Journal, October 30, 2002.
 Floyd Norris, “Too Much Regulation? Corporate Bosses Sing the Sarbanes-Oxley Blues,” New York Times, January 23, 2004.