The photo shows eight Fox Business School officials smiling from behind a vendor table. It was April 2018, three months after their school was unranked by U.S. News and World Report. Fox had claimed that 100% of its online MBA students had submitted GMAT scores, though only 16% had actually done so.
The high-ranking Fox staffers were in Hawaii to promote their school at the annual conference of the Association to Advance Collegiate Schools of Business. To the group’s left, displayed on an easel, was a large, poster-sized headshot of then-Dean Moshe Porat.
“And why is there a photo of what looks like a book cover at this table for Fox Business School?” assistant U.S. attorney Mark Dubnoff asked Diana Breslin-Knudsen, former senior vice dean at Fox, on Thursday at the trial of her former boss.
“Because the dean wanted to promote his book, which was going to be released sometime that summer,” Breslin-Knudsen answered.
A DEAN ‘OBSESSED’ WITH RANKINGS
Breslin-Knudsen was the second witness to take the stand on the fifth day of the federal trial of her former boss. Porat was, in a way, the first witness as prosecutors finished playing clips from his video depositions in the former dean’s $25 million defamation lawsuit against Temple University. (More on that below.) Porat is accused of being the ringleader of a scheme to inflate the percentage of students who submitted Graduate Management Admission Test scores to gain admission to the school’s online MBA program, leading to four consecutive No. 1 rankings and more than $40 million in extra tuition as enrollment rose along with the school’s reputation.
Because of Covid-19 restrictions limiting the number of people in the courtroom, Porat’s trial has been sparsely attended so far. His wife and adult children sit behind him on most days. On Thursday, the rest of the audience was a mix of reporters, lawyers, and special agents with the FBI, United States Postal Inspection Service, and the Department of Education’s Office of the Inspector General.
Much of Breslin-Knudsen’s testimony mimicked that of previous Fox staffers called by prosecutors. Dean Porat was obsessed with rankings, he was slow to agree that Fox should contact U.S. News to correct its untruthful GMAT percentage, and he celebrated the school’s fourth No. 1 ranking with a champagne toast and celebratory emails even after he knew there was a serious problem.
Breslin-Knudsen testified that Porat hired Marjorie O’Neill, who pleaded guilty to conspiracy charges in the case this summer and may testify in this trial, in 2010 to focus on rankings. Breslin-Knudsen was O’Neill’s supervisor for her duties as manager of finances, but Porat supervised her rankings work. O’Neill had a table lined with a dozen or so 2- to 3-inch wide binders filled with rankings spreadsheets and data for the growing list of ranking entities she submitted to each year. O’Neill called them the “Dean’s Binders,” Breslin-Knudsen testisfied, and she often saw Porat and O’Neill pouring over them when she passed O’Neill’s office.
A PHOTO WORTH A THOUSAND WORDS
The photo at the Hawaiian conference is significant because it shows that Porat had still not accepted the gravity of the rankings scandal several months after it had all unraveled. His book, Transforming A Business School: Entrepreneurial Leadership In An Era Of Disruption, was all about Fox’s rise through the rankings, his former provost, JoAnne Epps, testified a day earlier. But, by then, all the people at the AACSB conference would have already known that Fox had been unranked. There was a brazenness to it, perhaps a flash of arrogance, that made Breslin-Knudsen uncomfortable.
“There were definitely concerns,” she testified Thursday. “Tom Kegelman and I both told the dean that we didn’t necessarily think it was a good idea to be promoting his book with all the controversy that was going on with the rankings.
“In light of what happened, and what was going on in the (Jones Day) investigation, I felt that it was bragging about what Fox was doing with the rankings. It was talking about how the dean held everyone’s feet to the fire on rankings, and the book itself felt somewhat inappropriate.”
A CONTENTIOUS CROSS
Marjorie O’Neill is central to Porat’s defense. She was a lone actor who “did something very purposefully with playing with the data … not listening to everyone else. Imposing her will on the data,” Porat testified in his video deposition, a clip of which was played for jurors this morning.
O’Neill also popped up frequently in defense lawyer Michael Schwartz’s tense cross examination of Knudsen which took all afternoon and will continue into tomorrow. Breslin-Knudsen, who has since retired, conceded that she was O’Neill’s supervisor on financial matters and filled out her often complementary performance reviews. She also conceded that she was sent some of O’Neill’s past ranking submissions and nothing raised red flags. Any concerns about the rankings data were not elevated to dean Porat’s attention, she admitted.
The sparring between Schwartz and Breslin-Knudsen continued throughout the 3-hour-long cross as Knuden repeatedly tried to qualify “yes” or “no” questions with longer explanations. Schwartz raised his voice at times and, at one point, Judge Gerald Pappert stepped in.
“Hold on. Hold on. Hold on,” Pappert interrupted the cross-talk between witness and lawyer.
“Ma’am, when you hear me, you have to stop talking. You can be rude to him,” the judge joked, referring to the defense lawyer. “But, for the last time, listen to the man’s question and answer.”
PROFESSOR GOTTLIEB’S SECRET SAUCE
To prove its case, the government must prove that there was both a conspiracy between Porat and other actors – most likely O’Neill and former statistics professor Isaac Gottlieb, both who have already pleaded guilty to conspiracy charges. They also must prove intent to defraud.
Swartz indirectly challenged both tenets in its cross-examination.
In one instance, Breslin-Knudsen testified that around Fox Business School, Dr. Gottlieb’s rankings regression analyses were known as the “secret sauce.” Schwartz compared them to trade secrets that could help other business schools improve their rankings if they figured out Gottlieb’s methods. Knudsen conceded that she had participated in such conversations with Fox colleagues.
“When you were talking about keeping that trade secret a secret, you weren’t joining a conspiracy, were you?” Schwartz asked.
“No,” Breslin-Knudsen answered.
In another, Schwartz asked Breslin-Knudsen about an email from Dr. Darin Kapanjie in which he said he was “very concerned” about a number of issues in O’Neill’s 2018 draft ranking submission. (The submission that would end up getting the school unranked in U.S. News.) Kapanjie said several of the mistakes were happening year after year.
In her reply, Breslin-Knudsen referred Kapanjie to Tom Kengelman who “is in charge of rankings now.”
“So that’s your response? You delegated addressing these serious concerns that Dr. Kapanjie had raised to you in confidence to Tom Kegelman?” Schwartz asked.
“Yes,” Breslin-Knudsen answered.
“Did you regret doing that?”
“I wish I had looked into it myself. Yes.”
“Were you committing a fraud in your mind?” Schwartz asked.
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