1 00:00:15,276 --> 00:00:29,876 Speaker 1: Pushkin. Hey, there, Against the Rules listeners, I appreciate you 2 00:00:29,956 --> 00:00:32,796 Speaker 1: indulging me while I record some background interviews from my 3 00:00:32,876 --> 00:00:36,716 Speaker 1: next book, which is mostly about Sam Bankman Free, the 4 00:00:36,756 --> 00:00:41,716 Speaker 1: founder of the cryptocurrency exchange FTX. Last year, while I 5 00:00:41,756 --> 00:00:45,996 Speaker 1: was on the scene, FTX collapsed dramatically. As I record this, 6 00:00:46,676 --> 00:00:49,756 Speaker 1: Sam Bankman Freed is under house arrest and awaiting what 7 00:00:49,836 --> 00:00:52,916 Speaker 1: looks like a very complicated trial. The whole thing feels 8 00:00:52,916 --> 00:00:55,036 Speaker 1: like it could become the white collar criminal event of 9 00:00:55,036 --> 00:00:58,236 Speaker 1: our age. But if you took the long view, the 10 00:00:58,316 --> 00:01:01,996 Speaker 1: historical view, maybe this whole affair would look a little different. 11 00:01:03,156 --> 00:01:06,556 Speaker 1: Welcome back to on background from Against the Rules. I'm 12 00:01:06,596 --> 00:01:19,596 Speaker 1: Michael Lewis. As i've been writing about Sam backman Fried's case, 13 00:01:19,716 --> 00:01:22,156 Speaker 1: I've also been wondering about how this would all have 14 00:01:22,196 --> 00:01:25,316 Speaker 1: gone down fifty or a hundred years ago. Of course, 15 00:01:25,316 --> 00:01:27,596 Speaker 1: there wasn't any crypto back in the day. But I 16 00:01:27,596 --> 00:01:31,076 Speaker 1: find myself curious to hear an historical perspective on white 17 00:01:31,116 --> 00:01:34,636 Speaker 1: collar crime in America. I've been wondering, have we gotten 18 00:01:34,676 --> 00:01:39,076 Speaker 1: more lenient about it tougher? And what is prison like 19 00:01:39,436 --> 00:01:42,556 Speaker 1: for white collar criminals these days compared to what it 20 00:01:42,636 --> 00:01:45,516 Speaker 1: used to be. Fortunately I found someone who could answer 21 00:01:45,556 --> 00:01:49,676 Speaker 1: these questions and more. Eugene Saltis. He's a professor at 22 00:01:49,676 --> 00:01:52,516 Speaker 1: the Harvard Business School, or HBS as it's also known. 23 00:01:53,436 --> 00:01:55,476 Speaker 1: A lot of his students have gone on to populate 24 00:01:55,516 --> 00:02:00,556 Speaker 1: boardrooms and c suites superachievers. But at some point Saltis 25 00:02:00,596 --> 00:02:04,396 Speaker 1: got interested in the type of superachiever who achieves bad things. 26 00:02:05,596 --> 00:02:09,396 Speaker 1: He sought them out, usually in prison, an interview them, 27 00:02:10,476 --> 00:02:13,596 Speaker 1: and he published their accounts and his analysis in an 28 00:02:13,636 --> 00:02:17,756 Speaker 1: excellent book called Why They Do It Inside the Mind 29 00:02:17,796 --> 00:02:29,556 Speaker 1: of the White Collar Criminal. I kind of just want 30 00:02:29,556 --> 00:02:33,556 Speaker 1: to start by asking you how you business school professor 31 00:02:33,636 --> 00:02:40,476 Speaker 1: got interested in white collar crime? So I began quite accidentally, 32 00:02:41,396 --> 00:02:43,636 Speaker 1: I think, probably like anyone that gets involved in I 33 00:02:43,716 --> 00:02:45,636 Speaker 1: heard thinking about white collar crime. Who was up at 34 00:02:45,636 --> 00:02:47,876 Speaker 1: three in the morning watching actually a show called lock 35 00:02:47,956 --> 00:02:51,716 Speaker 1: Up on MSNBC, And I was imagining, if I had 36 00:02:51,876 --> 00:02:54,276 Speaker 1: half an hour with the white collar criminals, these former 37 00:02:54,276 --> 00:02:57,476 Speaker 1: executives who were in the news, what would they say 38 00:02:57,516 --> 00:03:00,396 Speaker 1: what led them there to their current predicament, which is 39 00:03:00,396 --> 00:03:03,116 Speaker 1: generally a medium security prison. And so that night I 40 00:03:03,276 --> 00:03:05,636 Speaker 1: actually wrote some letters to individuals who I had been 41 00:03:05,636 --> 00:03:08,316 Speaker 1: following the news then loan behold. A couple of months later, 42 00:03:08,796 --> 00:03:11,516 Speaker 1: some volunteered that I could come visit them in prison. 43 00:03:12,036 --> 00:03:14,036 Speaker 1: One thing led to the next. A couple of years later, 44 00:03:14,076 --> 00:03:16,556 Speaker 1: writing a book, and now my entire world is immersed 45 00:03:16,556 --> 00:03:20,116 Speaker 1: there and it's found at home. In the Harvard Business School, 46 00:03:20,116 --> 00:03:22,596 Speaker 1: you actually teach a course I do. I teach a 47 00:03:22,996 --> 00:03:26,676 Speaker 1: second year of course called Borderline that titles very descriptive. 48 00:03:26,676 --> 00:03:30,556 Speaker 1: It's on conduct that somewhere between legal, illegal, moral, immoral. 49 00:03:30,996 --> 00:03:33,876 Speaker 1: It's all the things in business that fall in between 50 00:03:33,876 --> 00:03:37,116 Speaker 1: the cracks of business. What we spent a lot of 51 00:03:37,116 --> 00:03:40,396 Speaker 1: time focusing on are actually entrepreneurs. And I think that 52 00:03:40,516 --> 00:03:44,036 Speaker 1: in the best case, entrepreneurs who for a while you 53 00:03:44,116 --> 00:03:47,756 Speaker 1: might engage in something like puffery, you don't actually put 54 00:03:47,796 --> 00:03:49,396 Speaker 1: in a lot of internal controls. I mean, this is 55 00:03:49,436 --> 00:03:51,916 Speaker 1: what we do see in a case like FTX, and 56 00:03:51,956 --> 00:03:53,996 Speaker 1: then you go from this little working out of your 57 00:03:53,996 --> 00:03:57,476 Speaker 1: garage the next thing running a multibillion dollar enterprise, and 58 00:03:57,516 --> 00:04:00,756 Speaker 1: then bad things happening and you look back and say, 59 00:04:00,796 --> 00:04:04,116 Speaker 1: how did that occur? Could that have been prevented? And 60 00:04:04,156 --> 00:04:05,676 Speaker 1: so that's in the best case what we look at. 61 00:04:05,676 --> 00:04:08,796 Speaker 1: We look at other instances of people's circumventing rules thinking 62 00:04:08,836 --> 00:04:12,276 Speaker 1: it's very clever. This is very enron esque. You see 63 00:04:12,276 --> 00:04:14,556 Speaker 1: a law and you think of a way of going 64 00:04:14,596 --> 00:04:18,196 Speaker 1: around it because the law doesn't say you can't, and 65 00:04:18,356 --> 00:04:21,236 Speaker 1: you have the mentality show me where it says I can't. 66 00:04:21,756 --> 00:04:24,036 Speaker 1: Sometimes it works and people come very wealthy because of that. 67 00:04:24,116 --> 00:04:26,116 Speaker 1: Other times you get a lot of trouble. So the 68 00:04:26,116 --> 00:04:28,516 Speaker 1: students when they're coming to the class, they sort of 69 00:04:28,516 --> 00:04:30,956 Speaker 1: in a frame of mind of what do I do 70 00:04:31,036 --> 00:04:34,996 Speaker 1: to prevent this happening to me? Everyone starts in what 71 00:04:35,076 --> 00:04:37,716 Speaker 1: I call them more moral mode, almost like an ethics class. 72 00:04:38,236 --> 00:04:41,876 Speaker 1: How ought you behave in these situations? That's not how 73 00:04:41,916 --> 00:04:44,916 Speaker 1: these decisions are made. No one spends half an hour 74 00:04:44,996 --> 00:04:47,556 Speaker 1: pondering them. You don't have all the information. You're not 75 00:04:47,596 --> 00:04:50,196 Speaker 1: bringing diverse viewpoints, and that's why a lot of times 76 00:04:50,236 --> 00:04:53,116 Speaker 1: smart people make, with the benefit of hindsight, poor decisions. 77 00:04:53,836 --> 00:04:57,796 Speaker 1: As your class paid any attention to FTX, We're absolutely 78 00:04:57,836 --> 00:05:02,196 Speaker 1: going to get there because FS is fascinating. Would interest 79 00:05:02,236 --> 00:05:06,676 Speaker 1: you about it? So I will say two dimensions. The 80 00:05:06,756 --> 00:05:10,636 Speaker 1: first is again and I'm relying on the publicly available 81 00:05:10,636 --> 00:05:13,796 Speaker 1: information is separating on the two narratives. The one that 82 00:05:14,196 --> 00:05:18,756 Speaker 1: the prosecutors and sec and other agencies are describing, which 83 00:05:18,756 --> 00:05:23,076 Speaker 1: is this is a fraud since its inception, which is 84 00:05:23,116 --> 00:05:26,276 Speaker 1: story one. In story two is these are these are 85 00:05:26,316 --> 00:05:30,756 Speaker 1: are set of very very smart kids effectively who built 86 00:05:30,756 --> 00:05:34,356 Speaker 1: actually in a pretty remarkable business that frankly would have 87 00:05:34,396 --> 00:05:36,836 Speaker 1: benefited from a couple of weeks at HBS about internal 88 00:05:36,836 --> 00:05:39,756 Speaker 1: controls and compliance systems, and never set any of that up. 89 00:05:40,196 --> 00:05:43,236 Speaker 1: So it wasn't someone overnight decided to take ten billion 90 00:05:43,236 --> 00:05:46,116 Speaker 1: dollars in transfer from