Another Harvard Business School MBA has gone from famous to infamous.
Stephen K. Bannon, President Trump’s former chief strategist and a Class of 1985 MBA grad, allegedly defrauded donors to a massive crowdfunding campaign that claimed to be raising money for the construction of a wall along the U.S.-Mexico border. Federal prosecutors in New York today (Aug. 20) said Bannon and Air Force veteran Brian Kolfage deceived donors by claiming they would not take any compensation as part of the “We Build The Wall” campaign. Instead, prosecutors alleged, Bannon stuffed his pockets with more than $1 million through a nonprofit entity he controlled, funneling hundreds of thousands of dollars to Kolfage while keeping a “substantial portion” for himself.
Bannon joins a parade of Harvard MBAs who have found themselves in legal jeopardy over the years. Over the past 15 years, five other MBAs from Harvard have served time behind bars for their crimes. The lineup includes the famous from Rajat Gupta, the former managing director of McKinsey and Class of 1973 MBA, who served 19 months in prison for insider trading in 2015, to Jeffrey Skilling, the former Enron CEO and a member of HBS’ Class of 1979, who was found guilty in 2006 of multiple counts of fraud and insider trading. After serving slightly more than a dozen years in jail and paying $40 million in restitution, he was released earlier this year.
FIVE OTHER HARVARD MBAS HAVE DONE JAIL TIME IN THE PAST 14 YEARS
And then there are the lesser-known MBAs from HBS who found themselves trapped in insider trading scandals with Gupta. Nine years ago, Samir Barai, a hedge fund manager who graduated from Harvard in 1999, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud, and one count of obstruction of justice. He was actually the second Harvard MBA to plead guilty in the biggest insider trading case since the 1980s when junk bond king Michael Milken was indicted on charges of insider trading in 1989 and ultimately pleaded guilty to six felony charges of securities fraud and spent 22 months in jail. Adam Smith, a former 1999 classmate and ex-Morgan Stanley banker and a former employee of hedge fund Galleon Group, had also pleaded guilty in the same year, 2011.
But that’s not all. Gregory Rorke, a Class of 1980 MBA from HBS, was sentenced to two years in prison and three years of supervised release for defrauding investors of more than $3 million. Prosecutors said he overstated his own net worth and the tax liabilities of his company in seeking money from investors. No less surprising, Rorke had been an adjunct professor at Columbia Business School from 1997 to 2012.
Of course, Bannon has only been charged and not yet convicted of fraud. Yet, even before this latest shocking development, his classmates were just as surprised when Bannon later emerged as a right-wing extremist, founder of Breitbart and key advisor to Trump during both the 2016 campaign and in the White House. Four years ago, in fact, just after Trump’s election, more than 650 women who are graduates or students of Harvard Business School signed a letter condemning Bannon, then the newly named chief strategist for President-elect Trump. The women called him out as one of the chief architects of the alt-right movement that preaches “white nationalism, racism, misogyny and hatred.”
‘HE WAS QUITE GUTSY’
When he arrived at Harvard Business School in 1983 he was a 29-year-old married Navy Officer who came off as smart, gregarious and preppy, often seen around campus in a favorite yellow sweater.
He made an early impression in class. On his very first day, he took a seat in the sky deck in the back of the class when a professor singled him out in a cold call asking that he present the day’s case study on Fieldcrest blankets under discussion.
“This,’’ Bannon said confidently, “is a sleepy industry.’’
“He was quite gutsy and pretty much blew the class away with an incredible performance,’’ classmate Cornelia Tilney told The Boston Globe. “I remember thinking after watching him, ‘I am definitely flunking this class if this is where the bar is set!’
AT AN HBS REUNION, HE WAS LOOKING FORWARD TO SIGNING UP FOLKS FOR THE TEA PARTY
Bannon would leverage his MBA into an investment banking job at Goldman Sachs, ultimately spending more than 20 years in the finance industry. But when he showed up for the 25th reunion of his class in 2010, Bannon had apparently become obsessed with politics.
In preparation for the 25th reunion of Bannon’s HBS class in 2010, the attendees submitted updates about what was going on in their lives. In his update for the class, Bannon wrote that his new focus was as a filmmaker. He said that his most recent film about the financial implosion on Wall Street was called “Generation Zero” and was endorsed by none other than Sarah Palin. His description of the movie made clear his new political bent: He called the movie “a frontal assault on the progressive movement trying to destroy our country. I currently have another half dozen or so films on various right-wing topics getting ready for production and am having a hell of a lot of fun…’Looking forward to catching up with everyone at the reunion and signing folks up for the populist rebellion we call the Tea Party movement.’’
Bannon has been charged with conspiracy to commit wire fraud and conspiracy to commit money laundering, each of which comes with a maximum 20-year prison sentence. He has pled not guilty to the charges.