Schools and scoundrels

No matter which prison former Refco Inc. Chief Executive Officer Phillip Bennett is assigned to serve the 16-year sentence imposed on him Thursday in Manhattan, N.Y., federal court, chances are he will stand out with his master’s degree from Cambridge University in England.

Bennett, 60, joins at least a dozen other wealthy corporate executives whose degrees are from U.S. Ivy League schools such as Harvard University and the University of Pennsylvania’s Wharton School who’ve been incarcerated for white-collar crimes this decade.

Exceptional intelligence, self-confidence and feeling special, common among those educated at such schools, can turn into deviousness, arrogance and entitlement, said Tom Donaldson, a professor of ethics and law at Wharton in Philadelphia.

The head of what was once the biggest independent U.S. futures broker, Bennett defrauded investors of $2.4 billion. He pleaded guilty to crimes including bank and securities fraud, and money laundering.

“If the devil exists, he no doubt has a high IQ and an Ivy League degree,” Mr. Donaldson said. “It’s clear that having an educational pedigree is no prophylactic against greed and bad behavior.”

Imprisoned executives with Ivy League degrees include Jeffrey Skilling, 54, former CEO of Enron Corp. (Harvard Business School); Timothy Rigas, 52, former chief financial officer of Adelphia Communications Corp. (Wharton); and William Sorin, 59, former general counsel of New York-based Comverse Technology Inc. (Harvard Law School).

Some of these convicted executives have multiple degrees. Conrad Black, the former CEO of Chicago-based Hollinger International Inc., now serving a 6 1/2-year sentence for stealing $6.1 million from the company, has two bachelor’s degrees from Carleton University, a master’s degree from McGill University and a law degree from Laval University, all in Canada.

“There is a correlation between going to an elite school and ending up as a CEO,” said Edwin Hartman, a professor of business ethics at New York University’s Stern School of Business. “Look at the list of the heads of the 400 elite companies. They certainly didn’t go to no-name state schools.”

A top-level education may also cultivate arrogance, said Maurice Schweitzer, who teaches information management at Wharton.

“We tell our students at premier institutions that they are special, and they certainly feel special,” Mr. Schweitzer said. “We have famous faculty and great resources. They are surrounded by accomplished peers, and recruiters flock to them.”

Harvard University spokeswoman Rebecca Rollins said the Massachusetts school didn’t have an immediate comment.

Wrongdoing in the executive suite is more about character flaws than alma maters, said Andrew Weissmann, a former federal prosecutor who led the U.S. Justice Department task force that investigated the collapse of Enron. “Just because you went to a good school doesn’t mean you have a good moral compass.”

Moreover, some of the executives convicted since the Sarbanes-Oxley Act was passed in 2002 in response to corporate corruption didn’t attend elite schools. HealthSouth Corp. founder Richard Scrushy, 55, sentenced to almost seven years in prison for bribery, has a bachelor’s degree from the University of Alabama in Birmingham. Former Tyco International Ltd. CEO L. Dennis Kozlowski, convicted of stealing $137 million from the company and in prison for eight to 25 years, has a bachelor’s degree from Seton Hall University.

Executives with top educations may end up trading their pin stripes for prison jumpsuits because they are driven to excel.

“People who succeed in corporate America are risk takers,” said Anthony Barkow, a former federal prosecutor and Harvard Law School graduate who is now a New York University Law School professor. “They’re smart, confident and sometimes even arrogant. That’s what it takes to succeed. Risk takers get closer to the line and sometimes cross it.”

Graduates from top-tier universities may feel so special, they think law doesn’t apply to them, Wharton’s Schweitzer said.

“We encourage our students to explore and think outside the box,” Mr. Schweitzer said. “In general, this approach is very constructive, but it may prompt people to be less likely to recognize an ethical dilemma.”

Current and former prosecutors who’ve handled white-collar cases said the defendants’ most common trait was avarice.

“It doesn’t matter if you graduated from the best schools in the world and had every privilege accorded to you or not,” said Mr. Campbell, a member of the Enron Task Force with degrees from Yale University and the University of Chicago School of Law. “Greed is a strong motivation, and it can cause you to make mistakes.”