one entity to another. But it's 91 00:05:46,156 --> 00:05:48,676 Speaker 1: the fact that they never actually spent the time to 92 00:05:48,676 --> 00:05:52,276 Speaker 1: put together ways of not coal mingling funds. So it's 93 00:05:52,396 --> 00:05:56,356 Speaker 1: not this egregious, deliberate fraud. It's just a matter of 94 00:05:56,636 --> 00:06:02,716 Speaker 1: really incredible sloppiness, which still has the extraordinary detrimental consequences 95 00:06:02,756 --> 00:06:05,396 Speaker 1: that we've seen. I'm surprised that you've been able to 96 00:06:05,396 --> 00:06:09,556 Speaker 1: discern that much that the first narrative is so powerful 97 00:06:09,916 --> 00:06:12,396 Speaker 1: in the media right now, that you've even heard the 98 00:06:12,436 --> 00:06:16,596 Speaker 1: second narrative. I spent a lot of time thinking, probably 99 00:06:16,636 --> 00:06:19,076 Speaker 1: always about what these other narratives are, because I think 100 00:06:19,716 --> 00:06:22,476 Speaker 1: there's this simple story that we like to tell, and 101 00:06:22,516 --> 00:06:26,876 Speaker 1: it's also the same story that enforcements and prosecutors they 102 00:06:26,916 --> 00:06:29,796 Speaker 1: need to tell. But I will say, having spent a 103 00:06:29,836 --> 00:06:31,676 Speaker 1: lot of time with a lot of very smart people 104 00:06:32,036 --> 00:06:34,916 Speaker 1: that have found themselves, you know, facing these circumstances, I 105 00:06:34,916 --> 00:06:37,916 Speaker 1: think it's much more complicated when it starts digging down. 106 00:06:38,436 --> 00:06:40,876 Speaker 1: Why do you think people don't like to see that? 107 00:06:42,756 --> 00:06:45,076 Speaker 1: I bet you when you when you find yourself at 108 00:06:45,076 --> 00:06:47,796 Speaker 1: a dinner party and you start to explain that Bernie 109 00:06:47,836 --> 00:06:51,156 Speaker 1: Madoff was much more complicated than you know. I bet 110 00:06:51,156 --> 00:06:54,596 Speaker 1: people bridle at that it was fraud. You're welcome to 111 00:06:54,596 --> 00:06:56,676 Speaker 1: being my like wingman at any dinner party when this 112 00:06:56,756 --> 00:07:04,316 Speaker 1: pops up. Yes, when you get to know any particular 113 00:07:04,476 --> 00:07:09,436 Speaker 1: messy situation where maybe some illegal stuff was done, and 114 00:07:09,436 --> 00:07:11,356 Speaker 1: and you start to really understand it, and then you 115 00:07:11,436 --> 00:07:13,756 Speaker 1: try to explain it as in as complicated a way 116 00:07:13,836 --> 00:07:16,756 Speaker 1: as it actually happened. People who are watching it from 117 00:07:16,756 --> 00:07:20,156 Speaker 1: the distance that most people watch these things, reading, reading 118 00:07:20,156 --> 00:07:22,596 Speaker 1: the newspaper, you know, whatever, whatever news, whenever it gets 119 00:07:22,596 --> 00:07:25,556 Speaker 1: to them, they're not they're not they don't really want 120 00:07:25,596 --> 00:07:30,356 Speaker 1: to enter into that conversation. I'm empathetic because there are 121 00:07:30,396 --> 00:07:33,716 Speaker 1: a lot of victims. I mean, FPX, there's a million 122 00:07:33,756 --> 00:07:36,156 Speaker 1: people roughly that are wondering, am I going to get 123 00:07:36,196 --> 00:07:38,156 Speaker 1: my money back? It? Did I just lose everything? As 124 00:07:38,196 --> 00:07:41,476 Speaker 1: it down to zero and anything? But I will say 125 00:07:42,396 --> 00:07:45,716 Speaker 1: the kind of strong, vilified argument I understand, and if 126 00:07:45,716 --> 00:07:47,636 Speaker 1: I was in their position, I wouldn't want to hear 127 00:07:47,676 --> 00:07:51,836 Speaker 1: any other explanation. But but simultaneously, it doesn't go a 128 00:07:51,876 --> 00:07:55,596 Speaker 1: long way to explain underlying root causes, the psychology about 129 00:07:55,636 --> 00:07:58,236 Speaker 1: what happened and how can we stop this from happening again. Yes, 130 00:07:58,236 --> 00:08:00,716 Speaker 1: it's not very helpful. It's not it's not very helpful 131 00:08:00,756 --> 00:08:03,836 Speaker 1: at improving us. So the ANLJA I've often thought of 132 00:08:04,036 --> 00:08:07,596 Speaker 1: is when there's an airplane crash, yep, immediately what happened? 133 00:08:07,596 --> 00:08:09,436 Speaker 1: You call, oh, you call the airlines in, you call 134 00:08:09,596 --> 00:08:11,956 Speaker 1: you know, FA, you call a pile of agencies. They 135 00:08:11,956 --> 00:08:16,116 Speaker 1: come in and a manufacture and their first and foremost 136 00:08:16,156 --> 00:08:17,996 Speaker 1: goal is let's get to the bottom of this. Is 137 00:08:17,996 --> 00:08:20,916 Speaker 1: it whether is it air traffic controllers? Is it the pilot? 138 00:08:21,316 --> 00:08:24,076 Speaker 1: And they really want to know what happened here? That's 139 00:08:24,116 --> 00:08:26,436 Speaker 1: not true with white collar crime. Everyone has what I 140 00:08:26,476 --> 00:08:29,196 Speaker 1: call an agenda. You know, the people that prosecutors, their 141 00:08:29,276 --> 00:08:31,796 Speaker 1: job is to get people, send people to jail, the 142 00:08:31,836 --> 00:08:34,876 Speaker 1: people working on you know, the claimants in bankruptcy, they're 143 00:08:34,876 --> 00:08:37,556 Speaker 1: trying to get money back, the defense counsels, trying to 144 00:08:37,716 --> 00:08:39,716 Speaker 1: explain why this is not the story that you hear 145 00:08:39,756 --> 00:08:43,916 Speaker 1: in the news, the promise there's no independent third party 146 00:08:43,996 --> 00:08:46,236 Speaker 1: that's sitting there. Interesting. I want to know why this 147 00:08:46,356 --> 00:08:49,476 Speaker 1: happened and what can we do to make this not 148 00:08:49,556 --> 00:08:52,676 Speaker 1: happen again. That's what I'm supposed to do. That's what 149 00:08:52,796 --> 00:08:54,476 Speaker 1: your book is. I mean, there is a there are 150 00:08:54,556 --> 00:08:57,076 Speaker 1: players in the society who have an incentive to play 151 00:08:57,076 --> 00:09:00,796 Speaker 1: this role, right, and that's that's it's sort of what 152 00:09:00,836 --> 00:09:03,196 Speaker 1: a writer is supposed to do. Who walks into this situation. 153 00:09:04,316 --> 00:09:06,836 Speaker 1: One of the things I've noticed is that when someone 154 00:09:06,876 --> 00:09:09,716 Speaker 1: gets into this kind of trouble, whether it's Dan Ryan 155 00:09:09,756 --> 00:09:15,236 Speaker 1: People or Bernie made Off or Sam Bankman Freed, their 156 00:09:15,276 --> 00:09:18,436 Speaker 1: point of view becomes kind of taboo that they're not 157 00:09:18,796 --> 00:09:21,916 Speaker 1: actually allowed to offer their point of view. They try, 158 00:09:22,636 --> 00:09:25,236 Speaker 1: but people don't want to hear their point of view anymore. 159 00:09:25,876 --> 00:09:28,196 Speaker 1: And so I think that part of the problem is 160 00:09:28,196 --> 00:09:31,276 Speaker 1: just like who's allowed to speak once one of these 161 00:09:31,316 --> 00:09:34,756 Speaker 1: things blows up, and who's allowed to have any kind 162 00:09:34,796 --> 00:09:38,116 Speaker 1: of credibility, and the cases got me wondering a little 163 00:09:38,116 --> 00:09:41,156 Speaker 1: bit about just the history of white collar crime, like 164 00:09:41,836 --> 00:09:45,436 Speaker 1: when even the term was invented and why, and sort 165 00:09:45,476 --> 00:09:48,596 Speaker 1: of like who's the original white collar criminal? What's the 166 00:09:48,636 --> 00:09:52,316 Speaker 1: history of the subject. So the term white collar crime 167 00:09:52,356 --> 00:09:55,276 Speaker 1: is actually comparatively new. We can actually point to a 168 00:09:55,276 --> 00:09:59,476 Speaker 1: sphysific person sociologist named Edward Sutherland, and this is back 169 00:09:59,516 --> 00:10:03,076 Speaker 1: in the nineteen thirties. He literally created a book white 170 00:10:03,076 --> 00:10:08,436 Speaker 1: Collar Crime that coined the term and raise the idea 171 00:10:08,476 --> 00:10:10,756 Speaker 1: at the time that there were a lot of things 172 00:10:10,796 --> 00:10:14,436 Speaker 1: that companies were doing that ought to be criminal, but 173 00:10:14,516 --> 00:10:16,796 Speaker 1: simply because there were no laws on the book, we're 174 00:10:16,876 --> 00:10:18,916 Speaker 1: not criminal. What were the kind of things? Was he 175 00:10:19,076 --> 00:10:22,036 Speaker 1: talking about? A lot of basic fraud, A lot of 176 00:10:22,516 --> 00:10:26,316 Speaker 1: stuff that we look pretty conventionally it's pretty criminal today. 177 00:10:26,476 --> 00:10:31,156 Speaker 1: Anti competition was a big area, but there were i'll 178 00:10:31,156 --> 00:10:33,756 Speaker 1: say massive gaps that you could do some pretty awful things. 