The Biggest B-School Scandal Stories Of 2017

richard arend umkc

UMKC Chancellor Leo Morton, who announced last month that he will retire after the 2017-2018 academic year, is named as a co-defendant in a lawsuit by a former professor who claims he was fired in retaliation for calling out the business school’s practice of inflating its statistics to earn more favorable rankings. UMKC photo

8. Fired Missouri-KC Prof Claims Retaliation

As noted above, there are certainly at least two sides to school rankings. On one hand, they are calls for transparency from universities that charge a ton of money to attend. On the other, they can cause people in power to do bad things — like fudge data and numbers. And that’s precisely what one whistleblower at the University of Missouri-Kansas City’s Henry W. Bloch School of Management alleged the administration was doing. In December of 2016, Richard Arend, a tenured professor of strategy and entrepreneurship at Bloch was fired for what the school called a “substantial lack of fitness.” In June, Arend retaliated claiming the school fired him for his five-year crusade to raise awareness of the school’s systematic and orchestrated inflation and falsification of data that led to undeserved accolades, including a No. 1 ranking in 2012 for research in innovation management from the scholarly Journal of Product Innovation Management (JPIM) and four years of top-25 rankings in entrepreneurship from the Princeton Review.

First reported by the Kansas City Star, Arend was terminated because he “demonstrated substantial lack of fitness in the professional capacity as a teacher and researcher at the University.” At the time, the school cited three causes for the dismissal: “research and/or other academic misconduct; his actual or attempted intimidation, threats, coercion, and/or harassment directed against students, faculty, and staff; and other misconduct.”

After a February 2015 audit by PricewaterhouseCoopers, the Princeton Review stripped the Bloch School of four years of top-25 rankings for entrepreneurship because key metrics had been inflated in areas like number of students enrolled in entrepreneurship programs and the percentage of students to launch a business in school, among others.

Yue Wang, a 25-year-old graduate of the Hult School outside Boston in a photo from her Facebook page

7. Chinese Students Arrested In Latest TOEFL Fraud

It’s a lesson often learned at an early age: Cheating is bad. In the case of four Chinese nationals, it was really bad. Last May, the foursome were arrested by federal officials and charged with them with conspiracy to defraud the United States after they allegedly engaged in test fraud on the Test of English as a Foreign Language (TOEFL). Specifically, Xiaomeng Cheng, 21, of Arizona State University; Leyi Huang, 21, of Penn State University; and Shikun Zhang, 24, of Northeastern University were all arrested for allegedly paying Yue Wang, a 25-year-old graduate of the Hult International Business School to take the TOEFL for them.

“Illegal schemes to circumvent the TOEFL exam jeopardize both academic integrity and our country’s student visa program,” William Weinreb, acting U.S. Attorney for the District of Massachusetts, said in a statement. “By effectively purchasing passing scores, (the students) violated the rules and regulations of the exam, taking spots at U.S. colleges and universities that could have gone to others.”

According to the charging documents and reports, Zhang, Huang, and Cheng paid Wang about $7,000 between 2015 and 2016 to take the TOEFL test after they had failed to meet their universities’ minimum scores. Federal agents investigating fraud involving Chinese nationals and admissions exams in the Boston area last year received a tip that a Chinese student was planning to impersonate another Chinese student and sit for the TOEFL test. As Reuters reported in August, the three students that paid Wang the $7,000 could have served up to five years in a federal prison, but were deported back to China in exchange for the served time. At the time, Wang had yet to be charged.

Clayton Christensen, author of The Innovator’s Dilemma and a Harvard Business School professor, is in a legal dispute with a former manager of his investment fund, Disruptive Innovation LLC. Wikipedia photo

6. HBS Star Prof In Court Over Investment

The concept of “disruptive innovation” is one of the most maddeningly popular terms in the tech world at the moment. Clayton Christensen, the original articulator of the concept and a Harvard Business School professor, experienced a bit of disruption of his own late last year. Late last year, Shawn Cox, a former employee of Christensen filed a lawsuit claiming he was lowballed out of his promised 6% ownership stake in Christensen’s Disruptive Innovations GP, LLC. Besides the less-than-expected buyout, which occurred after the company’s value climbed considerably, Cox claimed Christensen and his son, Matthew Christensen, threatened with legal action to avoid any buyout payment.

According to legal documents filed in Massachusetts and Utah in December, Cox began working for the Christensens in 2010 as a principal at Rose Park Advisors, managing its Disruptive Innovative fund. In 2013, Cox left to return to Utah. Two years later, the Christensens offered to buy Cox out — but, Cox says in his lawsuit, they refused to provide financial information that would enable an accurate estimate of fair market value. The Christensens offered Cox a sum just north of $500,000. He says the value of the 60,000 Class B membership units he accrued while a principal for Rose Park is actually at least $14 million. And now he’s seeking more for damage to his reputation and his prospects, as well as coverage of his legal fees. After Cox sued the Christensens earlier this year for the $14 million plus an additional $5 million in damages — claiming the Christensens also injured his reputation with interviews with local press and disparaging comments to other financial advisors. The Christensens have since countersued and the dispute is ongoing.