Top Ten B-School Scandals & Controversies Of 2014

No question, this past year was a doozy for misbehavior in the business school world. Two of the lead figures in the Top 10 B-School Scandals and Controversies of 2014 defrauded millions from investors. One business school was reported to have resorted to deception through exaggeration in order to boost enrollment and donations. An elite MBA program’s students were called out as booze-swilling, sex-crazy spendthrifts prone to mocking a poor sod who just wanted to do his damn schoolwork. Then there were the Jesuit schools, popping up in surprising places in a major set of rankings, raising the specter of conspiracy. Not to mention the epic Great Sichuan Chicken War, pitting an irate Harvard Business School professor against a family-owned Chinese restaurant. Taken together, these Top 10 stories show business school as a microcosm of the world, in all its pettiness and grandeur – and no shortage of the quirky, the kooky, the crooked, and the criminal.

1. An HBS Prof’s $4 Spat Over Spicy Chicken

Harvard Business School professor Benjamin Edelman was mocked and disparaged world-wide after his dispute with a Boston-area Chinese restaurant over a $4 take-out overcharge went public, and viral. Though many saw Edelman’s prickly correspondence with a restaurant representative – and escalating demands for compensation – as petty and bullying, Poets&Quantstook the position that the professor, a dedicated and capable consumer-protection activist, was correct in his actions, though unnecessarily aggressive in his approach. Multiplying a small overcharge by the number of take-out orders per week could amount to thousands of dollars. And false advertised prices would give the restaurant an unfair competitive advantage over competitors. Edelman apologized, but he shouldn’t have – Sichuan Garden had it coming.

2. A Harvard MBA Assails the Party Culture

Last year it was a Stanford Graduate School of Business professor railing against a prevailing business student culture of booze and fancy cars. This year it was an anonymous Harvard Business School candidate decrying an HBS student culture of costly meals, “hook-ups and drunken shenanigans.” The international student, writing in the HBS newspaper, claimed his studiousness and unwillingness to get plastered with his peers made him a butt of jokes over meals at restaurants such as Sorellina, where a grilled octopus appetizer cost $19.

3. A Furor Erupts over BusinessWeek Ranking

MBAs could be excused for wondering whether it was Businessweek or Vice magazine that was asking the questions about their business programs. “During your MBA program, approximately how many alcoholic beverages did you drink in an average week?” went one of the questions. “Do you identify as lesbian, gay or bisexual?” went another. “Is your MBA program a good place for a single person to find casual dating partners?” went a third. After complaints from business school students and deans, Businessweek dumped the questions – so much for a story on “Top Schools for Drunken Bisexual Hook-ups.”

4. Why a Goat Farmer Ranks Business Schools

The University of North Carolina’s highly respected Kenan-Flagler Business School found itself associated with a widely deplored marketing technique – and a goat farmer from the Appalachians. It turned out that the school’s highly regarded online MBA program, in partnership with an educational technology company, had involved itself with some highly questionable rankings put out by a colorful character – with an even more colorful alter ego – from Tennessee who specialized in “pay per lead” content marketing that put Kenan-Flagler in the disreputable company of a number of low-end for-profit schools.

5. How Hult Became the World’s Largest Graduate Business School

World domination through telemarketing and kickbacks? Hult International Business School has a dubious reputation for the quality of its programs, but its voracious recruitment campaign has turned it into the largest graduate business school on the planet, with enrollment dwarfing that of major players including IE Business School in Spain and Northwestern University’s Kellogg School of Management. School officials make no apologies for their recruitment strategies, as the school’s barely more than a decade old, a short time to build up a strong brand. While Hult remains somewhat of a laughing stock on internet chat forums, it’s difficult to assess its impact on students because graduates are reluctant to sling mud at an institution that appears on their resumes.

6. Ex-MIT Dean Pleads Guilty to Scam

According to prosecutors, former MIT deputy dean Gabriel Bitran and his son Marco scammed some $12 million in a $500 million hedge fund scam connected to convicted mega-fraudster Bernie Madoff. Bitran had taught at MIT for 35 years, serving as deputy dean for five. His son Marco was a 2003 Harvard Business School MBA. Both agreed in August to plead guilty. Investors lost 50% to 70% of their principals, court heard. In a 2009 email to his son, Bitran had expressed contrition, saying they’d misled investors for profit, and that “a veteran professor of MIT should not have engaged in this type of behavior.”

7. Stanford ‘MBA’ Gets Nine Years in Jail

When is an MBA not an MBA? After his degree is stripped because during his insider-trading trial a record of his expulsion from Harvard Law School is accidentally released. Mathew Martoma graduated from Stanford University Graduate School of Business in 2003. This September, he was sentenced to nine years in prison for his role in a pharmaceutical stocks sell-off that generated $276 million in profits and netted Martoma a $9 million bonus. In March, a month after Martoma’s insider-trading conviction, Stanford confirmed that he no longer had an MBA degree, because he was admitted under “false pretenses” – he’d failed to disclose that Harvard Law School had thrown him out for doctoring his transcript and sending it to federal judges while he pursued a job.

8. PWC to Probe Bloch Rankings Scandal

If a little-known racehorse with a mediocre record suddenly won the Kentucky Derby, questions would arise as to whether the beast was juiced. If a business school unranked by the major rankings players was suddenly described in an academic study as better than Harvard, Stanford, and MIT for product innovation management, questions would arise as to the source. In the case of the University of Missouri – Kansas City Bloch School of Management, it was the Kansas City Star newspaper which asked questions, and in its investigation the paper found shocking ties by the study’s authors to the school, along with a “pattern of exaggerations and misstatements that polished the school’s reputation as it sought to boost enrollment and open donor’s checkbooks.”

9. A Different View of a Rankings Scandal

In 2013, officials at Tulane University Freeman School of Business admitted the school had falsely inflated average GMAT scores of enrolled students by 35 points from 2007 to 2011 and had falsely boosted the number of applications received annually by an average of 116 applications during the same years. The fudged data had catapulted Freeman onto U.S. News & World Reports’ list of top-50 business schools. This year, the former admissions director at Freeman, who had resigned shortly before the scandal erupted and was tacitly blamed for cooking the books, gave Poets&Quants a controversial explanation for scandal: the school manufactured it to create a reason to pursue sweeping change.

10. Is There a Jesuit Business School Conspiracy?

To the question, “Is there a Jesuit business school conspiracy?” the Jesuits say no. But then they would, wouldn’t they, if they were conspiring? Certainly, officials at Jesuit B-schools make a compelling argument that blamed flaws in rankings methodologies for their surprising prominence in the U.S. News & World Reportspecialty rankings. School officials surveyed for the U.S. Newsspecialty rankings vote for schools they’re familiar with, and that’s why, Jesuit officials say, Jesuit business schools such as Haub in Philadelphia and Cook in St. Louis can come out on top of Dartmouth College’s Tuck School and Harvard Business School, despite exclusion from the U.S. News top-100 list.

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