179 00:10:33,836 --> 00:10:36,236 Speaker 1: I mean, at this point we were pre sec This 180 00:10:36,316 --> 00:10:39,116 Speaker 1: is pre to a lot of our modern securities laws. 181 00:10:40,236 --> 00:10:42,716 Speaker 1: We've come a long way since. I mean I was 182 00:10:42,716 --> 00:10:45,476 Speaker 1: looking back at like Occupy Wall Street where people were saying, 183 00:10:45,476 --> 00:10:47,996 Speaker 1: you know, no one's held accountable, and I appreciate where 184 00:10:47,996 --> 00:10:50,716 Speaker 1: people were coming from. I take a long window. Let's 185 00:10:50,756 --> 00:10:54,316 Speaker 1: go back decades in fifty and seventy five years. We've 186 00:10:54,316 --> 00:10:56,956 Speaker 1: come a long way and people are held to account, 187 00:10:57,076 --> 00:11:00,436 Speaker 1: maybe not perfectly by any means, but we're not another 188 00:11:00,556 --> 00:11:04,436 Speaker 1: Southerland's time. And why did this problem exist? Explain why 189 00:11:04,596 --> 00:11:06,596 Speaker 1: there was room for someone to come in and write 190 00:11:06,596 --> 00:11:08,596 Speaker 1: a book that said, look, there's all this bad stuff 191 00:11:08,596 --> 00:11:11,196 Speaker 1: going on and it should be illegal. It's not illegal. 192 00:11:11,636 --> 00:11:15,116 Speaker 1: We need this whole category called white collar crime. When 193 00:11:15,156 --> 00:11:18,956 Speaker 1: you say crime, people thought it meant a street offense. 194 00:11:18,956 --> 00:11:21,716 Speaker 1: It's a violent offense of someone you know, hurting you 195 00:11:21,956 --> 00:11:25,596 Speaker 1: or taking your pocketbook. White color crime bides very nature, 196 00:11:25,676 --> 00:11:28,276 Speaker 1: much more amorphous. If there's a murder, you have a 197 00:11:28,316 --> 00:11:32,316 Speaker 1: body and the question is who did it, it's unquestionable 198 00:11:32,396 --> 00:11:34,916 Speaker 1: that had happened. If you think of white collar crime, 199 00:11:34,956 --> 00:11:38,236 Speaker 1: in almost all the instances, it's the prosecution not only 200 00:11:38,276 --> 00:11:41,436 Speaker 1: has to show that X did it, but they're trying 201 00:11:41,436 --> 00:11:43,236 Speaker 1: to show that it was a crime in the first place. 202 00:11:43,276 --> 00:11:46,516 Speaker 1: Because how do you separate sloppiness or a mistake or 203 00:11:46,596 --> 00:11:51,356 Speaker 1: an adverse market change from someone deliberately tried to take 204 00:11:51,396 --> 00:11:54,036 Speaker 1: a company under for their own benefit gain. White color 205 00:11:54,076 --> 00:11:57,156 Speaker 1: crime is messy and harder to dramatize the victims. So 206 00:11:57,316 --> 00:12:00,356 Speaker 1: this book gets published. Does it have an effect? No, no, 207 00:12:00,716 --> 00:12:03,076 Speaker 1: it didn't get a lot of press outside of more 208 00:12:03,116 --> 00:12:06,276 Speaker 1: obscure academic circles, and a lot of people said, whoa, whoa, 209 00:12:06,316 --> 00:12:08,476 Speaker 1: this guy is saying all these people are doing things 210 00:12:08,476 --> 00:12:10,756 Speaker 1: that are criminal. Let's look at the law. The law 211 00:12:10,796 --> 00:12:13,316 Speaker 1: says these are not crimes. And so it kind of 212 00:12:13,316 --> 00:12:15,916 Speaker 1: looked like, in some kind of ultra progressive argument that 213 00:12:15,956 --> 00:12:17,676 Speaker 1: I'm going to call people a criminal who are not. 214 00:12:18,436 --> 00:12:20,596 Speaker 1: But they missed the broader point which he was making 215 00:12:20,676 --> 00:12:22,396 Speaker 1: is that maybe we need to think about all the 216 00:12:22,436 --> 00:12:26,916 Speaker 1: institutions that protect these entities and powerful individuals. Let's take 217 00:12:26,916 --> 00:12:38,516 Speaker 1: a quick break. I'm back with Eugene Saltis on background. 218 00:12:39,356 --> 00:12:41,516 Speaker 1: Before the break, we heard how the term white collar 219 00:12:41,596 --> 00:12:43,916 Speaker 1: crime didn't really get much traction when it was first 220 00:12:43,956 --> 00:12:47,476 Speaker 1: introduced in the nineteen thirties, but in the nineteen sixties, 221 00:12:47,716 --> 00:12:52,556 Speaker 1: during the Kennedy administration that started to change. There was 222 00:12:52,996 --> 00:12:56,276 Speaker 1: a massive case of price fixing in the electrical space 223 00:12:56,716 --> 00:12:59,556 Speaker 1: ge and Westinghouse. This is the first time you had 224 00:12:59,916 --> 00:13:04,356 Speaker 1: senior level executives at major companies being criminally prosecuted. Actually 225 00:13:04,716 --> 00:13:08,316 Speaker 1: front page of Life magazine. It was an executive, a 226 00:13:08,396 --> 00:13:12,596 Speaker 1: well known an executive literally going into jail. So the 227 00:13:12,596 --> 00:13:15,436 Speaker 1: main arguments that the lawyers were making in defense of 228 00:13:15,476 --> 00:13:18,716 Speaker 1: their their their clients were this is a fine gentleman. 229 00:13:18,836 --> 00:13:21,596 Speaker 1: You should not send this fine gentleman in a prison 230 00:13:21,716 --> 00:13:24,916 Speaker 1: with I believe they actually used the word pimps and prostitutes, 231 00:13:25,716 --> 00:13:27,276 Speaker 1: and so it wasn't they didn't do it, but like, 232 00:13:27,396 --> 00:13:29,756 Speaker 1: why would you send this fine gentleman? That's not where 233 00:13:29,996 --> 00:13:35,476 Speaker 1: gentlemen go? So class class distinctions were being made. Yeah, 234 00:13:35,556 --> 00:13:37,676 Speaker 1: and was there a place to send them other than 235 00:13:37,716 --> 00:13:40,916 Speaker 1: the places where pimps and prostitutes were were their white 236 00:13:40,956 --> 00:13:44,756 Speaker 1: collar prisons? I don't believe there were. Since they weren't 237 00:13:44,756 --> 00:13:47,036 Speaker 1: bringing these people to book, that wasn't really a special 238 00:13:47,036 --> 00:13:49,516 Speaker 1: place to put them. No, no, not at all. But 239 00:13:49,916 --> 00:13:51,676 Speaker 1: I mean these senses were shut. I mean we're talking 240 00:13:51,676 --> 00:13:54,396 Speaker 1: like a couple of months. Because what happened immediately when 241 00:13:54,396 --> 00:13:59,356 Speaker 1: the Westinghouse executives got out, the president of Westinghouse actually 242 00:13:59,396 --> 00:14:02,956 Speaker 1: noted again about these fine gentlemen, and they were rehired 243 00:14:03,196 --> 00:14:07,916 Speaker 1: back in their exact same positions. I mean, it's really 244 00:14:07,916 --> 00:14:10,756 Speaker 1: it's interesting how the ulture is moved, right, I mean, 245 00:14:10,796 --> 00:14:14,676 Speaker 1: it really is different. It is really different. I'll give 246 00:14:14,676 --> 00:14:17,356 Speaker 1: one other spin that's interesting. I will say the person 247 00:14:17,396 --> 00:14:20,436 Speaker 1: who probably had the greatest impact, Actually we go to 248 00:14:20,436 --> 00:14:22,356 Speaker 1: the eighties. We have to jump all the way to 249 00:14:22,396 --> 00:14:24,236 Speaker 1: the eighties. Yeah, we gotta go all the way to 250 00:14:24,236 --> 00:14:25,876 Speaker 1: the eighties. But the person who led it is the 251 00:14:25,916 --> 00:14:28,796 Speaker 1: part that's interesting is Rudy Giuliani. When he was a 252 00:14:28,956 --> 00:14:31,556 Speaker 1: US Attorney of the Southern District of New York, he 253 00:14:31,636 --> 00:14:33,956 Speaker 1: did over fifty prosecutions. He's the one that we now 254 00:14:33,996 --> 00:14:36,196 Speaker 1: think of the purp walk is like that's standard affair now. 255 00:14:36,476 --> 00:14:39,836 Speaker 1: That was Giuliani's innovation. And so you know, Giuianni's had 256 00:14:39,996 --> 00:14:43,116 Speaker 1: a really a storied career and he's the one that 257 00:14:43,156 --> 00:14:46,716 Speaker 1: created that. I'll say, the modern senior prosecutor who holds 258 00:14:46,796 --> 00:14:50,876 Speaker 1: senior executives and and doesn't mess around, you know, prais 259 00:14:50,876 --> 00:14:54,556 Speaker 1: them through the office and handcuffs and uh, you know, 260 00:14:54,916 --> 00:14:56,516 Speaker 1: puts them in the back of the car. You know, 261 00:14:56,596 --> 00:14:58,116 Speaker 1: it's interesting about that. I mean, there's a lot that 262 00:14:58,156 --> 00:15:01,436 Speaker 1: is interesting about that, but that that first, it doesn't 263 00:15:01,436 --> 00:15:03,876 Speaker 1: happen till then. So the question is like why then, 264 00:15:04,556 --> 00:15:07,316 Speaker 1: I mean, if that approach becomes the standard approach afterwards, 265 00:15:07,356 --> 00:15:09,076 Speaker 1: it is because it worked. I mean that it worked 266 00:15:09,156 --> 00:15:12,076 Speaker 1: for Giuliani, it made it more popular, people liked it. 267 00:15:13,516 --> 00:15:16,916 Speaker 1: But what is it about that period that leaves it 268 00:15:16,956 --> 00:15:21,956 Speaker 1: open to this innovation. I mean, I think because a 269 00:15:21,996 --> 00:15:25,756 Speaker 1: prosecutor him or herself makes a name, and I think 270 00:15:25,756 --> 00:15:28,476 Speaker 1: there is an element of the personality in building up 271 00:15:28,516 --> 00:15:30,876 Speaker 1: you know, the career of the individuals who are holding 272 00:15:30,876 --> 00:15:35,116 Speaker 1: people to account. Is it a uniquely American phenomenon. Yeah, 273 00:15:35,196 --> 00:15:39,436 Speaker 1: there's no country that that that is even close. It's 274 00:15:39,516 --> 00:15:43,556 Speaker 1: challenging to hold individuals accountable. You indict an individual, they 275 00:15:43,556 --> 00:15:45,916 Speaker 1: fight for their life because there's nothing left other than 276 00:15:45,996 --> 00:15:48,716 Speaker 1: trying to protect their reputation. So they will go to court. 