Prosecution & Defense Rest In Rankings Fraud Trial Of Ousted B-School Dean

Fox School of Business at Temple University is shown this week in Philadelphia.

Both sides ended the testimonial portions of their case today (November 22) in the federal trial of Moshe Porat, with neither side calling what might be considered star witnesses. The case will resume November 29 after a break for the Thankgiving holiday.

Porat, the former dean of Temple University’s Fox School of Business, is accused of orchestrating a scheme that knowingly submitted false numbers to U.S. News & World Report in order to climb in the magazine’s online MBA rankings. He is charged with one count of conspiracy to commit wire fraud and one count of wire fraud and faces up to 25 years in prison and $500,000 fine if convicted.

Prosecutors did not call Marjorie O’Neill, named repeatedly throughout the trial on both the direct and cross-examinations by several state witnesses. Defense attorneys also rested without calling Porat to testify on his own behalf. Lawyers for both sides declined to answer Poets&Quants questions about their respective decisions.

The trial, in the Eastern District of Pennsylvania’s federal courthouse in Philadelphia, began with jury selection on November 9. The government’s case took just over six days and featured testimony from several of Porat’s former colleagues who painted the ex-dean as an intimidating, micromanaging boss obsessed with rankings. Other witnesses included former Fox students, former Temple Provost JoAnne Epps, and FBI Agent Brian Coughlin, who led the investigation. Poets&Quants founder and editor John A. Byrne was the state’s first witness, testifying as an expert in rankings and business education. (Byrne’s January 2018 story about Fox’s fourth No. 1 ranking brought the scandal to the attention of Temple officials.)

The defense contends that while Porat (who was fired from his job after the scandal unraveled) was perhaps a demanding boss who cared deeply about Fox’s standing, he was a leader who elevated Fox into a nationally-recognized business school over the course of a distinguished 40-year career. It was O’Neill who submitted inaccurate data to the rankings magazine, not Porat.

PROSECUTION RESTS

Assistant U.S. Attorney Mark Dubnoff rested his case Monday after the testimony of Ara Sardabegians, a 2017 graduate of Fox’s online MBA program, who told the court that he selected the B-school because of its No. 1 ranking in U.S. News & World Report. (Sardabegians was the second former Fox online MBA student to testify in the trial.)

“I’d like to say I’ve gotten over it, but I guess if you guys can’t tell I’m still a little bitter and hurt about the situation.” said Sardabegians, one of seven students to file a federal lawsuit against the school in the wake of the scandal. He calculated that he spent about $40,000 of his own money (after a $5,000 scholarship and money from his employer) on the program, but received $7,000 to $8,000 in a settlement.

“I felt like I had been bamboozled, and I still today kind of feel bamboozled,” he testified.

Ousted Temple Fox Dean Moshe Porat

Dubnoff did not call O’Neill, the former Fox staffer who pleaded guilty in May to conspiracy charges stemming from the case. In the deal, O’Neill admitted that she falsified the submissions that propelled Fox to four consecutive No. 1 rankings under Porat’s direction–until the scheme unraveled in January 2018.

Part of her plea agreement stipulated that she cooperate with prosecutors, and whether she would testify had been a question throughout the trial. Former Fox Vice Dean Diana Breslin-Knudsen testified that O’Neill told her in the “walk to the train conversation” that Porat instructed O’Neill to report that 100% of Fox online MBA students had submitted GMAT scores for admission to the program, even though only about 16% had actually done so. (Another former Fox official, former statistics professor Isaac Gottlieb, also each pleaded guilty to conspiracy charges, but he was not expected to testify.)

DEFENSE PRESENTS ITS CASE

With testimony that was emotional at times and funny at others, the defense both opened and closed its case today, calling 10 character witnesses who identified themselves as Porat’s friends and colleagues.

Daniele Grossman testified that she and her husband have known Moshe and his wife, Rachel Porat, a neonatologist in Philadelphia, for over 25 years. The four friends had property along the Jersey Shore and often took long walks along the water. Grossman became emotional while explaining the deep conversations the four would have discussing books, films and other topics. The Porats were a “magnet, our inspiration” who helped draw more friends to move to their neighborhood at the shore, she said, pausing to collect her composure.

