We are all aware of how significant and important rankings are in the world of b-schools, especially for those in the industry and pursuing an MBA, to the point where someone has committed a fraudulent act by manipulating their rating just to be on top of the game.
In this episode of Business Casual, John, Maria, and Caroline discuss Moshe Parat of Temple University’s Fox School of Business in Philadelphia, who is in his mid-70s and was recently sentenced to prison for data manipulation, as they unravel the story behind how the former dean was busted.
[00:00:07.570] – John
Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host Caroline Diarte Edwards and Maria Wich Vila are going to talk about an unprecedented event that just occurred. It is the sentencing of a former business school dean for cheating on the rankings. This is the first time a College official of any kind has actually been prosecuted by a federal prosecutor, convicted and now sentenced to jail for lying on the rankings. In this case, the dean was Dean Moshe Parat of Temple University’s Fox School of Business in Philadelphia. If you’ve been following this case and we’ve written many stories about it, you’ll know exactly what happened. And in effect, he basically inflated the percentage of students who were enrolled, who submitted this standardized test and inflated the GMAT score for the entering class. And by doing these and other things, ended up getting a number one ranking for four straight years for their online MBA program in US News. But the school in Parat cheated on a number of rankings in addition to its online MBA ranking. But the big deal was getting at number one list, which of course, attracted a lot of potential students into the program.
[00:01:44.160] – John
So Dean Parat was sentenced to 14 months in federal prison, also three years of supervised probation, a quarter of a million dollars fine, and 300 hours of community service. That sounds rather severe, but when you read what the judge said to him at the sentencing, it’s kind of interesting. He said this could be my first case where from start to finish, I was never given one word or gesture to hang my hat on to be able to say that the defendant has had some remorse or that he accepted some responsibility. A constant theme coming from Moshe Parat is that he did nothing wrong, that he was betrayed by his subordinates. Any such assertion, which I’ve overheard in his comments and in his smirking from counsel’s table, is insultingly, silly, and it is contrary to all of the evidence that the court saw and that the jurors based their decision on. So what did he really do? He lied to a magazine. Do you think it’s fair that this guy who is 74 years of age should be going to jail?
[00:02:59.570] – Caroline
Well, I think he’s been made an example of right, because it’s not the first case of fiddling the data, quite frankly, but he seems to be extremely blatant about it and unrepentant. So if you play things differently, perhaps he would have got off a bit lighter. But I think the government wanted to send a clear message to schools that this is a serious offense, that people make important decisions.
[00:03:27.990] – Caroline
Important life decisions based on the information that’s published about schools. And they decide which program to apply to. They may just decide which program to attend based on some of that data. And so it’s misleading people in a way that can have a significant impact on people’s futures. So, yes, it is serious, and I think it sends an important message to schools that honesty is very important here, and it’s not a game. It’s critical information for the market and for their customers, and that they need to understand that the integrity of the data is very important here.
[00:04:15.110] – John
Right. And the university itself has already stated that it lost a minimum of $17 million in remediation cost. This occurred through fines. It had to pay lawyers that had to hire settlements with students who filed the class action suit claiming that they were defrauded. So the University had put out a minimum of $17 million already. Maria, what do you think?
[00:04:44.020] – Maria
I mean, yeah, I think before we started recording, we were saying, well, is it worth it to go or does it make sense that someone would go to jail simply for lying to a magazine? And I think people lie to magazines all the time, but those things have no real repercussions. For example, if a Hollywood starlet claims that for a fifth birthday in a row that she’s 29, it’s her 29th birthday, or if a certain action star claims to be six foot two when they’re really five foot eight, like, okay, that sort of stuff happens, at least in the Hollywood world all the time, but there are no real consequences. I think in this case, the deception. First of all, it was clearly something that had to be orchestrated. Right. There had to be some sort of premeditated thought to go into this level of deceit. It wasn’t like, oh, I misspoke, and I said I was 29, but I’m really 47. No, it was a very significant amount of effort that went into this level of fraud. And as Caroline pointed out, people make decisions based on this. They chose to go to school.
