Five years after being the first to file for whistle-blower protection under Sarbanes-Oxley, former CFO David Welch has lost the family farm and his savings, and still doesn't have a job.
Stephen Taub, CFO.com | US
May 18, 2007
Dear Mr. Welch: I am replying to your comment re: my comments. I had written those comments based upon only seeing the first half of the article because my internet failed to display the entire article due to loading problems. I discovered this AFTER posting my comments and was re-directed back to the article. After seeing there was more to the article, I was aghast, and immediately notified the Editor, stating this same info, and that had I been able to read the entire article prior to posting my comment, I would not have included the second half of it. I further asked the Editor not to print that portion due to my website errors and even more importantly, I asked the Editor to ONLY print the praise comments for your article. See, I realized that I had made a terrible mistake in judgment due to not having the entire article at the time of my original comments. That is why I IMMEDIATELY recanted my comments by notifying the Editor. I guess the Editor chose NOT to oblige my request, and has thus acted unethically by printing something s/he already knew was based on a mistake. Shame on you Editor for choosing to print something that the author had already requested you NOT to print!! I have a printout of my comments to the Editor requesting the changes to my original comments, with this footer: http://www.cfo. com/index.cfm/l_emailauthor/9210493/2984986 dated 05/20/2007. However, I think that some good has come of it since you retorted and included all the facts that you said I did not possibly know, which is true – how could I possibly know all those things since they were not included in the article? Now, we all know how hard you have searched for a replacement job and can have even more empathy for your plight and be able to encourage you all the more in your endeavors to get a job and overcome the past. With all sincerity to you and your family, Good luck!
Posted by Roxane Gehman | June 05, 2007 10:09 am
Roxane Gehman drew an interesting conclusion from this story when she said, "...are we supposed to feel sorry for him for choosing not to work at all during the last five years ...? No, it may not be as prestigious or pay as well, but at least he would be contributing to his family, and not just sitting back on his laurels, forced to sell his wife's heritage in her family farm. Maybe if he had worked doing something non-CFO, he wouldn't have had to sell the family farm and use up all their savings and life insurance proceeds..." I find it so interesting when people read something into an article that isn't even there. What she doesn't know about (nor did she ask) are the 250 or more applications and resumes submitted, the dozens of interviews, the part-time teaching position, the 12 month temporary job taken which was more than 3 1/2 hours from my wife, the part-time $10 per hour clerk's position at an equipment rental store, and the full-time enrollment in a doctoral program attempting to qualify myself for a new career. She would have been right if she had not been so wrong about the facts.
Posted by Dave Welch | May 25, 2007 02:24 pm
In a previous time and place I worked just an odd 30 miles or so from Floyd. My employer at that time is a publicly traded company and still is. I was asked to improperly record a $20 million transaction that would hide losses. The entry was all about matching the earnings forecast. I refused to make the entry and went to internal audit to no recourse. Someone else made the entry and the false entry is now hidden in depreciation. For a long time I have attempted to encourage myself to go to PWC and show my "proof". This article is only another reason to stay silent and never tell the truth. SOX has helped some, but it could have helped more. PS... You are probably wondering about internal audit. Internal Audit didn't help! The director of Internal Audit was chums with my boss. I wasn't allowed any contact with PWC after that too!
Posted by A Guy | May 24, 2007 09:35 pm
...and have been for nearly 10 years now. It looks as if there are databases available for employers to consult about job candidates and containing profiles of the kind that we see in spy movies, with all the evidence pointing in one direction. We see this allegedly going on in relation to the profiling of terrorists. If so, once you are labelled, there is nothing you can do about it. There is no such thing as due process in job interviews, so you may never know what they have against you, if anything. Most importantly, you cannot correct that information, no matter how misleading. It is much easier to enforce a law against wrongful dismissal than a law against discrimination. Let me give you an analogy. When you go into a store, you have no obligation to buy. It is only when you want to return something that you have bought that there are conditions attached. The most important of those conditions is usually that you leave your name and phone number, just in case you change your mind too often. Do agencies that enforce the laws against wrongful dismissal keep tabs on employers who dismiss employees at whim? I bet that they are not and I bet that they should. Those employers have a vested interest in ruining the careers of those they dismiss, first to justify themselves in retrospect and second to rein in those who have another side of the story to tell.
Posted by Jean Cote | May 24, 2007 09:00 pm
For a human being to stay unemployed with the inability to feed himself and his family simply for standing for what's right is unconscienable. Every decent American should be outraged and disgusted by this act. It seems to me that the citizenry of this great country of ours is currently asleep or too busy partying and boozing it up. This seems to be the only plausable explanation to how a company can get away with something like that and for so long. The whistle blower laws should be eradicated completely because they do not work to protect decent Americans. Those laws do nothing but protect the evil doers of our society by providing them with an avenue to hide while they continue to spread their malicious prosecution of inocent and decent individuals behind close doors. Individuals like Mr. Welch should be held as a heroe in every corner of America because his standing for what is right is exactly what will help to keep our great country strong for years to come. Kudos to Mr. Welch!
Posted by Kanal Van Gaston | May 24, 2007 12:06 pm
In sports, a referee makes his call. Judges don't overturn them. Even though a trial might overturn a referee's on the field ruling, it is accepted that the need for a final ruling is greater than the need for the right ruling. Something similar needs to be put into place to keep cases from dragging on 5 years and more.
