I found out last week that one of my MBA professors is about to get put away for fraud.  This guy was way more than a professor.  He was a prominent fixture in the Charleston business community.  Even in his downfall, the Charleston Post and Courier has an archive section dedicated to articles about him and the case.

First of all, I’m saddened at the news.  Dr Parish was easily my favorite prof in the grad program.  I was a numbers guy and he taught Managerial Finance, Quant Methods and all the other hardcore math-based subjects.  He was also one of those colorful teachers, passing along a bit of his passion for the business at hand along with knowledge.

But more than that, this is one of those cases that conjures up a bunch of universal, often-asked but never-answered questions about life and man and judgment.

The most basic question:  How could someone so smart be unable to figure out the most basic reality of this situation.  Dr Parish was a mad genius, no doubt about it.  He took the most difficult technical classes and made them easy.  Yet for all of that intelligence he couldn’t foresee a certain fall.  And this isn’t one of those book smart vs. street smart things.  The fact that his schemes would eventually fall apart was pure logic.

In this day and age two things make it virtually impossible to carry on something like this forever.  1. Everything leaves a trail.  Long and winding though it may be, there will always be some kind of trail.  2. You will be checked eventually.  Not if … when.  And often it will be for some totally  unrelated, non-threatening reason.  The SEC got onto Parish after a routine balance check during the audit of one of his investors.  Something just that simple and it all comes unglued.

Another question:  Why such risk when someone with Parish’s talent could have broken the bank honestly?  Looks like he’ll spend the better part of a decade in prison, but the initial estimates were well in excess of 100 years.  The things is, this guy really knows the markets, really knows investing, and really has some killer algorithms with which he can blow away the expected returns on your run-of-the-mill fund.  On the level he could still have been one of the most comfortable men in Charleston for the rest of his life.

Lesson learned from CSU:  Somewhere in this whole thing, Charleston Southern U, the school from which I received my MBA, invested $10M with Parish in what sounded like darn near a simple hand-shake agreement.  Accounting lesson for you all in the age of Sarbanes-Oxley:  When entering into some kind of business arrangement with a related party (eg. one of your most trusted professors), this is the time to severely increase your due diligence and documentation.

So, now the fallout.  Looks like CSU will survive which is good.  They need to still be able to attract talented students in order to continue the progress they’ve been making.  And my professor will have to spend a good chunk of time in prison.  Again it saddens me, but this is the appropriate answer and I would never suggest it should be otherwise.  As a result of one man’s greed, manipulation and dishonesty, hundreds have lost significant savings and retirement funds.  Now that man must take ownership of his actions and their consequences.