White-Collar Americans Are Guilty Until Proven Innocent

Posted: February 5, 2011 in Uncategorized

Americans have a legal right to be presumed innocent until proven guilty, and yet for white-collar workers, that’s nice in theory but simply not the case in practice.

I am CEO of a California software company and saw this issue up close a few days ago. We are hiring right now. My team and I follow a rigorous hiring process — screen resumes, look for experience fit, interview on the phone, interview in person, discuss the candidate as a team, reference check and then hire. We look for skills, experience and values — will the candidate be a great fit for our open position and our company? Will they be successful working with us?

I have been interviewing candidates over the past month and was sent the resume of an individual currently charged in the active New York insider trading case. NY prosecutors have charged six employees of high-tech firms and the expert network service Primary Global Research with leaking and profiting from sharing insider information with hedge funds.

The state is proceeding against both high-tech insiders who allegedly leaked confidential information — like Walter Shimoon from Flextronics — and the conduit of the information to the hedge funds like PGR employee James Fleishman. And today the SEC piled on with additional charges of insider trading.

My candidate was one of the six accused individuals. He had an excellent experience fit for the position we have open and, because he was a qualified candidate, and I believe everyone is innocent until proven guilty, I explored the next step and consulted with my lawyers at Wilson Sonsini on the risks of bringing him in for interview and potentially hiring him.

Bottom line — it’s not practical to hire someone in a customer-facing position who is facing criminal charges. My lawyer’s advice was pragmatic:

  • The individual won’t be available 100 percent of the time to do the job. If you live and work in California, but you are being prosecuted in New York, you are going to have to take time out to travel, stand in court and defend your liberty. That’s going to be more important than any job.

  • They’ll be distracted. Successful sales takes 1,000 percent focus, especially in this economy just emerging from a recession. You can’t afford to be distracted by anything.
    • If the employee fights for their innocence they’ll be fighting for months or years — if they plead guilty and cooperate with the state in order to reduce their sentence or not serve any time then they are a convicted felon.

    And the toughest reason for a CEO to hear:

    • Your company will be painted with their tainted brush if you put that person in a customer facing position. This is because you would have knowingly hired someone the government has stated is fraudulent — and if a customer has a dispute with your company that fact will hurt your defense. Your company will be presumed to be OK with fraud and on the defensive as a result.

    If we, as a business community, truly believed each person is innocent until proven guilty, then our customer base would be fine with us hiring someone under indictment, but my lawyers were right to advise me as they did. I checked. Most customers would not want to work with someone under indictment — it would be uncomfortable for them, and my company would be tainted. Most customers (and employees) would doubt and assume there is compelling evidence or the government would not have charged the candidate.

    I find myself terribly conflicted in the situation. I’m a CEO with a responsibility to my company and my employees, and yet I am a private citizen with faith in the law. I did not proceed with the candidate because I recognize that the law is our culture’s minimum moral standard, not the maximum, and so as a CEO I had to make a gray-area judgment that I did not like.

    The harsh reality for white-collar workers is that “doubt is as powerful a bond as uncertainty,” and in our current business climate, if accused by the State, they are at a practical level guilty until proven innocent.

    Follow Penny Herscher on Twitter: www.twitter.com/pennyherscher

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