Critical Read Free

Columbia University. The decision to switch jobs had been agonizing for Paul, since he was not a gambler by nature, but his growing need for disposable income and the chance to make it big in the rapidly growing, trillion-dollar healthcare industry trumped the uncertainties and the associated risks.
    Remarkably, everything had gone according to plan for Angels Healthcare LCC, thanks to Dr. Angela Dawson's innate business acumen. With the stock, warrants, and options Paul controlled, he was within weeks of becoming rich along with the other founders, the angel investors, and to a lesser extent the more than five hundred physician equity owners. The closing of an IPO was just around the corner, and due to a terrifically successful recent road show that had institutional investors drooling, the stock price was just about set at the upper limits of everyone's expectations.
    With an anticipated five hundred million dollars to be raised on the first go-round, Paul should have been on cloud nine. But he wasn't. He was more anxious than he'd been in his entire life, because he was ensnared in an epic ethical dilemma exacerbated by the series of recent corporate accounting scandals, including that at Enron, which had rocked the financial world during the previous six or seven years. The fact that he had not cooked the books was not a consolation. He religiously adhered to GAAP -- Generally Accepted Accounting Procedures -- and was confident that his books were accurate to the penny. The problem was that he didn't want anyone outside of the founders to see the books, specifically because they were accurate and therefore clearly reflected a major negative-cash-flow situation. The problem had started three and a half months previously, just after the independent audit had been completed for the IPO prospectus. It began as a mere trickle but rapidly mushroomed into a torrent. Paul's dilemma was that he was supposed to report the shortfall, not just to his CFO, which he certainly did, but also to the Securities and Exchange Commission. The trouble was, as the CFO quickly pointed out, such reporting would undoubtedly kill the IPO, which would mean that all their strenuous effort over almost a year would go down the drain, perhaps along with the future of the company. The CFO and even Dr. Dawson herself had reminded Paul that the unexpected burn rate was a mere quirk and obviously temporary since the cause was being adequately redressed.
    Although Paul acknowledged that everything he was being told was probably true, he knew his not reporting definitely violated the law. Forced to choose between his innate sense of ethics and a combination of personal ambition and his family's insatiable need for cash, the conflict was driving him crazy. In fact, it had driven him back to drink, a problem he'd overcome years ago but that the current situation had reawakened. Yet he was confident the drinking wasn't completely out of control since it was restricted to having several cocktails prior to boarding the commuter train on his way home to New Jersey. There had been no all-night binges and partying with ladies of the night, which had been a problem in the past.
    On the evening of April 2, 2007, he stopped into his designated watering hole en route to the train station, and while sipping his third vodka martini and staring at himself in the smoky mirror behind the bar, he suddenly decided he would file the required report the following day. He'd been flip-flopping for days, but all at once he thought maybe he could have his cake and eat it too. In his mildly inebriated state, he reasoned that it was now so close to the IPO closing that maybe the report would sit around at the bureaucratic SEC and not get to the investors in time. That way, he'd have assuaged his conscience and, he hoped, not killed the IPO. Feeling a sudden euphoria at having made a decision even if he would change his mind overnight, Paul rewarded himself with a fourth