Summarized the Video. Aaron Beam discusses with Stanford Graduate students his start of his career as a newly certified CPA. His career started at Life Mart where he meets Richard Crush who wastes no time on sizing up Aaron Beam. However, Life Mart is acquired a couple years later Jeopardizing the employment of Aaron Beam, however, venture capitalists ask if anyone has a company idea to start up and Richard Crushes name is thrown out. Richard Crush proposes to Aaron Beam to be his partner in starting p South Health; two years later, South Health becomes a publicly traded company.
Since their wealth is tied to the stock price, Crush is constantly in contact with Wall Street analyst to constantly improve their numbers. In order to meet Wall Street’s demands they begin manipulating bad debt expenses and soon begin to produce multiple fraudulent revenue entries into their 1,500 Journals. A year later Beam leaves the company after lying to auditors and not agreeing with cooking the books. He distances himself from the company, only to later be asked by Crush to come sack and help him grow the company more, he states that the fraud has stopped.
Beam does not return and years later the fraud is uncovered. When Beam and other accountants step forward, Crush denies any involvement. Many accountants take a plea but Crush goes to court only not to be found guilty by the Jury. Beam receives 3 months in prison and is now a felon. 2. Who are the main characters of the video? Aaron Beam – Started his career alongside Richard M. Crush at Life Mart in Houston, Texas, Life Mart eventually became acquired. Together with Richard Crush hey became founders of Health South a health care company that focused on outpatient services.
Aaron Beam served as the GOOF of Healthiness; however, since their wealth was tied to the price of stock it soon became hard to meet market expectations which eventually lead the accounting team to cook the books. Aaron Beams not content with this aggressive approach decided to retire. When the massive accounting fraud was discovered anyone who had any involvement needed to come forward, Aaron Beams came forward and served a 3 month sentence in a minimum security prison. Life after prison, Aaron Beams became known as the “guy who cooked the books” instead of the GOOF of one of the greatest companies in Alabama.
He opened a lawn mowing business and makes a living out of it. Richard M. Crush – CEO and founder of Healthiness became obsessive with his wealth and refused to report a bad quarter which would lead to the fall of Healthiness’s stock price. He ordered to do whatever needed to be done to meet market expectations. Upon the discovery of fraud within Healthiness, Richard Joined an inner city church and purchased a television station in which he would preach the gospel every Sunday. Once Trial began and 17 Scoffs confessed their involvement, Richard was the only person that knew nothing.
Final verdict after every GOOF pointed out that Richard was aware of all faulty transactions and was the one directing those entries was to find Richard M Crush not guilty. Bill Owens – Chief Accountant who proposed to Richard to enter small transactions in their ledgers to meet market expectations. 3. Prepared to deal with the kind of issues he had to deal with? To be better prepared Aaron Beam said ethics should be taught so that when faced with an ethical dilemma people would be equipped deal with it.
Tone at the top of a company is also foreshadowing on how a company conducts business. He also said if you let yourself compromise your ethical principles it will lead too bad ending. He will not be known for all the good he has done but the bad and it is not worth it. 4. What are the 7 signs of ethical collapse of a company and how did it apply to Healthiness? Pressure to maintain numbers – According to Aaron Beam at Healthiness that was the ultimate goal, to reach numbers that the stock market was emending of them, Crush pressured them since it had been done before.
Fear and Silence – Aaron was intimidated by Richard M. Crush from the beginning. Crush led by intimidation. Young and a Bigger-Than-Life-CEO – Richard hired younger personnel and eventually intimidated those to do whatever needed to be done to keep Healthiness afloat with the market demands. Weak Board – Healthiness had one of the greatest weak board of directors, which eventually were a “yes sir” board. Anyone who questioned or confronted an issue was eventually replaced by Richard.
Conflicts – Richard set everyone up in a position that would keep those involved with the cause of continuing to cook the books. He made sure that made sure they all had stock options and made sure they were set up to be conflicted to be true to the cause. Innovation like no other company – Healthiness’s earnings was a straight shot up never having a negative bump along the way. Goodness in some areas atones for evil in others – Healthiness gave money to churches and schools all across Alabama. Richard made sure money was given to these causes giving Healthiness CEO as a generous reputation.