USC alum returns to speak about white-collar crime
Few USC graduates picture themselves ending up in prison, but that is exactly what happened to alumnus Justin Paperny, who became involved in unethical business practices and is returning to campus Monday to caution students against making the same mistakes he did.
Paperny, a former Trojan baseball player who graduated from USC in 1997 with a degree in psychology, was sent to federal prison in 2008 and served an 18-month term for crimes stemming from unethical business actions committed while working as a junior partner at UBS Wealth Management, a financial management firm in Century City.
This problem is not unique to Paperny.
Kenneth Merchant, Deloitte & Touche LLP chair in accountancy and professor of accounting, said at least one Leventhal School of Accounting graduate each year experiences problems associated with illegal business decisions.
“The worst is felonies, and then they’re getting sanctioned,” Merchant said. “It happens to at least one [former student] a year.”
Paperny, however, has decided to use his experience to help warn others.
Inspired to turn his life around by a fellow inmate, Paperny started a blog from prison in October 2008. Paperny would write blog entries and mail them to his mother, who would retype them and post them on the Internet. The blog became “Lessons from Prison,” which was published as a book in 2009 and is now required reading for business classes at several universities, including USC.
Paperny, who now tours the country to speak to business students, said he had never intended to become involved in illegal activity.
“My bad behavior, or unethical behavior, really started slowly. Nobody wakes up and says, ‘Today is the day I’m going to commit a white-collar crime and commit fraud,’” Paperny said. “I had this singular focus toward work and making money. I wasn’t able to discern the sort of person I was turning into.”
Paperny said he made his first unethical decision six or seven months into his career, when a senior broker advised him to pad his sales numbers so he could qualify for a $10,000 bonus.
“I can’t blame my senior brokers — I don’t blame anybody — but my senior brokers were teaching me the practical aspects,” he said. “I didn’t have enough patience or enough discipline at the time to decide there was a better way to do things. I knew it was wrong, but I figured the culture allowed it, so it must be OK.”
Arvind Bhambri, associate professor of management and organization at the Marshall School of Business, said, like Paperny, most people who become involved in illegal business dealings have no intention of doing so initially.
“People don’t set out to break the law,” Bhambri said. “It starts incrementally. It’s like riding a tiger, and you don’t know how to get off without getting eaten.”
Bhambri said it is vital that students who enter the business world have full awareness of what they are doing at all times.
“What I’ve found in my conversations [with former students] is that a lot of people will be engaged in unethical behavior, rationalizing it in their own mind, ‘This doesn’t benefit me, it’s for the company, if everyone else is doing it, it must be okay,’” he said. “And that’s a dangerous path. Just because something has been done a particular way before doesn’t make it right.”
Bhambri said USC business students discuss ethics in almost every course, and the university also offers a course strictly on ethical behavior.
“The debate that has gone on for a long time is whether we should have a separate course for ethics or if we should integrate it in [to all the courses]. We try to do it at both levels,” Bhambri said. “In the MBA program in particular, we try to get some exposure to ethics in the first couple of weeks.”
Nathan Lowenthal, a freshman majoring in business administration, is currently taking a philosophy course called the Professions and the Public Interest in American Life (PHIL141), taught by Professor Dallas Willard. Lowenthal said the class is a popular choice among business students.
“We talk about situations professionals are put in that require them to make tough ethical decisions,” he said.
Paperny said it is possible for students entering the business world to succeed while holding on to their morals, despite an environment that “tacitly approves” of unethical or even illegal practices that would benefit a company’s bottom line.
“I’m convinced you can,” he said. “You have got to be prepared to be different and know that it’s okay to say no to people.”
Paperny said the ability to make the right decision in tough situations requires daily effort.
“When I was a baseball player, I played every day and I got good. It’s no different being ethical. If you cultivate those habits daily and do it and not just talk about it — evaluate whether your words and actions correlate with the kind of person you want to become,” Paperny said. “When you practice doing the right thing, it will be so easy to make the right decision. But if you don’t cultivate those habits, it’s so easy to cross the line.”