277 00:15:48,716 --> 00:15:52,076 Speaker 1: They will spend every penny they have. The white color criminels. 278 00:15:52,116 --> 00:15:54,756 Speaker 1: Many of the ones that you interacted with had long sentences, 279 00:15:54,796 --> 00:15:57,676 Speaker 1: and we're not in minimum security prisons. They were in 280 00:15:57,956 --> 00:16:00,756 Speaker 1: what looked like a real jail. Yeah. Yeah, you have 281 00:16:00,796 --> 00:16:03,516 Speaker 1: a year plus sentence, which means you're you're not getting 282 00:16:04,476 --> 00:16:07,396 Speaker 1: lighter touch facility, You're getting the real deal. I mean, 283 00:16:07,436 --> 00:16:10,436 Speaker 1: they're dangerous and so this is where we hear them 284 00:16:10,556 --> 00:16:13,596 Speaker 1: hiring consultants and other people to kind of inform them 285 00:16:13,596 --> 00:16:15,876 Speaker 1: about what their experiences like and how to quote, you know, 286 00:16:15,956 --> 00:16:20,316 Speaker 1: survive during their their sentence. So once you're up and 287 00:16:20,436 --> 00:16:22,836 Speaker 1: you have a couple of years sentence, you're you're not 288 00:16:22,956 --> 00:16:24,916 Speaker 1: going to a prison camp, which would be I think 289 00:16:24,956 --> 00:16:27,996 Speaker 1: what most people think of as the white collar prison. Yea. 290 00:16:28,156 --> 00:16:30,596 Speaker 1: I mean you're you're in oftentimes a medium security prison. 291 00:16:31,156 --> 00:16:33,516 Speaker 1: You know, it's it's not a pleasant place, I will say. 292 00:16:33,716 --> 00:16:37,436 Speaker 1: I mean, they're loud, noisy, dirty, They're they're exactly what 293 00:16:37,476 --> 00:16:39,916 Speaker 1: people think. Who did you? Who did you? Who did 294 00:16:39,916 --> 00:16:41,596 Speaker 1: you visit? By the way, anybody I would have heard 295 00:16:41,636 --> 00:16:43,916 Speaker 1: of My first visit probably was one of the more 296 00:16:43,916 --> 00:16:47,436 Speaker 1: prominent Dennis Kolswalski, the former CEO of Tycho. I remember him, yep, 297 00:16:48,236 --> 00:16:50,636 Speaker 1: one of the most highest paid executives in the country. 298 00:16:50,996 --> 00:16:53,036 Speaker 1: A rock star by any account. I mean, he was 299 00:16:53,116 --> 00:16:56,596 Speaker 1: the next up and coming Jack Welch and uh yeah, 300 00:16:56,276 --> 00:16:58,916 Speaker 1: he was the first person that went from you know, 301 00:16:58,956 --> 00:17:01,276 Speaker 1: flying in a Gulf stream to you know, being in 302 00:17:01,436 --> 00:17:05,196 Speaker 1: actually a prison in upstate New York. Described visiting him. 303 00:17:05,236 --> 00:17:07,676 Speaker 1: What was it like? I was really nervous coming in. 304 00:17:07,676 --> 00:17:09,996 Speaker 1: I will say, it was this pretty off place and 305 00:17:10,556 --> 00:17:14,036 Speaker 1: there's you know, downs Koswalski there wearing a polo shirt. 306 00:17:14,436 --> 00:17:16,476 Speaker 1: The warden was kind enough to give us effectively a 307 00:17:16,556 --> 00:17:19,476 Speaker 1: lawyer visiting room, which sounds like it was nice. But 308 00:17:19,516 --> 00:17:21,676 Speaker 1: it had like a one of those flashing lights that 309 00:17:21,756 --> 00:17:25,116 Speaker 1: was like half flashing and it and it felt very 310 00:17:25,196 --> 00:17:29,356 Speaker 1: very small and again kind of dirty and cold. But 311 00:17:29,636 --> 00:17:33,116 Speaker 1: what was amazing is immediately I remember, you know, kind 312 00:17:33,156 --> 00:17:35,676 Speaker 1: of the I would say, almost the grace that mister 313 00:17:35,836 --> 00:17:39,356 Speaker 1: Kolzwalski had when we started the conversation. And I appreciate 314 00:17:39,436 --> 00:17:42,636 Speaker 1: how quickly people can evolve. You can go from flying 315 00:17:42,636 --> 00:17:46,116 Speaker 1: into G six to prison and it's not immediate, but 316 00:17:46,196 --> 00:17:49,036 Speaker 1: you learn how to evolve and adapt, and we're surprisingly 317 00:17:49,036 --> 00:17:53,356 Speaker 1: adaptable creatures. Did you go visit Bernie made Off? I 318 00:17:53,396 --> 00:17:56,516 Speaker 1: was never actually permitted by the prison. Every Wednesday night, 319 00:17:56,636 --> 00:17:58,996 Speaker 1: actually I would speak to him at seven pm in 320 00:17:59,036 --> 00:18:01,596 Speaker 1: my office. You would call collect my Harvard office and 321 00:18:01,596 --> 00:18:04,876 Speaker 1: we would speak and hundreds of pages of correspondence. What 322 00:18:04,916 --> 00:18:06,916 Speaker 1: did he want to talk about? Did he acknowledge that 323 00:18:06,956 --> 00:18:10,556 Speaker 1: he had done something wrong? Yes, he absolutely did admit 324 00:18:10,716 --> 00:18:13,596 Speaker 1: that he did something wrong, But he did have the 325 00:18:13,596 --> 00:18:18,836 Speaker 1: ability to rationalize and justify why the adverse impact that 326 00:18:18,876 --> 00:18:22,156 Speaker 1: that had on on so many victims was not what 327 00:18:22,276 --> 00:18:25,116 Speaker 1: people were making it out to be. I call he 328 00:18:25,116 --> 00:18:27,356 Speaker 1: had they put all their eggs in one basket. That's 329 00:18:27,396 --> 00:18:31,396 Speaker 1: like investing one on one failure. He had these interesting 330 00:18:31,396 --> 00:18:35,956 Speaker 1: ability to kind of explain or provide a different way 331 00:18:36,316 --> 00:18:41,316 Speaker 1: of seeing the world. Did he feel wronged? He would 332 00:18:41,316 --> 00:18:43,876 Speaker 1: have preferred obviously to not have been in prison. But 333 00:18:43,956 --> 00:18:47,036 Speaker 1: I think for a long time he thought that was 334 00:18:47,116 --> 00:18:48,596 Speaker 1: the end of the road. I mean, at some point 335 00:18:48,876 --> 00:18:52,356 Speaker 1: by its very nature, whether you know, he admitted it, 336 00:18:52,396 --> 00:18:55,436 Speaker 1: which is what he did, or he died and those 337 00:18:55,476 --> 00:18:58,956 Speaker 1: pieces would have been exposed, it was inevitable in some way, 338 00:18:59,076 --> 00:19:01,596 Speaker 1: and I think he knew that getting to know these people, 339 00:19:02,036 --> 00:19:04,196 Speaker 1: did you find the more you got to know them, 340 00:19:04,276 --> 00:19:07,876 Speaker 1: more sympathetic you were with their plight. I'm empathetic and 341 00:19:07,956 --> 00:19:10,636 Speaker 1: the basis of you know, this is not what they 342 00:19:10,676 --> 00:19:13,836 Speaker 1: wanted to have their career. And as I became a 343 00:19:13,916 --> 00:19:16,996 Speaker 1: husband and had some kids during the course of the project, 344 00:19:17,076 --> 00:19:19,596 Speaker 1: so you know, missing your kids growing up, that would matter. 345 00:19:20,196 --> 00:19:22,356 Speaker 1: But at the same time, what they did deserve the 346 00:19:22,356 --> 00:19:25,636 Speaker 1: sanction that they're getting and it's harsh and it's difficult, 347 00:19:25,996 --> 00:19:29,596 Speaker 1: but that's what we demand. Did you have the sense 348 00:19:29,676 --> 00:19:31,836 Speaker 1: that in most cases these were not people who were 349 00:19:31,916 --> 00:19:36,036 Speaker 1: kind of born criminals, that they circumstances and their personality 350 00:19:36,076 --> 00:19:38,276 Speaker 1: had interacted in such a way they kind of found 351 00:19:38,276 --> 00:19:40,596 Speaker 1: themselves at the top of a slippery slope and slid down. 352 00:19:40,596 --> 00:19:43,676 Speaker 1: It exactly made off. I don't think he was a 353 00:19:43,716 --> 00:19:46,636 Speaker 1: born criminal. I think he had a lower ability to 354 00:19:46,676 --> 00:19:49,156 Speaker 1: empathize with others. So it's the extent that he found 355 00:19:49,196 --> 00:19:52,516 Speaker 1: himself in a position engaging in behavior that ultimately was 356 00:19:52,516 --> 00:19:55,476 Speaker 1: taking advantage of people. He didn't have the compunction to 357 00:19:55,956 --> 00:19:58,316 Speaker 1: stop in a way that maybe other people might may have. 358 00:19:58,796 --> 00:20:02,196 Speaker 1: But he was not destined to create a massive pyramid 359 00:20:02,236 --> 00:20:05,316 Speaker 1: scheme or Ponzi scheme. It just made a series of mistakes, 360 00:20:05,316 --> 00:20:07,876 Speaker 1: and rather than pulling back from those mistakes, he I 361 00:20:07,916 --> 00:20:10,156 Speaker 1: would say double down and triple down, and you know, 362 00:20:10,676 --> 00:20:12,556 Speaker 1: it starts as something much smaller and grows to something 363 00:20:12,676 --> 00:20:15,476 Speaker 1: much more significant, and often starts as something very legitimate. 