Wednesday, April 4, 2007

Defining Hypocrisy

David Charlow on the Columbia website (NYTimes)
If anyone at Columbia University has dealt with either a) the financial aid office or b) any type of disciplinary hearing, then the name Dean David Charlow most likely means something to them.

Dean Charlow is the Director of Financial Aid at Columbia and also the Senior Associate Dean of Student Affairs. His duties include overseeing the financial aid office (which is not the most efficient branch of Columbia University, but then again, which is?) and sitting in on some disciplinary hearings for students who have run afoul of the administration.

But now it seems that the tides have turned. Dean Charlow is involved in a stock scandal involving Education Lending Group, Inc., the parent company of a subsidiary called Student Loan Xpress (the E is left off to make it cool and hip).

To make a long story short, Charlow owned 7,500 shares of the stock and 2,500 stock warrants in the company. The reason that this is a big deal is that it creates a conflict of interest for Charlow because his office is supposed to steer students to the correct loan program for them, but Charlow might be inclined to suggest Student Loan Xpress because the more students use it, the more interest its parent company CIT Group Inc. receives and the higher the stock will rise and hence more money for Charlow.

While the timeframe of this whole deal is not very clear in the article, Charlow walked away with more than $100,000 at the end of it. At first Robert Hornsby, Columbia's spokesman, did not immediately call back reporters and it appeared that this would just get swept under the rug like many Columbia-related incidents can be that may appear negative in the press.

However, Columbia spokesman Robert Hornsby stated that the school has placed Dean Charlow, a Columbia graduate from the class of 1985 and recipient of an MBA from the business school in 1992, on leave. A termination from Columbia might not be his biggest worry, however, because he still has to answer to New York Attorney General Andrew Cuomo, who according to numerous news outlets has begun an investigation into not only Columbia and Charlow, but officials at the University of Texas and at USC who held 1,500 shares of Student Loan Xpress' parent company, as well as the company itself.

Possible punishments? A fine, which tend to be pretty high when the SEC is involved, and possible jail time. Looks like the man who is used to handing down disciplinary decisions now must answer to his own infractions.

UPDATE (4/5/07): According to the New York Times today, Charlow is on paid leave from Columbia, which seems to add to the $100,000 he accumulated from Student Loan Xpress stock. Columbia wasted no time in removing Charlow's profiles from their administrative websites, however.

Additionally, the probe is widening as the New York Times has just reported that Matteo Fontana, a senior official at the federal Education Department, sold 10,500 shares of Student Loan Xpress' parent company around the same time that Charlow and his peers from USC and Texas did.

It appears that this whole thing is just beginning and I am sure more updates are to come. As a final note, in typical Columbia fashion, an e-mail sent out by Dean Austin Quigley and Zvi Galil, Deans of Columbia College and SEAS did their best to downplay the incident.

They referred to Charlow, who they did not name throughout the entire e-mail, as an "undergraduate financial aid officer," despite the fact that he was the director of that office and stated that "the employee involved has been put on administrative leave," neglecting to mention that Charlow will continue to be paid by the University.

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