How Not To Become a Corporate Fall Guy

January 3, 2015
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In the book, Too Big to Jail, University of Virginia Law professor, Brandon Garrett, questions why the government doesn’t formally charge executives, banks and corporations for the crimes they commit. The Department of Justice issues sanctions and fines for any crimes committed, but it’s exceedingly rare to see individuals prosecuted. And, when individuals are prosecuted, it’s usually a fall guy who takes the blame.

A fall guy is a scapegoat for the company. He takes the blame for the actions of someone higher up the corporate ladder, and sometimes he takes the blame for an entire group of guilty people.

Executives, especially those with political connections, have a unique advantage over middle managers, and often blame them for company mistakes. When the company is facing legal consequences, no one should be left to take the blame, but the moral compass of rich executives is nearly non-existent when the Sauron eye of prosecution looms over them. The result is someone lower down the corporate ladder taking the blame, and thus also facing the consequences.

If–without your knowledge– you are named the company’s fall guy during a legal imbroglio, here are some consequences you could face:

  • Demotion
  • Responsibilities taken away
  • Denied bonuses and other pay
  • Firing; including being escorted from the building by security
  • And, worst of all, prosecution, imprisonment, and fines

Perhaps the most famous “fall guy” in recent history is Andrew Fastow. Andrew Fastow is the financial officer who was paid to set up the faulty “partnerships” that Enron execs used to inflate the corporation’s value even while the company was collapsing in on itself. Enron execs paid Fastow millions of dollars off the books to create the partnerships that netted them mind bogglingly huge profits; then, when everything fell apart, he was the one who was indicted because he was, technically, the person responsible for creating those deals in the first place. That he did them at the behest of his bosses didn’t really matter in the eyes of the law. He knew what he was doing wasn’t strictly on the up and up and he did it anyway.

Another famous “fall guy” is Jack Grubman; the man who was grilled by congress and who many decided was the key player in the downfall of Worldcom and, subsequently, the burst of the “new tech” bubble that inflated the incomes of millions of silicon valley players around the turn of the millennium. You’ll notice that Citigroup and Smith Barney execs weren’t trotted out and flogged before the public and, in fact, Citigroup execs continue to do quite well for themselves. Smith Barney was later absorbed by Morgan Stanley but not because of the Worldcom disaster.

The most recent high-level example of the fall guy has to be Kareem Sarageldin, who is the only banking professional to be officially sentenced (to date) for the financial banking crisis that toppled the economy a few years ago. There is no doubt that he did some things that weren’t great but there are others in the industry–including Sarageldin’s boss–who did things that were far worse. Even so, they have yet to even be charged, let alone tried, for their more-than-questionable moves which contributed our entire economy collapsing.

What to Do if You Become the Fall Guy

If your company is attempting to pin crimes or misconduct on you, it’s absolutely essential you obtain a lawyer. In June of 2014, four Las Vegas businessmen were indicted on conspiracy to commit wire and mail fraud after defrauding consumers in a time share scam. Employees acted as telemarketers, calling consumers and asking them to sell their timeshares. In all actuality, nothing about what they were doing was legal, but ignorance of the law does not make you exempt from it–unless you’re a cop, of course.

Although this case does not have a clear fall guy, it does paint a grim picture of what a fall guy could face, if found guilty in Nevada – up to 25 years in prison and a fine of $250,000. In cases like these, it’s the executives that should go to prison and not the employees.

How to Protect Yourself

When seeking a fall guy, corporations typically avoid anyone who can defend themselves. Executives aren’t looking for a fighter; they want someone who lacks confidence and will make an easy victim. For this reason, it’s important to stand up for yourself at all times.

It’s also important to pay attention. If you’re not paying attention, you could be signing your name to documents that create a paper trail that paints you as the crime’s perpetrator. Jobacle, a career advice blog, recommends that you “Keep written records of who, in your work area, made major corporate decisions, and when. Do not keep this on your work computer.”

Remember the 2005 film, Fun with Dick and Jane? In the movie, Dick (played by Jim Carrey), is the fall guy for a made-up media company. He’s indicted on several charges, but really had no idea he’d ever committed a crime. This film serves as a warning for anyone who isn’t paying attention. Never – ever! – participate in any activity that isn’t clear-cut legal. Avoid taking bribes, forging signatures, keeping secrets, etc. If someone higher up suggests you do something illegal (or otherwise sordid conduct), don’t be like Dick. Tell someone! Run straight to human resources and from there to a defense attorney!

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