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| ARTICLE SUMMARIES AND QUESTIONS |
"Rage Against the Machine," pp. 84-94: Diebold Inc., a venerable, 147-year-old company based in Canton, Ohio, is trying to shake itself awake from a corporate nightmare that began innocuously enough when it decided to try its hand at building electronic voting machines. Bad idea. The $3 billion public company, whose core products are ATMs, bank vaults, and security systems, now admits it didn't know a whole lot about the elections business when it went into it. Unfortunately, the damage to its reputation is already done. Since 2001, it has been revealed that the company's "secret" software — available on the Internet — is laden with security flaws. Machines rolled out in time for the 2002 elections crashed early and often, and Diebold failed to provide adequate technical support. In Maryland, Diebold allegedly knew that some of its machines had defective motherboards but did not replace them for a year, causing local gubernatorial candidates to urge supporters to vote by absentee ballot. And in an apparent conflict of interest, Diebold's former CEO, Wally O'Dell, made publicly clear his support of President Bush and the GOP, pledging to "deliver votes" to his favorite candidates. Though there has not been a single confirmed instance of vote tampering with a Diebold unit — or any electronic unit, for that matter — Diebold's new CEO, Thomas Swidarski, is acutely aware of the challenges Diebold faces. He is expected to decide within months whether the elections business fits into the company's product portfolio at all. In this article, students analyze Diebold's difficulties in the elections business and its CEO's plans to get the company back on track. Discussion Questions:
"Ford's Student Driver Takes the Wheel," pp. 96-100: Ford Motor Company has been around a long time and has recovered from its share of slumps. But this time, the company is in such dire straits, it would take something close to a miracle to save it. Is new CEO Alan Mulally that miracle? It's hard to say. On the plus side, he seems to recognize the need for change — real change — to make the company viable again. Mulally must figure out how the company can cut costs, retain talent, and integrate its business globally, three tasks it has thus far failed miserably at. He also inherits a host of problems that have plagued the company for more than three decades — excess capacity, inefficient operations, a powerful and richly compensated union, robust foreign competition, and a corporate culture characterized by careerism, vicious turf battles, and high turnover. Turning around any company facing such seemingly insurmountable odds would be a tall order, much less for an ex-Boeing executive toiling virtually alone to make it happen. Mulally is confident in his chances, presumably as is chairman Bill Ford. Wall Street isn't painting a rosy picture for the automaker, however. As Goldman Sachs analyst Robert Barry writes, "Executing what will be a mammoth, multiyear restructuring in a company with a depleted talent pool, while also coping with severe volume, mix, and pricing pressures, large cash-burn rates, and relentless competition, looks like a steep uphill battle to us." Students examine the current state of Ford Motor Company and the top priorities of its new CEO, Alan Mulally. Discussion Questions:
"The Bonnie and Clyde of Mortgage Fraud," pp. 104-122: When the housing market started to soar in 2001, mortgage fraud became the fastest-growing white-collar crime. Leading the felonious charge was one Matthew Cox, who with the help of accomplices has ripped off homeowners, stolen identities, and defrauded lenders across at least six states. A classic con man, Cox is charming, manipulative, and cunning. He studies county courts, looking for those he can easily dupe with falsified documents. Schooled as an artist, he is an expert at forging signatures. He knows how to obtain corporate seals of actual banks, and he launders money in complex webs of cashier's checks made out to counterfeit names. Authorities suspect he has stolen at least $15 million through fraudulent mortgages, earning him a spot on the Secret Service's Most Wanted list. The government hopes Rebecca Hauck is the key to catching the wily thief. Hauck was one of Cox's molls, herself assuming at least five identities to forge documents, obtain fake driver's licenses, lease mail drops, rent apartments and open bank accounts. Captured in March after splitting with Cox, Hauck has pleaded guilty to mortgage fraud conspiracy and bank fraud charges that together carry maximum penalties of 35 years in jail plus restitution of $1.25 million. In the hope of having her sentence reduced, she is cooperating with the feds in their case against Cox. But first they have to find him, and the clever crook, facing a 42-count indictment carrying a 400-year jail sentence, isn't likely to turn up so easily. This article reveals the ins and outs of mortgage fraud based on the criminal exploits of one of its top practitioners, Matthew Cox. Discussion Questions:
"The Law Firm of Hubris Hypocrisy & Greed," pp. 154-176: You can almost hear the clinking of champagne glasses in executive suites around the country. Milberg Weiss, the notorious law firm that took corporations for $45 billion while championing itself as a defender of the little guy, is itself under indictment by federal prosecutors for allegedly paying three plaintiffs $11.4 million in illegal kickbacks in about 180 cases spanning 25 years. While the investigation's targets — founding partner Mel Weiss, ex-partner Bill Lerach, and name partners David Bershad and Steven Schulman — are claiming innocence, the criminal probe has triggered a mass exodus of lawyers and clients from the firm. Once a veritable lawsuit factory, Milberg has filed just a handful of suits in the five months since the bombshell landed. Making things worse is the firm's response to the federal investigation. It has failed to cooperate with prosecutors, launch its own inquiry, bar anyone under investigation from dealing with the issues in question, and most incredibly, halt the suspect behavior. The firm brazenly continued to pay kickbacks into 2005, well after it became aware that its business practices were under scrutiny. For his part, Weiss has battled back, complaining that the government's case is politically motivated by the trial-lawyer-hating Bush administration, and that prosecutors have insisted on "impossible concessions," including waiving attorney-client privilege. Should it go to trial, the case promises to be a brutal fight, something Milberg isn't accustomed to facing from the defendant's chair. Students take a closer look at the complex downfall of Milberg Weiss, the country's leader in class-action lawsuits. Discussion Questions:
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