[00:05:43.650] – Maria
They were paying. I believe the tuition for the online program was around $60,000. That’s quite a bit of money to pay for a school that you think you’re getting the number one online program and you’re really getting something that is a far lower quality. So I feel terrible for the school. I almost wonder if the school will now sue, if they haven’t already, if they will sue this person saying, look, we had to pay $17 million because of your individual fraud. And so maybe I think you said it was like 14 months or something, but we want you to give us some more money back because I feel bad for all the hardworking people at that program. I feel bad for the people who went to the school. There’s a lot of collateral damage as a result of this. And it’s pretty sad.
[00:06:33.770] – John
Yeah. And it does speak to how serious it was. It was an orchestrated campaign to cheat a statistics professor was actually asked to reverse engineer the rankings to see what would happen if they were able to, or if they simply reported stuff that they didn’t have, and what impact would it actually have on their ranking? And then they falsified a number of metrics to make sure that they were number one. And they were number one in 2015, 2016, 2017, and 2018, until they basically were forced were to go back to us due to say, hey, we made a little mistake on their data, never thinking that by admitting a simple mistake, which was not a mistake, it was deliberate, that the whole thing would unravel because then the university called in a law firm to investigate and law firm found outright fraud. And that led to one thing after another. But one of the interesting things in the case is why the US prosecutor decided to go after the Dean. It’s never been done before. And it turns out that the former Dean can blame himself for this. He was so arrogant, so smug that he filed a defamation lawsuit against the University after he was fired from his job.
[00:08:03.050] – John
And that suit required a fair number of depositions to be filed and people to be questioned. And the depositions were incredibly damaging to him and revealed the extent of the fraud. More than that, his deposition, which was videotape, caught him in a number of contradictions and outright lies. And it’s those lies and the arrogance that the former Dean showed that basically convinced the prosecutor to go after him. So his own arrogance and his own refusal to accept any responsibility and instead to blame others for this. And then the file lawsuit against the University is actually what caused the prosecutors to go after him, which I think there’s a lesson in this.
[00:08:57.750] – Caroline
I was just going to say I’m sorry.
[00:08:58.720] – Maria
I thought you were done. I think the lesson is to look up the definition of the word defamation before you sue someone for it, because it’s not defamation. If it’s true, what would be picking. I’m sorry. I didn’t mean to drop down. I really thought you were done.
[00:09:12.210] – John
No, that’s that he actually did it. It’s kind of unreal. It’s just crazy. He sued the University for $25 million, and it just totally unraveled him and got the US government after him because the prosecutor read his deposition and read the other depositions, and it was clear he was guilty of sin. They went after him. Lord knows what his own defense cost him already. I’m imagining it cost him an awful lot of money because he hired a very high powered attorney in Philadelphia to defend him. And frankly, I think the attorney did a disservice to him. He should have convinced the Dean to basically throw himself at the mercy of the court. And instead of arguing that he was innocent, he should have argued whether or not this is a federal crime. And they could have focused their defense on more technical legal arguments. Instead of pretending that this guy was innocent, when he was clearly not innocent and had no grounds to claim that he knew nothing about this and he himself was betrayed. It’s really remarkable. Now, we do know Incidentally and this has happened before, that different schools cheat on rankings. Even when they don’t cheat, they report numbers in the most favorable possible light by reinterpreting questions that are asked.
[00:10:51.210] – John
So when the questions on these surveys are not ironclad and allow room for interpretation, you can bet that the school will interpret the question in a way that allows the school to provide an answer that’s more positive to it. And then there’s also for some of these rankings where they actually survey alumni or students. On a number of occasions, schools have been caught basically lobbying their students to fill out the surveys in the most positive way, which always goes to the point that we’ve made in the past. Rankings are incredibly limited. They’re flawed and perfect, and people pay way too much attention to them. And I think this case, if anything, above and beyond the tragedy that it is for the school and the former Dean, who I said before, 74, actually is 75, and he has a number of illnesses, apparently, and his wife is ill and in a wheelchair, and he is her primary caretaker. So it’s really tragic that this guy’s arrogance led to his total downfall, but it is what it is. And I think it will send the message to other schools. As you point out, Caroline prosecutor wanted to make an example of them.
[00:12:11.580] – John
And I think that’s really true. Wouldn’t you think now, Caroline, that any admissions director or Dean who’s tempted to cheat on the rankings would never do it?