Posted by Roland Cycan | May 24, 2007 11:53 am
Despite all of the public furor over the Cardinal Bancshares situation, an interesting question is whether the public shareholders of this company have taken note of it. Investors should view as a red flag any such indicators that company management may be deliberately misrepresenting their financial results (and thanking Mr. Welch for having the fortitude of conviction to go forward with his complaint despite the very high career risk associated with it).
Posted by Bill Springer | May 24, 2007 11:52 am
He is to be commended for having the courage to come forward and report what he did about his company. Unfortunately, he was not praised but scorned by them for upholding his duty to act in the public's best interest. I hope that he does get the DoL decision's award, because he does deserve it since he is protected by the S-OX section regarding whistleblowers. If the DoL does not enforce their decision, it will probably make other whisteblowers unwilling to come forward since it would indicate that they will not truly be protected as led to believe in the S-OX legislation. On the other hand, are we supposed to feel sorry for him for choosing not to work at all during the last five years when he could get a non-CFO job to help support his family? No, it may not be as prestigious or pay as well, but at least he would be contributing to his family, and not just sitting back on his laurels, forced to sell his wife's heritage in her family farm. Maybe if he had worked doing something non-CFO, he wouldn't have had to sell the family farm and use up all their savings and life insurance proceeds. What if his wife can no longer support the family? What will he do then - keep waiting for the DoL to enforce their decision while he continues not earning any wages and accruing more legal fees? From a financial planning standpoint, this does not seem to be in his family's best interest.
Posted by Roxane Gehman | May 20, 2007 05:22 pm
In light of what happened to Mr. Welch, not knowing the ultimate truth but understanding that earnings management has been around for a long time, we must wonder; are there any ways to protect CFO’s from situations like this. Where is the AICPA in all of this? If blowing the whistle will get a CFO marked as damaged goods then how many other CFO’s will have the courage to do it? Are CFO’s supposed to adopt the unspoken honor code; don’t turn against your fellow executives? After all it is an honor code. To talk or not to talk, is that the question. But if you decide to talk, make sure you can live the rest of your life without having to work because if not, your integrity will cost you everything you have. In hindsight; would it have been better for Mr. Welch to simply resign his position instead of filing a complaint? How would the sudden and voluntary departure of a CFO be interpreted by investors, analysts and other interested parties? Can charges be filed against a CFO for not blowing the whistle against a former employer? SOX has generated lots of changes which has resulted in much higher auditing costs for Public Companies and a perception of integrity, but in the end it all boils down the same old basic presumption, the integrity of the individuals entrusted with the responsibility of reporting and certifying the financial reports
Posted by Salvador Ramos | May 20, 2007 12:48 pm
I am one year David's experience precursor and one year before SarbOx starts acting. By not agreeing with some financial "tactics", I was "free" to leave the company. For living, I exercised my stock options. Hopefully my wife still working and help me to pursue my PhD in Finance. Is it the only field where my references are accepted. Companies like to be validated SarbOx compliant by accredited consultants. Companies don't like to be validated SarbOx compliant by whistle-blower accredited consultants. At that company, SarbOx act cannot exercise anymore: it became an European agglomerate... And I lost the intended process for no legal evidence. Good luck, David!
Posted by Marius Gavrila | May 19, 2007 10:02 am
Gary Cademartori had an excellent question: "Why haven't the Dept of Banking, SEC, DOJ and PCAOB been all over this?" I also find that to be curious for not one of these agencies has asked to see the documentation that proved this case. In the court room it is said that "a document speaks for itself." Neither I nor anyone else needs to interpret what the evidence says. The evidence I have is clear, simple, and it truly speaks for itself ... if only someone would listen. Every former employer of the whistleblowers I have researched (more than 25) uses the same approach - paint the whistleblower as a disgruntled, incompetent trouble-maker. That way, no one will believe him or her. Unfortunately, too many people fall for that line without doing their own research. Such is the case with some readers and with Cardinal's board of directors.
Posted by Dave Welch | May 19, 2007 09:09 am
We keep hearing about this Cardinal case every six months or so by the media as one of those "isn't this awful" cases. If he was right about the fraud he alleges, seems to me the Dept of Banking, SEC, DOJ and PCAOB would be all over this one and Cardinal, its directors and officers would have all been in hot water. So how come we do not hear about them being investigated or hauled off to jail? In any event, the worst thing in the world for Cardinal would be to have a senior officer in the building who might very well threaten to damage the bank again at any time and probably spend all his time covering tracks and accumulating "evidence" rather than attending to the heavy demands of the CFO job. reinstatment is a bad law and can never work.
Posted by Gary Cademartori | May 18, 2007 04:54 pm
In Viet Nam we marines were told we had to take the first shot and if we lived we could return fire without permission. We leaned that permission was never granted. So is the CFO and Auditor under SOx law. We are requiered to provide all the courage, put our family at risk and if we do not get fired and bankrupt then we can continue fighting corporate. Our Congress (all parties are equally at fault), SEC, and AICPA and State Boards are absolute in thier cowardness to actually reinforce the front line defense against corporate wrong doing. This situation is the classical proof.
Posted by Milton Bulloch | May 18, 2007 01:01 pm
This is guy has been out of work for 5 years and no one wants to hire him because of he saw something illegal going on and reported on it. What's wrong with this picture and what message does this send anyone else who might be thinking about protecting and upholding an ethical corporate culture?All we have is the perception of protection for these individuals if the regulatory agencies aren't able to mandate that companies reinstate employees and/or compensate them equitably for their loss of income due to the company's unethical behavior.
Posted by Emily Supped | May 18, 2007 12:17 pm© CFO Publishing Corporation 2009. All rights reserved.