This ethics scandal would have made the front page of the now-defunct Newsweek magazine were it not for the fact that it is about Newsweek. In fact, this convoluted case (a real head-scratcher) could be a semester-long ethics lesson in and of itself.
After the Dust Settled
The scam we will discuss roped in two, highly unlikely partners-in-crime: Newsweek magazine and a bible college (Olivet University) based near San Francisco, California. In the end, the scam amounted to a $35 million fraud and money-laundering scandal. Both CEOs have plead guilty to one count of money-laundering and one count of fraud. They did so to avoid jail time.
The entities claimed they were applying for loans for computer equipment when in reality Newsweek laundered the money to try to stay in business, and to assist Olivet in paying off debts and to buy real estate in upstate New York. It should be added that in an attempt to make both scams work, they convinced computer equipment vendor Oikos Networks, to sell them poor quality computer equipment at highly-inflated prices. Oikos has already entered a guilty plea in its role.
In case this is causing you a lot of scratching as to connections, here’s the key to unlocking the mystery: the owners of Newsweek, actually its parent company IBT Media, were devotees of David Jang, proclaimed spiritual leader of Olivet University. IBT and the ownership group of the university have each been hit with $50,000 fines.
The judge who is presiding over the case is narrowly sticking to his word of no jail time, however, Judge Pickholtz has issued a warning that “[she] accepted the guilty pleas in exchange for a promise of no jail time — but said she could revoke the offer if new information came to light before their April 20 sentencing.”
Whistleblowing Backfired – Sort of
When Newsweek staff (Editor-in-chief Bob Roe and executive editor Ken Li) caught a hint of the scam in 2017, they wanted to investigate what the ownership group was up to in regard to the sudden influx of money and rumors to the church connections. They were “inexplicably” fired in January 2018 before the story ran.
In February 2018, a new editor-in-chief published a story entitled: “Why is the Manhattan DA looking into Newsweek’s ties to a Christian University?”
Apparently the IBT executives “tried to force them to reveal confidential sources before publication”. This led the new editor to publish a letter with the article talking of “breaches of journalism ethics.”
The case is currently ongoing, but it signals numerous ethical breaches, not just journalistic ethics.
The former executives of the IBT group and their connections to the church, placed themselves above the law and, in fact, the very thing (journalism) they purported to represent. They felt that no one would be the wiser and when staff did catch on to a scheme to fund a bible college, the staff members were fired.
There is so much unethical behavior occurring here that it is difficult to know where to start. Certainly, a church with plans to expand bible colleges, as well as their religious leader; the management of the ownership group of Newsweek and a computer sales company, were all complicit.
Was it a need for power, money or both? Was it a sense of religious “righteousness?” that fueled their disregard for the law and journalism (and even their understanding of God?) that drove them?
Maybe, in the end, the best ethical statement of all to be made is that everyone who knowingly perpetrated this scam stood in direct opposition to every value they claimed.
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