364 00:20:16,316 --> 00:20:19,796 Speaker 1: I mean, a lot of great entrepreneurs start with creative 365 00:20:19,836 --> 00:20:22,796 Speaker 1: ideas that do push the bounds of law. We can 366 00:20:22,836 --> 00:20:25,196 Speaker 1: think of uber and airbeing b You know, they looked 367 00:20:25,236 --> 00:20:29,476 Speaker 1: at zoning laws, they looked at taxicab laws and thought 368 00:20:29,596 --> 00:20:33,596 Speaker 1: they're outdated, or they're antiquated, or they don't fit the 369 00:20:33,636 --> 00:20:35,796 Speaker 1: modern world. Just kind of ignoring them for a while 370 00:20:35,876 --> 00:20:38,876 Speaker 1: until quote the law catches up or you're able to 371 00:20:38,916 --> 00:20:41,836 Speaker 1: lobby and change them. Sometimes that works very well, and 372 00:20:41,916 --> 00:20:44,876 Speaker 1: sometimes it ends very badly. If you to get your 373 00:20:44,916 --> 00:20:47,756 Speaker 1: students in a room and say here's what you need 374 00:20:47,796 --> 00:20:52,956 Speaker 1: to watch for to prevent you becoming the next Bernie 375 00:20:52,996 --> 00:20:58,476 Speaker 1: made Off or whoever, what tips would you give them? 376 00:20:58,556 --> 00:21:01,356 Speaker 1: I've had sinstead of run into two issues and problems 377 00:21:01,436 --> 00:21:04,276 Speaker 1: later on. Who are savvy and smart and I think 378 00:21:04,316 --> 00:21:06,916 Speaker 1: thoughtful people by by all accounts from all my interactions. 379 00:21:07,676 --> 00:21:09,996 Speaker 1: We go through all the exercises, all do the training, 380 00:21:10,676 --> 00:21:13,436 Speaker 1: we all talk about how we're high integrity, moral people, 381 00:21:14,196 --> 00:21:16,196 Speaker 1: but we never really are able to step back and 382 00:21:16,196 --> 00:21:18,796 Speaker 1: look at our organizations and look at ourselves at what 383 00:21:18,876 --> 00:21:21,756 Speaker 1: I call it an unbiased way. Something that I always 384 00:21:21,756 --> 00:21:24,156 Speaker 1: struggled with is while I'm talking to people that are 385 00:21:24,156 --> 00:21:27,396 Speaker 1: literally sitting in prison, people were still reflecting how they 386 00:21:27,396 --> 00:21:32,476 Speaker 1: were high integrity. You know, businessmen or attorneys are entrepreneurs, 387 00:21:32,796 --> 00:21:35,436 Speaker 1: who made a mistake, but otherwise they're high integrity people. 388 00:21:36,236 --> 00:21:38,436 Speaker 1: And I always reflected, well, that's the same thing we 389 00:21:38,476 --> 00:21:40,716 Speaker 1: all do, you know if we you know, when we 390 00:21:40,756 --> 00:21:43,596 Speaker 1: make mistakes, it's not like we change our view of ourselves. 391 00:21:43,636 --> 00:21:46,116 Speaker 1: Why should we expect someone that does it one hundred 392 00:21:46,156 --> 00:21:49,356 Speaker 1: times more and would view it differently. And so humility, 393 00:21:50,276 --> 00:21:53,516 Speaker 1: I guess the characteristic that I'm most fearful of when 394 00:21:53,556 --> 00:21:58,636 Speaker 1: people are so confident in themselves that they can't see others. 395 00:21:58,636 --> 00:22:00,596 Speaker 1: They don't want to surround themselves by people who may 396 00:22:00,596 --> 00:22:04,316 Speaker 1: have different views and opinion because that isolation is what 397 00:22:04,396 --> 00:22:08,196 Speaker 1: leads to poor decision making. So it's interesting you're identifying 398 00:22:08,276 --> 00:22:11,196 Speaker 1: the condition in the person in the environment that might 399 00:22:11,276 --> 00:22:13,676 Speaker 1: lead to this sort of thing, lack of humility being 400 00:22:13,676 --> 00:22:17,996 Speaker 1: one of them. What else are there other signs that 401 00:22:18,036 --> 00:22:22,956 Speaker 1: this is like fertile ground for white collar crime. Individuals 402 00:22:22,956 --> 00:22:26,676 Speaker 1: can engage in almost a degree of mindlessness. They are 403 00:22:26,796 --> 00:22:31,876 Speaker 1: not internalizing the broader ramifications, the lack of a feeling 404 00:22:31,876 --> 00:22:34,756 Speaker 1: of harmfulness. And that's because most of the victims and 405 00:22:34,796 --> 00:22:38,036 Speaker 1: white color crimes are they're distant, they're morphous. I mean, 406 00:22:38,116 --> 00:22:41,196 Speaker 1: some crimes like insider training, we can't even identify the victim. 407 00:22:41,276 --> 00:22:44,236 Speaker 1: We say it's the interior the market. That's not something 408 00:22:44,276 --> 00:22:46,796 Speaker 1: that resonates in our gut, and so you can go 409 00:22:46,836 --> 00:22:51,556 Speaker 1: ahead with the decision without feeling it. Have you ever 410 00:22:51,636 --> 00:22:55,996 Speaker 1: had one of your students end up in jail? I 411 00:22:56,076 --> 00:22:59,556 Speaker 1: have had, I have had. It's one of the last 412 00:22:59,596 --> 00:23:03,316 Speaker 1: slides I actually show in my last last lecture. It's 413 00:23:03,316 --> 00:23:07,076 Speaker 1: a picture of the class cards of former Harvard Business 414 00:23:07,076 --> 00:23:10,036 Speaker 1: School students that are either currently or recently been in prison. 415 00:23:10,476 --> 00:23:13,076 Speaker 1: Roger cooped out, the former head of McKinsey, just skilling 416 00:23:13,076 --> 00:23:16,196 Speaker 1: the former CEO of Venron. But I make the point 417 00:23:16,436 --> 00:23:19,876 Speaker 1: that no one on their last day at HBS is 418 00:23:19,916 --> 00:23:23,636 Speaker 1: thinking of doing anything else but going out doing something productive. 419 00:23:24,316 --> 00:23:26,436 Speaker 1: Maybe it's, you know, to change the world in some way. 420 00:23:26,476 --> 00:23:28,516 Speaker 1: Maybe they just want to make a lot of money. 421 00:23:28,556 --> 00:23:30,356 Speaker 1: But no one is ever thinking, you know what, I'm 422 00:23:30,356 --> 00:23:34,076 Speaker 1: gonna go out make a pile of money, change the world, 423 00:23:34,196 --> 00:23:35,836 Speaker 1: get on the cover of a magazine. You know what, 424 00:23:35,876 --> 00:23:37,636 Speaker 1: Then I'm going to try that. You know that wire 425 00:23:37,676 --> 00:23:40,916 Speaker 1: fraud that I heard about her engaging insider trading. No 426 00:23:40,956 --> 00:23:42,796 Speaker 1: one's ever thought that, right, But we look at the 427 00:23:42,876 --> 00:23:45,556 Speaker 1: data and we see people like Roger Coop. I mean, 428 00:23:45,916 --> 00:23:48,756 Speaker 1: he's as celebrated as you can get. I mean, you 429 00:23:48,756 --> 00:23:51,916 Speaker 1: don't become the managing director of McKinsey and Company by 430 00:23:52,156 --> 00:23:57,396 Speaker 1: being anything but a incredibly thoughtful, strategic, respected leader for 431 00:23:57,436 --> 00:24:01,156 Speaker 1: literally decades. And so to see someone of that position, 432 00:24:01,796 --> 00:24:04,996 Speaker 1: you know, literally twenty seconds after a Goldman sex board 433 00:24:05,076 --> 00:24:09,476 Speaker 1: meeting divulging information to a hedge fund. Some people think 434 00:24:09,516 --> 00:24:12,556 Speaker 1: of that as damning and just kind of indictment on business. 435 00:24:12,956 --> 00:24:15,796 Speaker 1: I actually look at the other way. That's humbling. To 436 00:24:15,836 --> 00:24:18,556 Speaker 1: see someone that we could rightfully respect in so many 437 00:24:18,596 --> 00:24:22,356 Speaker 1: ways do something that is so incredibly myoptic. Should make 438 00:24:22,396 --> 00:24:24,596 Speaker 1: us all sit down and think about ourselves and how 439 00:24:24,756 --> 00:24:29,556 Speaker 1: what limitations and capacity that we might make these simple 440 00:24:29,796 --> 00:24:32,956 Speaker 1: myopic decisions that have these extraordinary ramifications. Do you get 441 00:24:32,956 --> 00:24:35,636 Speaker 1: a sense that your students internalize this and are terrify 442 00:24:35,756 --> 00:24:37,556 Speaker 1: that it might happen to them. You see at the 443 00:24:37,556 --> 00:24:40,236 Speaker 1: wheels turning. And I've had a lot of i'll say, deep, 444 00:24:40,316 --> 00:24:44,316 Speaker 1: like heartheart conversations with students sometimes of facing difficult decisions 445 00:24:44,316 --> 00:24:48,156 Speaker 1: and trade offs. I've seen many instances. Now I don't 446 00:24:48,156 --> 00:24:51,236 Speaker 1: want to call it crime in progress, but people getting 447 00:24:51,236 --> 00:24:54,716 Speaker 1: into situations that, depending on how it goes, are going 448 00:24:54,756 --> 00:24:59,116 Speaker 1: to go from a tough business decision to potentially books 449 00:24:59,116 --> 00:25:01,836 Speaker 1: and records kind of like called regulatory violation too. If 450 00:25:01,876 --> 00:25:04,876 Speaker 1: that continues down the same slippery slope, it's going to 451 00:25:04,916 --> 00:25:07,916 Speaker 1: turn to something that a prosecutor would become interested in. 452 00:25:08,236 --> 00:25:10,156 Speaker 1: What do you think it is about American culture that 453 00:25:10,236 --> 00:25:15,036 Speaker 1: has encouraged the prosecution of white color crime. I think 454 00:25:15,036 --> 00:25:17,676 Speaker 1: there is something as people become more and more powerful 455 00:25:17,716 --> 00:25:21,476 Speaker 1: in companies, become more and more powerful, the desire to 456 00:25:21,996 --> 00:25:27,036 Speaker 1: hold those an account, which I believe is only appropriate. 