Climbing the Corporate Ladder, Beware the Dark Side

When I graduated from college in 1980, I never imagined that, in addition to the American dream, corporate America would offer so many tempting opportunities to break civil and criminal law.

Insider trading, stock option backdating, accounting fraud, securities fraud, breaching fiduciary duty, embezzlement, leaking confidential or classified information, RICO, it's a long and scary list. But the scariest thing about it is that, at the time, it doesn't feel like you're crossing a line. It feels like business as usual.

Thinking back on it, not one person ever sat me down and said, don't do it. Well, somebody should have. And, since not too many former executives are willing to go on the record about this sort of thing, I decided to do for you what nobody did for me.

But before we get to that, let me tell you a story about a technology analyst I once knew who later became one of the richest men in America and now, will likely spend the rest of his life behind bars.

Yesterday, Galleon chief Raj Rajaratnam was convicted on 14 counts of securities fraud and conspiracy as the top guy in the biggest insider trading scandal in history. And while the billionaire hedge-fund manager isn't the only person I've known to "cross the line," he is certainly the most infamous.

You see, I knew Raj in another life, when he was president of investment bank Needham & Company in the 90s. We were both in our 30s. I can remember, after presenting at a Needham technology conference in Silicon Valley, Raj coming up to me to tell me he was leaving to run a hedge fund.

I remember him being excited about it, but I had no idea why. At the time, I didn't even know what a hedge fund was.

Needless to say, I've had no contact with Raj or anyone associated with him since or I wouldn't be writing this story, that's for sure. But as the Galleon insider trading scandal unfolded, as the SEC charged one top executive after another from big-name firms like Intel, IBM, AMD, and McKinsey, the only thing that surprised me was the overwhelming abundance of wire tap evidence.

As if that wasn't enough, Rajat Gupta, the former head of McKinsey and board director of Goldman Sachs and Procter & Gamble, was charged in a civil action by the SEC with passing inside information on Berkshire Hathaway's plan to invest $5 billion in Goldman to Rajaratnam, just before it was made public. Now that's a big fish caught in the net, I thought.

So, why wasn't I surprised by all this? I mean, these were supposed to be smart, savvy people, the cream of the crop.

Well, if you look at the sheer number of senior executives involved in the Galleon operation and the breadth of wire tap evidence the feds have on them - I mean, 19 of 26 defendants have already pled guilty in the criminal case - it's clear that, to them, this must have felt like business as usual.

No, it's not an excuse, but it is sad and tragic. Most importantly, it serves as a giant red warning flag for everyone fast-tracking their way up the corporate ladder and even those of you who are already there.

Committing white collar crime doesn't always feel as if you're crossing a line. It's more like a gentle slope that becomes more and more slippery over time.

If - like me - you grew up with parents who made a point of drilling work ethic deep into your young and impressionable mind, then you don't need to hear this. For everyone else, the message is simple:

Regardless of how it may seem at the time, it is crossing a line. And once you cross it, you can never cross back. Try to remember that when the opportunities arise, as they surely will.

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