“My opinion of Dr. Moshe Porat is that he is a man of absolute integrity, a man of honesty, a family man, a man of faith,” she said. “I would say that he is of noble character, and a loyal friend. I am very thankful for him.”

Throughout Grossman’s testimony, Porat’s adult daughter, sitting behind the defense table, wiped tears from her face. Porat’s wife pulled her in close for a comforting hug.

‘YOU’RE A NICE LOOKING JUDGE’

In one of the trial’s lighter moments, defense witness Michael Siegel joked with Judge Gerald Pappert as the judge asked for clarification on how long ago he had met Dr. Porat.

“I would say 18 or 20 years ago,” Siegel testified.

Then he told the silver-haired Pappert: “You’re a nice looking judge,” eliciting laughter from several jurors and throughout the courtroom.

“He can stay,” Pappert quipped, as Siegel prepared to leave the stand.

A student walks in front of Alter Hall at the Fox School of Business at Temple University.

“Maybe you could be on television. Like what’s her name, Judge Judy?” Siegel said.

Before the exchange, Siegel testified that after a career as a CEO building up companies after leveraged buyouts, Porat invited him to teach two classes at Temple: entrepreneurship and strategic management.

“An honest leader of men. He’s tough, but I respect toughness,” Siegel said.

Siegel, a graduate of the Wharton School at the University of Pennsylvania, told a story about a time he was walking along the boardwalk in Atlantic City when he ran into Porat.

“He got so pissed off that I was wearing a Penn shirt rather than a Temple shirt. The next day in my office, there were two T-shirts and two sweatshirts with Temple on them,” Siegel said. “He was very so proud of Temple University. Those 10 years (I taught at Temple) were some of the best years of my life.”

After their testimony, many of the Porat friends, Temple colleagues, former students and local business people, stayed behind and sat together in the back pews in a show of solidarity. When one witness finished, the others extended their fists to be bumped before he took a seat next to them. Moshe and his family visited with the group during the afternoon break, after the jury had left the courtroom.

OTHER TEMPLE FOX DEANS WERE ‘PAPERWEIGHTS’

Arvind Phatak retired as an international business and management professor after 45 years at Temple. He served under five different deans at the business school, including several years under Porat.

“I called all the other deans paperweights. They sat in the chair and did nothing. Just administration. Moshe was a visionary, a forward thinker,” Phatak said. “He would ask people like me, ‘What can I do for the business school to get it the image it deserves?’”

Temple University paid millions in a civil class-action lawsuit brought by former online MBA students after the scandal became public.

Phatak noted that Porat was voted by his peers to be department leader before he was selected dean, and that he always treated professors with respect when he became the boss.

To close questioning of each of its witnesses, defense attorneys asked a version of this question: After your years of knowing or working with Porat, have you formed an opinion about his character in terms of honesty and integrity?

“His dealings with most of the faculty and staff were full of candor, integrity and truth,” Phatak answered. “And from my experience, Moshe would always make sure that what was done in the business school was correct.”

DEFENSE WANTED TO CALL A FEDERAL JUDGE AS ITS FINAL WITNESS

Before defense could rest its case, the two sides had one more issue to argue outside of the ear shot of jurors. Porat’s team wanted to call another judge – also from the Eastern District of Pennsylvania – as a character witness.

Defense co-counsel Michael Schwartz argued that Judge Joel Slomsky – who has been friends with Porat for more than 20 years, owned a house near him at the Jersey Shore and was in a book club with the former dean – had a viewpoint unique from the testimony of other witnesses.

Prosecutors argued that other defense witnesses who already testified have known Porat for longer and also own property near him on the shore.

“There’s nothing unique that defense counsel has identified about (Judge Slomsky) that would suggest that we need to take the extraordinary step of having a judicial officer from this bench testify as a character witness in this case,” Dubnoff argued.

Pappert agreed with the prosecution. “I’m not going to call Judge Slomsky to testify in this case, and I’ll put an opinion in the docket explaining why,” he said.

With that ruling, the defense closed its case. Closing arguments will begin Monday after the Thanksgiving break with jury deliberations to follow.