457 00:25:27,076 --> 00:25:31,156 Speaker 1: I mean that's a byproduct of inequality. Yeah, I'm playing 458 00:25:31,156 --> 00:25:33,556 Speaker 1: by the rules and you're not, and you're getting something 459 00:25:33,596 --> 00:25:36,476 Speaker 1: because of that. This is probably like wild West justice too. 460 00:25:36,476 --> 00:25:39,276 Speaker 1: It's like cheating at cards. We might all be equal 461 00:25:39,316 --> 00:25:41,116 Speaker 1: at the card table, but if you see someone cheating 462 00:25:41,116 --> 00:25:44,356 Speaker 1: and you take you know, they take your chips from you, 463 00:25:44,356 --> 00:25:46,196 Speaker 1: you know you're gonna you know, this is like you 464 00:25:46,236 --> 00:25:49,876 Speaker 1: take them out back. This is the more civilized professional 465 00:25:49,916 --> 00:25:52,396 Speaker 1: form with our institutions. We want to hold people to 466 00:25:52,476 --> 00:25:54,676 Speaker 1: account that cheat and deceive us, because in the end, 467 00:25:54,716 --> 00:25:57,716 Speaker 1: what is what color or crime about? It's about deception. 468 00:25:57,836 --> 00:26:00,556 Speaker 1: I mean, that's at the heart of everything you deceive me, 469 00:26:00,876 --> 00:26:03,196 Speaker 1: and because of that you should be held to account. 470 00:26:06,316 --> 00:26:08,636 Speaker 1: After a break, Eugene Soltis and I talk about the 471 00:26:08,676 --> 00:26:11,676 Speaker 1: worst or of any white color convicts life, and it's 472 00:26:11,836 --> 00:26:14,356 Speaker 1: not the year they get convicted and go to prison. 473 00:26:22,636 --> 00:26:25,676 Speaker 1: I'm back with Eugene Saltis, the author of Why They 474 00:26:25,796 --> 00:26:28,716 Speaker 1: Do It Inside the Mind of the White Collar Criminal. 475 00:26:29,316 --> 00:26:31,716 Speaker 1: Do you have any sense of what happens to white 476 00:26:31,756 --> 00:26:34,356 Speaker 1: collar criminals once they get out of jail? Like, how 477 00:26:34,356 --> 00:26:38,076 Speaker 1: do they get on with their lives? It's hard having 478 00:26:38,116 --> 00:26:41,476 Speaker 1: a felony conviction, a criminal conviction on your record changes 479 00:26:41,516 --> 00:26:44,716 Speaker 1: your life. One thing I've observed is they're married, they 480 00:26:44,716 --> 00:26:47,476 Speaker 1: have kids. While they're going through the trial, everything is 481 00:26:47,476 --> 00:26:51,196 Speaker 1: held together. Failing this family grows stronger. I actually came 482 00:26:51,236 --> 00:26:53,196 Speaker 1: to admire many of their relationships I saw with their 483 00:26:53,196 --> 00:26:55,636 Speaker 1: family while they're in prison. And then what happens they 484 00:26:55,716 --> 00:26:58,476 Speaker 1: leave prison in a year later, it all falls apart. 485 00:26:59,196 --> 00:27:02,636 Speaker 1: Almost everyone I see getting divorced. It's not because the 486 00:27:02,916 --> 00:27:06,476 Speaker 1: spouse is not supportive. But you're frustrated because you say, 487 00:27:06,716 --> 00:27:09,156 Speaker 1: I did my time, I paid the cost that I 488 00:27:09,196 --> 00:27:11,356 Speaker 1: was supposed to. Why can't I move on with my life, 489 00:27:11,356 --> 00:27:14,196 Speaker 1: and you realize your friends don't want to associate with you. 490 00:27:14,196 --> 00:27:16,676 Speaker 1: You can't get a job, you can't do a lot 491 00:27:16,676 --> 00:27:19,196 Speaker 1: of things actually, once you have a criminal conviction, and 492 00:27:19,276 --> 00:27:22,636 Speaker 1: that's incredibly frustrating to especially type A people who want 493 00:27:22,636 --> 00:27:24,516 Speaker 1: to go forward and if you're you know, you're forty 494 00:27:24,556 --> 00:27:25,996 Speaker 1: and you're right and move on forty five right and 495 00:27:26,076 --> 00:27:28,716 Speaker 1: move on, you can't. So there's two groups. There's the 496 00:27:28,716 --> 00:27:30,436 Speaker 1: one group that has a lot of money still left 497 00:27:30,476 --> 00:27:32,596 Speaker 1: even after they paid all the lawyer bills and all. 498 00:27:33,236 --> 00:27:35,956 Speaker 1: You become an entrepreneur because you're not beholding anyone, so 499 00:27:35,996 --> 00:27:38,796 Speaker 1: you can reinvent yourself. There's a second group that if 500 00:27:38,876 --> 00:27:42,636 Speaker 1: sometimes will find I will say the Middle East, sometimes 501 00:27:42,636 --> 00:27:44,556 Speaker 1: Southeast Asia, but I've seen quite a few people going 502 00:27:44,596 --> 00:27:47,916 Speaker 1: to the Middle East or other jurisdictions in Asia where, 503 00:27:48,436 --> 00:27:50,716 Speaker 1: if anything, you had a criminal conviction. But then you 504 00:27:50,996 --> 00:27:55,276 Speaker 1: describe the improper American justice system, people say, yes, you know, 505 00:27:55,316 --> 00:27:58,076 Speaker 1: they kind of agree that that's you know, those crazy Americans, 506 00:27:58,116 --> 00:28:01,396 Speaker 1: and you you kind of reinvent yourself overseas where you 507 00:28:01,396 --> 00:28:05,036 Speaker 1: don't have those same limitations. So the pattern is their 508 00:28:05,076 --> 00:28:07,836 Speaker 1: marriages and families stick together while they're in jail and 509 00:28:07,876 --> 00:28:10,396 Speaker 1: they get out, they fall apart, moved asia. Yeah, but 510 00:28:10,596 --> 00:28:12,236 Speaker 1: that's a that's a good, good way of putting it. 511 00:28:12,316 --> 00:28:15,316 Speaker 1: The hardest people actually are people that are younger like FTX, 512 00:28:15,476 --> 00:28:18,396 Speaker 1: like Sam Bankman freed, He's thirty years old and faces 513 00:28:18,836 --> 00:28:21,916 Speaker 1: jail time. Can you think of analogies to him? I mean, 514 00:28:21,956 --> 00:28:24,756 Speaker 1: Elizabeth Holmes. A lot of the cases you don't hear 515 00:28:24,756 --> 00:28:27,396 Speaker 1: about when you see the article. I'll say of the 516 00:28:27,436 --> 00:28:30,036 Speaker 1: trader that is at a you know, the Goldman sachs 517 00:28:30,156 --> 00:28:33,876 Speaker 1: Or or JP Morgan who's a vice president who had 518 00:28:33,916 --> 00:28:35,756 Speaker 1: a cousin play some trades, and you have an insider 519 00:28:35,796 --> 00:28:38,476 Speaker 1: training charge, I mean you're making a couple hundred thousand 520 00:28:38,476 --> 00:28:40,396 Speaker 1: dollars a year. I mean these are lower key cases 521 00:28:40,436 --> 00:28:43,796 Speaker 1: than than than SPF. But you know, what do you 522 00:28:43,796 --> 00:28:46,676 Speaker 1: do even to plead guilty with a reasonable lawyer, you're 523 00:28:46,716 --> 00:28:49,356 Speaker 1: going to spend a million dollars or more. What do 524 00:28:49,396 --> 00:28:51,356 Speaker 1: you do after, you know, and you go to prison 525 00:28:51,396 --> 00:28:53,556 Speaker 1: for you know, six months or a year. No one 526 00:28:53,596 --> 00:28:55,916 Speaker 1: will hire you. You don't have enough money to create 527 00:28:55,956 --> 00:28:58,916 Speaker 1: your own business. That's hard. What you're saying is our 528 00:28:58,996 --> 00:29:02,596 Speaker 1: society judges you by the worst thing you did once 529 00:29:02,636 --> 00:29:04,076 Speaker 1: you have a criminal record. I mean, this is the 530 00:29:04,116 --> 00:29:05,916 Speaker 1: same thing if you have a low level drug offense 531 00:29:05,916 --> 00:29:08,716 Speaker 1: when you were you know, nineteen, or we're talking you know, 532 00:29:08,796 --> 00:29:11,756 Speaker 1: a trade or a bank. You don't get to participate 533 00:29:11,796 --> 00:29:15,076 Speaker 1: in insociety in the same way anymore, which is brutal. 