[00:12:22.210] – Caroline
I think it’s definitely going to be a case that sets an example and will be taken note of. I’m pleased because when I was an incident, I was responsible for lots of data sufficient for rankings. And frankly, it was the bane of my life because it took a huge amount of time. And it’s often frustrating because we were incredibly scrupulous in the data that we provided, and we had suspicions that some other schools weren’t. And that’s incredibly frustrating. And I think one good thing, for example, about the Financial Times ranking is they do actually go around and audit the data, and they go and store their staff at the schools, and they go through everything. And I think that ensures a certain quality of data, which may not be the case in all rankings.
[00:13:20.830] – John
Yeah. Ft is the only major ranking organization that actually does audits every three years of the school’s data, which is admirable. That raises a whole other question. To what extent is US News responsible for ranking the school without auditing any numbers, without the kinds of checks that the Financial Times does? And should US News bear some responsibility for basically creating a system through which a school can manipulate its data and therefore get ranked more highly by US News. Maria, do you think that there’s some culpability here on the part of US News?
[00:14:05.470] – Maria
I appreciate the trapped and leading way in which you’re trying.
[00:14:11.950] – John
[00:14:12.570] – Maria
Yes, let’s burn them to the ground. No. I mean, look, I think US News at a certain point, you just have to trust that if you’re asking people for their average GMAT scores, that they’re going to give you something honest. I mean, I think the fact that US News itself, as far as I know, was not sued as part of this or if they were, I’m assuming.
[00:14:32.000] – John
No, they were not.
[00:14:33.060] – Maria
Right. And I think if they would have tried, I think that would have been dismissed. I do think, though, that there is, as we’ve talked about before, the culture of trying to massage the rankings. Right. So I don’t think that necessarily outright fraud may be occurring at other schools. But I definitely think that there may be situations where maybe a candidate with a lower GMAT score. And if you take the GRE that way, we don’t have to include your lower score in our average GMAT. Like, maybe that will be better for you or one of my personal pet peeves. When schools try to really inflate how many people are applying to their school, they’re not lying about how many people are applying to their school, but some of them, I think, are engaging in less than savory practices in terms of making it sound like on their webinars or whatever, like anyone can get in, you can get in and you can get in. And I do think that schools sometimes are a little too they sort of mask how competitive the process is in their quest to get as many applicants as possible and therefore drive down the acceptance rate, knowing that the acceptance rate is seen as sort of a badge of eliteness of the school.
[00:15:43.360] – Maria
So I definitely think that whether or not peace schools consciously do it or not, I think they definitely try to do things like this with some rankings in mind. Whereas if the rankings do not exist, I like to think that they would focus on other ways to prove their quality.
[00:16:00.070] – John
You know, there’s that old saw about the child who puts his or her hand on the stove and after being burnt once, never does it again. And I do think that this decision and the fact that this former Dean is going to end up behind bars is going to have the same effect. People who are attempted even to massage data make shy away from it, knowing that the consequences of it are that severe, that high before, it was just, okay, well, maybe I’ll get caught, maybe I won’t. What difference does it make? But boy, if you have the federal government after you forget it, you’re not going to take a chance and do something stupid like this. The other thing that Bear is pointing out is while there’s a lot of schools that do this here and there, they never do it to the extent that they get named, number one, that their program is actually at the top of the list. And then when it’s done, it’s often not done for so many years. So this was truly an extraordinary case and one that directly involved the Dean in a few other cases. For example, Tulane’s business school a number of years ago was caught cheating and the Dean was not implicated in the scandal.
[00:17:21.220] – John
It was more like the admissions director was who was reporting the data, and he was simply let go quietly. But it didn’t go straight up to the top of the business school like this one did. So it is an extraordinary case. It’s an unusual case. And this poor guy is going to end up in jail. Now as a result, on some level, I actually feel sorry for him, even though let me just tell you, he was a real bully. He was a micromanager. People who worked for him were afraid of him. He’s just not a nice guy. And the prosecutor was seeking up to eleven years in jail and a restitution of something like five and a half million dollars plus the quarter million dollars fine. So they only got 14 months. But I think that’s enough, really, along with the probation, the quarter million dollar fine, and as we pointed out before, the years of community service that he would be required to have. It’s interesting, when you hear what he said to the court generally at these proceedings, you plead for some sort of mercy and you basically say something that’s going to convince the judge to give you a little bit of a break, for goodness sake.
