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“As the Chairman of the Board of this public company, I’ll be screening resumes of the people applying to be our new Chief Executive Officer. The recruiter just sent us descriptions of the first few candidates.
“I like the look of this first guy. He’s never run a public company before, but he ran a private company. He didn’t manage very many employees, but the business owned a lot of properties. And the guy left the private sector for an executive job in government, where he was responsible for a lot of people. Maybe he’s a good candidate.”
“Let me flip through his file for you. Wait a minute: When the guy was in the private sector, six of his businesses declared bankruptcy.”
“Whoa! That’s a red flag! If he ran our company into the ground, shareholders might sue us, saying that we were on notice that he was too aggressive in his business tactics. On the other hand, I kind of like a guy who’s aggressive. What else do we know about him?”
“Last year, his main business was convicted of 17 counts of criminal activity, including felonies involving tax fraud, scheming to defraud, conspiracy, and falsifying business records.”
“I like aggression, but I’m not so fond of criminality. And we’d probably have to disclose this stuff when we described the new CEO to shareholders. That’s not good. Is there anything else on the legal front that I should know about?”
“There was one — No, wait! Two! — civil cases brought against this guy for defamation.”
“Who won?”
“The juries found against him.”
“But it’s only defamation. That’s not so bad. How much did the juries find him liable for?”
“Five million bucks in the first case.”
“Hmm.”
“And 83.3 million bucks in the second case.”
“83.3 million bucks? For defamation? What the heck could he have said?”
“It looks like it was a little more than your basic defamation. The defamation was in connection with a sexual assault. The jury found that he assaulted a woman. The verdict said the assault wasn’t rape, but the judge said that what the guy did is often referred to conversationally as rape.”
“That’s creepy. I don’t even want to hear about it. We could get sued just for having a work environment that’s hostile toward women. If this guy raped somebody in the past, we’re plainly on notice that he might create a hostile work environment. I think we have to rule this candidate out.”
“Looking at the file, there’s another old event that you probably should know about.”
“What’s that?”
“In 2005, he was caught on tape saying that if you were a star, women would let you do anything. You could ‘grab ’em by the pussy.’ ”
“This guy sounds downright creepy.”
“Another thing: In just the last couple of months, there was a judgment against this character for $355 million because he had committed a whole bunch of different frauds over a very long time when he ran his business.”
“Jesus. This sounds terrible.”
“The judge’s decision talks about this guy’s past dealings. It sounds like he did a lot of shady stuff that I haven’t even told you about. Like a charitable organization that was dissolved, and a university that deceived people and …”
“I’ve heard enough.”
“Oh, yeah: As part of that $355 million judgment, he was prohibited from serving as an officer or director of any company in New York for the next three years.”
“New York, huh? Well, we’re a Delaware corporation …”
“One last thing: He’s recently been charged in four separate criminal cases — two federal and two state. Between now and the end of the year, he’ll probably be going to trial on 91 felony counts.”
“Four cases? Ninety-one felony counts? Who sent us this resume? Fire the headhunter!”
Mark Herrmann spent 17 years as a partner at a leading international law firm and later oversaw litigation, compliance and employment matters at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Drug and Device Product Liability Litigation Strategy (affiliate links). You can reach him by email at [email protected].