534 00:29:16,276 --> 00:29:21,516 Speaker 1: So Sam Bankman freed, play out various futures for him. 535 00:29:22,236 --> 00:29:25,116 Speaker 1: You said, there are two narratives, the two narratives that 536 00:29:25,116 --> 00:29:27,116 Speaker 1: will be spun basically in the courtroom, one by the 537 00:29:27,156 --> 00:29:30,196 Speaker 1: prosecutors and one by the defense. One of the narratives 538 00:29:30,236 --> 00:29:32,756 Speaker 1: is that it's is a criminal conspiracy from the start, 539 00:29:32,796 --> 00:29:35,596 Speaker 1: and this is a born criminal. And the other narrative 540 00:29:35,676 --> 00:29:38,756 Speaker 1: is this is something that it was an accident. Some 541 00:29:38,876 --> 00:29:42,676 Speaker 1: kids got sloppy and they kind of should be forgiven 542 00:29:42,676 --> 00:29:45,436 Speaker 1: and understood. If you want to create like White called 543 00:29:45,436 --> 00:29:47,716 Speaker 1: the perfect white collar crime, and this is I should 544 00:29:47,756 --> 00:29:49,556 Speaker 1: be very clear, not what we teach in class. But 545 00:29:50,436 --> 00:29:53,676 Speaker 1: you don't create any written records. This is what prosecutors use. 546 00:29:53,716 --> 00:29:57,236 Speaker 1: You look at emails, you look at you know, transcripts 547 00:29:57,236 --> 00:30:00,956 Speaker 1: of phone calls. There's actual evidence there. And so the 548 00:30:01,236 --> 00:30:04,236 Speaker 1: perfect white collar criminal the prosecutors have to rely on. 549 00:30:04,476 --> 00:30:06,796 Speaker 1: He said, she said, where you get other people to 550 00:30:06,796 --> 00:30:10,316 Speaker 1: turn and they try to recall conversation, and then the 551 00:30:10,356 --> 00:30:13,236 Speaker 1: defense cast out about the quality of those witnesses, those 552 00:30:13,276 --> 00:30:17,596 Speaker 1: cooperating witnesses. I think what's really difficult in the case 553 00:30:17,636 --> 00:30:21,316 Speaker 1: of you know, FTX is I mean there's lengthy in 554 00:30:21,396 --> 00:30:24,716 Speaker 1: well documented pieces of information. I mean this has also 555 00:30:24,756 --> 00:30:26,996 Speaker 1: look at the speed of the indictment which it came down. 556 00:30:27,396 --> 00:30:30,836 Speaker 1: I think prosecutors feel very confident and you know, I 557 00:30:30,836 --> 00:30:33,316 Speaker 1: don't think there's one council in the entire world that 558 00:30:33,316 --> 00:30:37,156 Speaker 1: would suggest defending yourself and I'll say the public court 559 00:30:37,356 --> 00:30:40,276 Speaker 1: while you're going through will help your case. You're talking 560 00:30:40,316 --> 00:30:43,196 Speaker 1: about Sam Bankman Freed actually talking to journalists while he's 561 00:30:43,236 --> 00:30:46,436 Speaker 1: going through this. Ye talking, yes, you know, well well 562 00:30:46,436 --> 00:30:49,396 Speaker 1: respected writers. Yes, But unfortunately, I think this is what 563 00:30:49,436 --> 00:30:51,316 Speaker 1: happens when you're criminally indicted. You get your time in 564 00:30:51,396 --> 00:30:54,156 Speaker 1: court to explain why that's wrong, and then if you're 565 00:30:54,196 --> 00:30:56,116 Speaker 1: not convicted, you get to then you know, write a 566 00:30:56,116 --> 00:30:59,596 Speaker 1: book and like some people, then explain why prosecutors are 567 00:30:59,636 --> 00:31:03,276 Speaker 1: wrong too. But doing it in real time that's just dangerous. Yeah, 568 00:31:04,476 --> 00:31:07,476 Speaker 1: So my view, if prosecutors are not able to make 569 00:31:07,516 --> 00:31:10,076 Speaker 1: at least one count. I would be pretty shocked actually, 570 00:31:10,276 --> 00:31:14,116 Speaker 1: just given with the volume misinformation and frankly they you 571 00:31:14,196 --> 00:31:17,436 Speaker 1: can see prosecutors Off have been very vocal and there's 572 00:31:17,476 --> 00:31:20,236 Speaker 1: already well known that there are other prominent individuals that 573 00:31:20,236 --> 00:31:24,836 Speaker 1: were around him that are cooperating, even with the best counsel. 574 00:31:25,516 --> 00:31:28,436 Speaker 1: That's a high bar to surmount as a defense. So 575 00:31:28,476 --> 00:31:30,556 Speaker 1: you go to prison. I mean, I think the question 576 00:31:30,596 --> 00:31:34,036 Speaker 1: is how long. We're talking like, you know, not six 577 00:31:34,076 --> 00:31:35,996 Speaker 1: months in prisoner or a year. I mean, you're looking 578 00:31:36,076 --> 00:31:39,916 Speaker 1: like a life sentence. That's scary. The reason why most 579 00:31:39,916 --> 00:31:41,996 Speaker 1: people don't go to court and put this in front 580 00:31:42,036 --> 00:31:44,596 Speaker 1: of a jury is you're literally looking at, you know, 581 00:31:44,796 --> 00:31:47,516 Speaker 1: theoretically one hundred years in prison. What kind of deal 582 00:31:47,596 --> 00:31:51,036 Speaker 1: do you imagine a prosecutor might offer him? I will say, 583 00:31:51,076 --> 00:31:55,876 Speaker 1: what makes this case so extraordinary is I mean again, 584 00:31:55,916 --> 00:31:59,316 Speaker 1: and this is the simplification, but you have one entity 585 00:31:59,596 --> 00:32:02,076 Speaker 1: that's independent from another entity in ten billion dollars of 586 00:32:02,076 --> 00:32:05,836 Speaker 1: customer money transferred. That's extraordinary. I mean I will say 587 00:32:05,876 --> 00:32:09,036 Speaker 1: that that pales in comparison anything made Off did. If 588 00:32:09,236 --> 00:32:11,236 Speaker 1: you take that simple story, I mean, that would be 589 00:32:11,236 --> 00:32:13,436 Speaker 1: an equivalent of you know, an owner of fidelity, like 590 00:32:13,476 --> 00:32:16,716 Speaker 1: the Johnson family transferring it to some other company they own, 591 00:32:16,876 --> 00:32:19,756 Speaker 1: like ten billion dollars. I mean, you don't that doesn't happen, 592 00:32:20,196 --> 00:32:23,556 Speaker 1: But it did. There's a million individual claimates. And so 593 00:32:23,676 --> 00:32:26,956 Speaker 1: I think in the case for prosecutors, they think about victims. 594 00:32:27,076 --> 00:32:29,876 Speaker 1: You have literally a million victims. You make, you know, 595 00:32:29,916 --> 00:32:32,596 Speaker 1: eighty thousand hours a year, you lost thirty in FTX. 596 00:32:33,436 --> 00:32:35,836 Speaker 1: You kind of want blood, so to speak. Yep, And 597 00:32:35,916 --> 00:32:38,236 Speaker 1: so I think even the deal that they would offer 598 00:32:38,276 --> 00:32:40,836 Speaker 1: would be something that would have looked so unpalallable. You 599 00:32:40,836 --> 00:32:44,076 Speaker 1: know we're gonna offer you. I'll just say ten to twenty. 600 00:32:44,156 --> 00:32:47,436 Speaker 1: He's thirty, thirty thirty, Yeah, I mean you're gonna be 601 00:32:47,476 --> 00:32:49,676 Speaker 1: in your mid forties. You think some reason that you 602 00:32:49,676 --> 00:32:52,396 Speaker 1: can avoid that. I will say, I don't see that 603 00:32:52,436 --> 00:32:55,716 Speaker 1: being possible here. So, if you're a betting man, you're 604 00:32:55,756 --> 00:32:58,716 Speaker 1: betting he's going to jail for a long time. I'm 605 00:32:58,756 --> 00:33:00,356 Speaker 1: betting he's going to be in prison for a while. 606 00:33:00,796 --> 00:33:03,316 Speaker 1: If you had had Sam Bankman freed as a student, 607 00:33:04,516 --> 00:33:06,076 Speaker 1: and you had a time machine, so you had a 608 00:33:06,116 --> 00:33:08,156 Speaker 1: sense that he was going to be facing these temptations 609 00:33:08,236 --> 00:33:14,356 Speaker 1: or difficulties, what would you have told him, what advice 610 00:33:14,356 --> 00:33:16,076 Speaker 1: would you have given him that would have kept him 611 00:33:16,076 --> 00:33:20,956 Speaker 1: out of trouble? So I wish the entire team would 612 00:33:20,956 --> 00:33:23,036 Speaker 1: have spent a month with us, let's say our first 613 00:33:23,076 --> 00:33:28,516 Speaker 1: month of HBS, let's say, doing some basic business internal controls, governance, 614 00:33:28,756 --> 00:33:32,916 Speaker 1: risk management, the kind of things that clearly lacked. If 615 00:33:32,916 --> 00:33:34,436 Speaker 1: I gave them a month of what I called the 616 00:33:34,436 --> 00:33:36,956 Speaker 1: basics and then they went ahead and did what's alleged, 617 00:33:37,836 --> 00:33:40,156 Speaker 1: then I know which story it is. They ignored that 618 00:33:40,316 --> 00:33:42,796 Speaker 1: and they went ahead, but to the extent that they 619 00:33:42,796 --> 00:33:47,076 Speaker 1: were genuinely so ignorant, there's a cost associate with that, 620 00:33:47,116 --> 00:33:50,516 Speaker 1: and I think there's a an appropriate set of sanctions, 621 00:33:50,596 --> 00:33:53,036 Speaker 1: but it's a very different set of root causes and 622 00:33:53,316 --> 00:33:56,916 Speaker 1: how I would think about their actions and their shortcomings 623 00:33:56,916 --> 00:34:00,876 Speaker 1: as business leaders. Can you think of another white collar 624 00:34:01,076 --> 00:34:04,836 Speaker 1: case like this? One of the questions I look at 625 00:34:05,116 --> 00:34:08,676 Speaker 1: this case and I really struggle with is that, you know, 626 00:34:08,716 --> 00:34:12,796 Speaker 1: there's a million individual claimants that lost money and and 627 00:34:12,956 --> 00:34:15,476 Speaker 1: feel that they've been defrauded. The question so why did 