[00:18:49.330] – John
Instead, this guy just said, hey, I’m not sorry. In fact, I need to help my wife because she’s not well, and so therefore you shouldn’t send me to jail. Not a convincing argument. Not at all. Anyway. Any last words?
[00:19:15.310] – Maria
I have a question, actually. So, John, because I actually pulled up the article that you wrote when they first came out at the top of the rankings, and you actually wrote an unlikely winner, claimed the top spot. And so I’m just wondering, I guess you feel sorry for him because of some of his personal circumstances, right? If this guy were like a fit 27 year old who’s single and a bro, maybe you’d be like, whatever, it’s fine. It’s a year in prison. But how did you feel as a journalist when you I mean, didn’t you feel a little bamboozled by this?
[00:19:47.950] – John
Yeah, sure. Because while I reported with some skepticism and then got into some of the numbers and showed how they were, when you compare them to other competitors in the field, competitors with bigger brands, greater prestige, better faculty, better students, and his numbers are better than a UNC and Indiana. It just didn’t make any sense. So, yeah, I felt a little bamboozled, too, because even though I pointed that stuff out and was skeptical about some of those metrics, I still didn’t imagine that they actually cheated and just created them out of nothing. So that was pretty amazing. Here’s what Parat said when he addressed the court for the first time. I’m 75 years old, truly in the Twilight of my life and experiencing systemic illnesses. Not only the heart, but the diabetes is very serious, he said. And I am the primary caregiver of my wife, who suffers a myriad of ailments after a tremendous career of helping premature babies. But she cared for and supported me for nearly 52 years. She badly needs my support and I need hers. We have very little time left on God’s Earth to help others and provide some joy to our six young grandchildren.
[00:21:18.570] – John
It is my humble request that you will allow me to help Rachel and others less fortunate than us in the community. And that was his statement. No remorse, no responsibility accepted. Rather, he allowed his false claims that others betrayed him and submitted these numbers not on his behalf, but on their own behalf. And he had no knowledge about it. Nothing had nothing to do with it. This is what he said to get mercy from the judge. It obviously didn’t work.
[00:21:58.150] – Maria
Yeah, I don’t feel sorry for him at all. Sorry, John. I don’t feel sorry for him at all. Right. This is not a victimless crime. And yeah, you mentioned a second ago, Indiana and UNC, they also suffered because they got pushed down in the rankings unfairly. So it’s not a victimless crime. And if this guy really is in the Twilight of his life and thinks he’s going to meet God soon, all the more reason for him to leave a God-fearing life and use this as a chance to repent. So for him to dig in his heels and be like, I’m in the twilight of my life, buddy, all the more reason to maybe reconsider that whole repentance thing, whatever. I’m just saying different strokes for different folks. But if your wife depends on you, all the more reason to live by the street and narrow and not try to end up in jail.
[00:22:46.210] – John
[00:22:46.850] – Maria
[00:22:48.250] – Caroline
I do think that it is surprising that US News doesn’t do more, though, to audit the data because it plays such a significant role in the market.
[00:22:58.050] – Maria
[00:22:58.310] – Caroline
Those rankings and perhaps even more so at the undergraduate level. And it plays a huge role in determining where people apply and the market dynamics. And to me, it’s shoddy journalism that they’re not doing more.
[00:23:20.990] – John
In fact, because you mentioned the undergraduate rankings in the last couple of weeks, there has been a professor at Columbia University, which was ranked number two by US News overall as a University, not just a business school, but the professor basically says it’s all based on false data. And this is a professor at the university itself who’s making these claims about Columbia University’s rise in the US news ranking. So there you have it. If anything, here’s the takeaway and we’ve said this before, it needs to be said again, treat these rankings with one big grain of salt because whether or not a school cheats, the methodologies of these different rankings hardly get close to measuring the true quality of an education. Yes, there’s some entertainment value if you parse the numbers, you might get some good data to use to help inform your decision about where to go or whether to accept an offer. But don’t just think that because the school is ranked three and another is ranked six and you got into three, you should be going to three. That’s the big takeaway. All right, Caroline and Maria, a pleasure as always. And for all of you out there, good luck on your MBA journey.
[00:24:48.830] – John
This is John Byrne with Poets and Quants you’ve been listening to Business Casual.