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Back in February, a young man named Mathew Martoma (né Ajai Mathew Thomas) was convicted of securities fraud. In addition to the actual act of using material non-public information about drug companies Elan and Wyeth to help out his employer, SAC Capital, in the P&L department, one thing that did not do wonders for Martoma’s case was the revelation that he had been expelled from Harvard Law School in 1999, as even he will tell you. For everything that Martoma is (a white collar criminal, an accomplished dancer), one thing he isn’t is stupid. That’s why when he was applying to Stanford University’s business school in 2001, he opted not to mention the incident at Harvard, probably figuring it would hurt his chances. One thing Martoma did not have the foresight to anticipate was that he would one day be a convicted felon, and, more importantly, that when it comes down to it? NOBODY MAKES A FOOL OF STANFORD. Which is this just happened:
Mathew Martoma, the SAC Capital Advisors LP employee found guilty last month of insider trading, is no longer a graduate of the Stanford Graduate School of Business, the school confirmed Tuesday. Administrators at the business school rescinded their offer of admission to Mr. Martoma, a move that nullifies the degree he earned in 2003, according to people familiar with the matter.
Of course, the university is not totally heartless: it gave Martoma a chance to explain, but evidently 4 weeks is not enough time to come up with a credible story.
Stanford sent Mr. Martoma a letter last month seeking explanation about statements on his application and allowed him two weeks to respond, according to people familiar with the correspondence. Mr. Martoma’s lawyers requested a two-week extension, which was granted, according to those people. That extension ran out last Friday.
For any b-school graduates who foresee some corporate fraud in their future, take note: even if you are convicted of whatever crime you’re thinking about committing, you’ll still be able to hang onto that degree, assuming you didn’t try and pull a fast one on your alma mater. No one cares that you engaged in securities fraud, or embezzled money from your company, or ran a giant Ponzi scheme, only that you deceived them.
Several elite business schools have had high-flying graduates whose careers imploded in scandal. University of Pennsylvania’s Wharton School counts among its alums former Galleon Group chief Raj Rajaratnam, convicted of securities fraud in 2011, while Harvard Business School educated Enron Corp. CEO Jeffrey Skilling, now serving a prison term for insider trading. Unlike Mr. Martoma, those executives still hold their degrees. “What makes this possible is not that he was a convicted felon, but that he was admitted under false pretenses,” said one Stanford faculty member with knowledge of the situation.
This is about drawing a line in the sand.