628 00:34:15,476 --> 00:34:17,916 Speaker 1: they trust to put their money into FDx given how 629 00:34:17,916 --> 00:34:21,076 Speaker 1: little governance there was? And we go, well, let's look back. 630 00:34:21,436 --> 00:34:24,716 Speaker 1: FTX was extraordinarily well funded. It was funded by i'll 631 00:34:24,756 --> 00:34:27,316 Speaker 1: say many of our former students that work at well 632 00:34:27,316 --> 00:34:31,636 Speaker 1: known venture capital shops and endowments and other organizations who 633 00:34:31,676 --> 00:34:33,716 Speaker 1: put money in. And this came out very much in 634 00:34:33,756 --> 00:34:36,596 Speaker 1: theanois as well. Put in hundreds of millions of dollars 635 00:34:36,636 --> 00:34:40,676 Speaker 1: with limited to oftentimes summonance, is no due diligence. It's 636 00:34:40,716 --> 00:34:42,276 Speaker 1: kind of the FOMO. They didn't want to miss out 637 00:34:42,476 --> 00:34:44,876 Speaker 1: those homes. Literally, it was well known was turning down 638 00:34:44,916 --> 00:34:47,196 Speaker 1: money if people ask questions. So you throw a one 639 00:34:47,236 --> 00:34:49,676 Speaker 1: hundred million dollars in or two hundred million in for 640 00:34:49,716 --> 00:34:52,316 Speaker 1: a venture capital company to write off two hundred million, 641 00:34:52,316 --> 00:34:54,876 Speaker 1: which is what they've all done. Frankly, isn't that big 642 00:34:54,916 --> 00:34:56,196 Speaker 1: of a deal. I mean, that's part of the risk 643 00:34:56,236 --> 00:34:59,156 Speaker 1: business they're in. But the challenge we face right now 644 00:34:59,236 --> 00:35:02,116 Speaker 1: is by all those venture capital companies and endowments and 645 00:35:02,116 --> 00:35:04,996 Speaker 1: other organizations putting in hundreds of millions of dollars each 646 00:35:04,996 --> 00:35:08,516 Speaker 1: into enterprises with little due diligence, what do they do? 647 00:35:08,636 --> 00:35:13,316 Speaker 1: They actively create credibility for an organization like FTX, and 648 00:35:13,316 --> 00:35:15,836 Speaker 1: then a million people rush and put money in and 649 00:35:15,996 --> 00:35:19,116 Speaker 1: really no one's watching the shop and actually helping a 650 00:35:19,116 --> 00:35:21,196 Speaker 1: company like FTX grow up, which is what could have 651 00:35:21,236 --> 00:35:26,196 Speaker 1: prevented this. We have money throwed young entrepreneurs that may 652 00:35:26,196 --> 00:35:29,236 Speaker 1: not have experience or knowledge, and then what happens at 653 00:35:29,236 --> 00:35:32,636 Speaker 1: the end the investors, institutional investors can write that off 654 00:35:32,676 --> 00:35:34,316 Speaker 1: and it's not that big of a deal, and then 655 00:35:34,316 --> 00:35:37,276 Speaker 1: you have a million individual investors that feel deceived by 656 00:35:37,276 --> 00:35:39,876 Speaker 1: the system. And this is why I think people are 657 00:35:39,916 --> 00:35:42,556 Speaker 1: critical about business. Why they're critical about places like Harvard 658 00:35:42,596 --> 00:35:46,316 Speaker 1: Business School is because they don't think business is looking 659 00:35:46,316 --> 00:35:48,516 Speaker 1: out for them. And this is exactly what makes people, 660 00:35:48,876 --> 00:35:51,476 Speaker 1: I think a purporately cynical of kind of business is 661 00:35:51,956 --> 00:35:54,036 Speaker 1: it looks like people are just making money and kind 662 00:35:54,076 --> 00:35:58,516 Speaker 1: of gambling when it has real consequences on unreal people. Eugene, 663 00:35:58,556 --> 00:36:07,436 Speaker 1: this was great. Absolutely. Eugene salt Us is a professor 664 00:36:07,476 --> 00:36:10,716 Speaker 1: of business administration at Harvard Business School and the author 665 00:36:10,756 --> 00:36:13,756 Speaker 1: of Why They Do It Inside the Mind of the 666 00:36:13,756 --> 00:36:17,676 Speaker 1: White Collar Criminal. Let's end today by answering a question 667 00:36:17,716 --> 00:36:19,596 Speaker 1: from one of our listeners, or maybe more than one. 668 00:36:20,156 --> 00:36:25,196 Speaker 1: Here's the first, Jake, who asks, how do you think 669 00:36:25,196 --> 00:36:28,676 Speaker 1: of the informative aspects of your books? Do you view 670 00:36:28,716 --> 00:36:31,196 Speaker 1: it as a dual purpose along with your broader goal 671 00:36:31,236 --> 00:36:34,596 Speaker 1: of building a large, broader narrative. Is it an ends 672 00:36:34,636 --> 00:36:36,516 Speaker 1: to the means to be able to have the reader 673 00:36:36,596 --> 00:36:38,996 Speaker 1: understand the story or do you see it as the 674 00:36:39,036 --> 00:36:42,956 Speaker 1: core of your works? First off, I don't break it 675 00:36:42,996 --> 00:36:46,356 Speaker 1: down quite like that. I don't think, oh, I'm going 676 00:36:46,396 --> 00:36:49,476 Speaker 1: to inform the reader about credit default swaps or baseball 677 00:36:49,516 --> 00:36:55,236 Speaker 1: statistics or cryptocurrency. What happens is there's an idea, or 678 00:36:55,276 --> 00:36:58,396 Speaker 1: there's a character, or there's both that I become really 679 00:36:58,436 --> 00:37:01,956 Speaker 1: interested in, and I realize that I can't get the 680 00:37:02,076 --> 00:37:06,436 Speaker 1: character or the idea cross without informing the reader more 681 00:37:06,636 --> 00:37:11,156 Speaker 1: about this or that. So the characters in The Big Short, 682 00:37:11,996 --> 00:37:15,436 Speaker 1: they were obsessed with the rigging of Wall Street and 683 00:37:15,476 --> 00:37:18,556 Speaker 1: the crashing of the American financial system, and that involve 684 00:37:19,356 --> 00:37:23,236 Speaker 1: some really technical financial instruments that they got very obsessed with. 685 00:37:23,676 --> 00:37:26,236 Speaker 1: So the reader had to understand them in order to 686 00:37:26,356 --> 00:37:31,636 Speaker 1: understand the character. The same is true of you know, 687 00:37:31,636 --> 00:37:33,916 Speaker 1: if I'm writing about Sam Bankman Freed, It's very hard 688 00:37:33,956 --> 00:37:36,796 Speaker 1: to do that and engage the reader in the way 689 00:37:36,796 --> 00:37:39,676 Speaker 1: I need to engage the reader unless they understand, at 690 00:37:39,756 --> 00:37:43,396 Speaker 1: least with Sam Bankman Freed understands crypto to be and 691 00:37:43,476 --> 00:37:46,036 Speaker 1: some other things. So you know, it's just sort of 692 00:37:46,076 --> 00:37:49,516 Speaker 1: like when you're entering into the world of another person. 693 00:37:50,236 --> 00:37:52,956 Speaker 1: There's sometimes some complicated things about that world that need 694 00:37:52,996 --> 00:37:57,876 Speaker 1: to be explained, and I try to explain them in 695 00:37:57,916 --> 00:38:00,836 Speaker 1: a way that doesn't disrupt the reader's pleasure in the narrative. 696 00:38:01,236 --> 00:38:04,676 Speaker 1: It's funny when I'm thinking about how to do that, 697 00:38:04,716 --> 00:38:07,836 Speaker 1: I think my mother needs to understand this. And the 698 00:38:07,876 --> 00:38:10,516 Speaker 1: funny thing about that my mother doesn't read my books, 699 00:38:10,636 --> 00:38:13,836 Speaker 1: but I still have that thought in my head. So anyway, 700 00:38:13,876 --> 00:38:16,476 Speaker 1: I hope that answer your questions and happy to take 701 00:38:16,556 --> 00:38:21,996 Speaker 1: more down the road. Thank you. If you have a question, 702 00:38:22,116 --> 00:38:24,116 Speaker 1: let me know, just write me by clicking the link 703 00:38:24,156 --> 00:38:29,476 Speaker 1: in our show notes or visiting ATR podcast dot com. 704 00:38:29,516 --> 00:38:34,476 Speaker 1: That's atr podcast dot com. On Background is hosted by 705 00:38:34,516 --> 00:38:38,116 Speaker 1: me Michael Lewis and produced by Katherine Girardot and Lydia 706 00:38:38,196 --> 00:38:42,836 Speaker 1: Jane Cott. Our editor is Julia Barton. Our engineer is 707 00:38:42,876 --> 00:38:47,076 Speaker 1: Sarah Brugere. Our show is recorded by Tofa Ruth at 708 00:38:47,076 --> 00:38:51,476 Speaker 1: Berkeley Advanced Media Studios. Our music was composed by Matthias 709 00:38:51,476 --> 00:38:55,236 Speaker 1: Bossy and John Evans of Stellwagon Symphonette. My old friend 710 00:38:55,356 --> 00:38:59,156 Speaker 1: Nick Brittell composed our theme song. On Background is a 711 00:38:59,156 --> 00:39:04,236 Speaker 1: production of Pushkin Industries. Define more Pushkin podcasts, listen on 712 00:39:04,276 --> 00:39:08,476 Speaker 1: the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts, 713 00:39:09,196 --> 00:39:11,356 Speaker 1: and if you'd like to listen to add free and 714 00:39:11,516 --> 00:39:15,076 Speaker 1: learn about other exclusive offerings. Don't forget to sign up 715 00:39:15,116 --> 00:39:19,916 Speaker 1: for a Pushkin Plus subscription at pushkin dot fm, backslash Plus, 716 00:39:20,716 --> 00:39:22,156 Speaker 1: or on our Apple show page.