Chuck Gallagher – Business Ethics Expert featured in WSJ Marketwatch article

Not a proud past…but what an incredible educational journey! Who ever thought that one day (now almost 25 years ago) I’d serve time in federal prison for really stupid choices. And, likewise, who ever thought that one day (so many years later – like NOW), I’d be honored as a business ethics expert to speak to so many organizations about the consequences of the choices we make. Remember every choice has a consequence! This Wall Street Journal article reminds me of that so clearly. Thank God for Second Chances!

Here’s the article featured in the Wall Street Journal’s Marketwatch:

In the 1980s, some clients of Chuck Gallagher’s certified public accounting firm in Morganton, N.C., got at least one service they undoubtedly didn’t want. Gallagher, a tax partner, created a Ponzi scheme: He stole $254,000 from the firm’s clients over four years from 1987 to 1990, telling himself that it was a “private hedge fund” and that he would eventually pay it back. The Federal Bureau of Investigation didn’t see it that way, and Gallagher was convicted of embezzlement and tax evasion in 1995.

Gallagher, 57, now lives in Greenville, S.C., and speaks to corporations about business ethics. He has also published a book, “Second Chances: Transforming Adversity Into Opportunity.”

MarketWatch: For a moment I thought that read “Transforming Opportunity Into Adversity.”

Gallagher: Well, in the 1980s, I did take opportunity and turn it into adversity.

MarketWatch: Why did you do it?

Gallagher: I was overextended and underfunded. I needed $2,000 for a house payment. I paid the embezzled money back, which solidified the rationalization that it was a loan. I convinced myself that I would always pay it back. Over time, $2,000 becomes $5,000, and $10,000 becomes $25,000.

MarketWatch: How did you get caught?

Gallagher: Like most Ponzi schemes, there was an unexpected call for cash. I had to admit that I was nothing more than a liar and a thief.

MarketWatch: What did you do with the money?

If you can convince yourself that what you’re doing is somehow OK, then you can sleep at night. You get so caught up in your own delusion that the delusion starts to be real.

Gallagher: I invested in an upscale house, automobiles, collectible items and furnishings. In the mid-1980s, we had just come out of a recession and my wife and I lived beyond our means. It’s not that much different to what people went through in the mid-2000s.

MarketWatch: How did you feel when you committed the crime?

Gallagher: At the very beginning, it was very uncomfortable. The need was strong, the opportunity was there.

MarketWatch: When you were committing the offense, did you convince yourself that it wasn’t really wrong?

Gallagher: I believed that I had a private hedge fund and I was going to pay that back, but I wasn’t investing any of it. If you can convince yourself that what you’re doing is somehow OK, then you can sleep at night. You get so caught up in your own delusion that the delusion starts to be real. I did not believe it was wrong. When the scheme collapsed it became very clear that I was living in an illusory situation.

MarketWatch: Did you go to prison?

Gallagher: I went to a minimum security federal prison—Federal Prison Camp at Seymour Johnson Air Force Base in Goldsboro, N.C.—in 1995, and was released in 1996.

MarketWatch: The word camp makes it sound like a summer camp.

Gallagher: People say “You went to one of those Club Feds.” The assumption is that all the white collar criminals hang out in prison, play cards and figure out how to come up with their next big scam, but that is not true. It is “fed” but it is no “club.” You have to work every day. My job was cleaning the urinals with a toothbrush for 12 cents an hour. It was the first year I was not required to file a federal income tax return, as I made $246 that year.

MarketWatch: How has your family been through this?

Gallagher: The most significant loss was the breakdown of my marriage. When I went to prison, I was legally separated. I have a wonderful relationship with my two sons, who are now 27 and 24, and we openly discuss what took place and use it as a learning opportunity that each choice has a consequence.

MarketWatch: How much do you get paid for giving speeches?

Gallagher: The typical fee is around $5,000. For the most part, I’m hired to speak to companies and talk about the human side of ethics. Why smart people make dumb choices and how we can prevent it.

MarketWatch: What has the audience reception been like?

Gallagher: It’s actually quite positive. I walk into most presentations in an orange jumpsuit and handcuffs, which captures audience attention at the beginning.

MarketWatch: Have you turned down any speeches?

Gallagher: There are some organizations where you just get the feeling they’re not really committed to ethical behavior or action. What they say and what you do sometimes are two entirely different things.

MarketWatch : Was it difficult to find work when you came out of prison?

Gallagher: I was fortunate to be given the opportunity to sell cemetery property—grave spaces—door to door. Not exactly the sexiest job. If you want to have another chance, do what other people are not willing to do. I became their top sales person. They made me a manager at a location. That became a top performing location. I eventually became responsible for two states—South Carolina and Georgia—and became senior vice president of sales and marketing. I am now chief operating officer at a private death-care funeral company.

MarketWatch: Did the FBI or other authorities encourage you to recount your experience as a cautionary tale, or suggest that it might not be a bad thing if you did?

Gallagher: I have spoken to the FBI, branches of the Navy and Coast Guard. What I’m able to bring to the table is a practical example of something that is true for a lot of white-collar criminals: Most [of them] aren’t Bernie Madoff. They are making simple, stupid small choices. They end up getting caught in their own psychological drama.

MarketWatch: What do you hope people take away from your experience?

Gallagher: To get the subconscious to talk to the conscious and ask questions like, ‘Where is my need?’ A company cannot control need. If I have a child who needs medical care, a company cannot control that. I can remove opportunity, remove the possibility that someone would make an unethical or illegal choice. Companies can teach and help people understand what rationalization looks like and sounds like: “I’ll just put it on my expense report.” Everybody does it, but the fact that everybody does it, doesn’t make it right.

MarketWatch: Have you spoken to your victims since?

Gallagher: I have spoken with my former partners. The firm survived. My partners are functioning as CPAs today. I’ve seen them from time to time. We don’t socialize. We don’t live in the same community any longer.

MarketWatch: Would you consider yourself an ambitious person?

Gallagher: I would. My lifestyle is much more modest. I’m much more cognizant of being financially responsible and not getting myself into trouble with debt.

MarketWatch: Would you do it again?

Gallagher: Absolutely not. The consequences are far too high. Going to prison was not a pleasant experience, but it was the best thing that ever happened to me. I had to learn what it meant to be Chuck Gallagher. Walking out of prison, I literally had nothing but the clothes on my back. I realized that success had nothing to do with the house that I lived in or the car that I drove or the watch on my arm. If I ask you today, “Who was your best teacher?” you will remember. If I ask you “Who was Miss America in 1995?” you won’t have a clue. Success is about having an impact on people’s lives.

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Quentin Fottrell is a personal finance reporter for MarketWatch based in New York. You can follow him on Twitter @quantanamo.