Ethics: a perspective from a mortgage felonJerome MaynePrevent mortgage fraud
Does it come as a big surprise that a convicted
felon—indeed, a white-collar criminal—would have
developed some thoughts on the topic of ethics? Probably not. Since
my conviction, I have had plenty of time to ponder the idea of
ethics, and I've conducted some research on my own about the
subject. In doing so, I've received tons of advice. I must say, I
wish I'd had this information at the beginning of my career.
Prisons are full of people who feel that the justice system
failed them. For some reason, they think that they shouldn't be
there. I thought the same thing when I was in prison. The truth is,
my fellow inmates and I did everything right to get ourselves into
prison. We did precisely the wrong things, in precisely the right
order, at precisely the wrong time—and there we were.
So, I came to the conclusion that it wasn't the system; it was
In 1999, I began serving a 21-month federal prison sentence for
conspiracy to commit mail fraud and wire fraud. The crime involved
four real estate investors submitting fraudulent documentation in
order to get approved for residential home loans. Ultimately, these
individuals took the equity out of the properties. Payments were
never made on the loans, which caused the bank to foreclose on the
property and incur thousands of dollars in losses.
I was their unsuspecting loan officer. After the first few
transactions, I knew in my heart that some of the documents I was
receiving were fakes. I didn't say anything. I justified my silence
and inaction by telling myself that verifying all of these
documents was not my job. I wasn't sure if they were fakes, I told
myself. Who was I to accuse someone of fraud if I wasn't sure?
Over the course of about nine months, my justifications
continued far past any rational point. The proverbial gray area
became black. Toward the end of my involvement with these four
individuals, I actually got involved in the purchase and sale of
one of the properties, and participated in reaping the profits.
To make matters worse for myself, occasionally, I would be given
a couple hundred dollars under the table after I completed
transactions. I told myself that these were tips for doing such a
good job. My co-conspirators probably called it hush money. The FBI
called it criminal activity. The United States government had the
final word, and they called me guilty.
I have been told by some people that my crime was "fraud lite."
Some have said that I was unlucky, in the wrong place at the wrong
time. Well, there is no such thing as fraud lite, and luck has
nothing do with making the right decisions. I committed a crime. I
am not proud of it, and I'm certainly no hero for talking about it
However, there is an ethics lesson to be learned in all of
Dictionary.com defines ethics as "a set of principles of right
conduct." So, in order to have ethics, someone or something has to
list out some principles of conduct that they deem to be right.
This could be an employer, a trade association or our government.
In the case of our government, this list is called "the law."
Employers get to decide this right conduct because it's
ultimately their money and reputation at stake. Trade associations
enact codes of ethics because they want to protect the image of
their collective professions in the eyes of their current and
potential client base. If you don't agree with their principles of
correct conduct, you are always free to start your own company or
get out of the association.
For the most part, the laws enacted by our government are
designed to protect. Another way to look at it is that laws are the
principles of correct conduct to follow when you're not at work or
part of a trade association.
Some principles of correct conduct overlap between different
entities. Occasionally, people get confused about which entity's
rules or conduct they are to follow at what time. Things can get
really confusing when we witness routine violations of the
principles of correct conduct by fellow employees, association
members or citizens without immediate consequence.
If ethics are a set of principles of right conduct set forth by
someone or something, how can general business ethics be taught? My
understanding of being ethical was that you base your decision to
do or not to do something on the feeling that you get in your
stomach. If that's the case, how do you teach stomach feeling to
Perhaps this logic is what led me astray.
It was nice to finally understand that ethics is more than just
a feeling and that it is actually a set of principles of correct
conduct set forth by someone or something. But this still didn't
solve my dilemma. In a business' code of ethics, you can't possibly
account for every situation. For every principle of correct
conduct—for every right way to act in one
situation—there is another, different situation that follows
that may require yet a different right way to act.
It reminded me of trying to teach my children not to say bad
words. If I tried to give them a list of forbidden words, I felt
that my list couldn't possibly be thorough enough. The list would
be too long, and if I missed one, the lesson would be incomplete. I
could always add new words to the list as they came up, but then
that would be making up rules as I go along, and I didn't want to
teach them that lesson, either.
If you don't have kids, you've at least been a kid at one point,
so I think you'll be able to relate to one of my child-ethic
I was traveling in my car with my boys, four and seven years
old. In the rear-view mirror, I saw the older one punch the younger
one on the arm. The young one howled in pain. I said, "Hey! Don't
punch your brother." Immediately, the older one slapped his little
brother in the arm. I said, "Don't slap your brother, either." This
was followed by a poke, which I followed with, "Don't poke." A
tickle—"Don't tickle." Then, just a touch. Finally, I said,
"Keep your hands to yourself, period!" The instigator was reduced
to leveling a taunting glare at his younger sibling.
This could have gone on for hours. I finally gave them the ol'
"Don't make me come back there!" (Which, of course, made no sense,
since I was driving).
Aren't there simply too many variable situations in the real
world? Yes, but ethics aren't about situations. They're about
people and their characteristic behavior.
Ethics don't stand for what to do, they stand for how to behave.
Finally understanding this made ethics less confusing for me (not
crystal clear, just less confusing). If you have ever had confusion
about ethics, I hope this helps you, too.
Here are my theories.
For employers and leaders, it is imperative that you have a set
of principles of right conduct. But to simply disseminate this
information in printed format is not enough. Ethics and behaviors
are best conveyed by example. Additionally, violations of ethical
standards must be dealt with and not overlooked, or the unethical
behavior will become business as usual.
If you are a member of an organization that adopts a code of
ethics, read the printed words and follow the examples of the
leadership. Pay attention to the feelings in your stomach. They may
not tell you exactly what to do, but they may serve as a red flag.
Remember, justifying questionable behavior is nothing more than
being dishonest with yourself.
Lead your ethics model by example. Follow your ethics model with
Back in 1994, when my criminal involvement with the real estate
investors was becoming clear to my boss, he taught me a valuable
lesson. He was talking about my behavior and its reflection on my
character when he said, "The appearance of impropriety is as bad as
impropriety itself." Not a bad golden rule.
Ethics may be a confusing area because they have to cover so
many situations. But confusing does not mean impossible. Take my
experiences and words for what they're worth, coming from a
convicted felon. Strive to be honest, diligent and consistent.
Society, your company, your family and your children need you to
stay out of prison.
Jerome Mayne is president of Fraudcon Inc. He is a
consultant, speaker, and a self-taught expert in fraudulent
behavior. Jerome is also the author of the book, "Life Saving
Lessons: The Diary of a White-Collar Criminal." He may be reached
at (612) 919-3007 or e-mail [email protected]