By: Patrick Burke, ‘17
HYDE PARK, CHICAGO - In a shocking revelation, the University of Chicago Booth School of Business was revealed to be an elaborate Ponzi scheme this week. The Federal Bureau of Investigation released an explosive report detailing what seems to be the largest fraud of its kind since the Bernie Madoff scandal.
Underpinning the Ponzi scheme is what investigators have coined as the Booth “Pay it Forward” culture, in which current, paying students are encouraged to attract new students. Each batch of students attracts the next year of students, enabling a massive, perpetual scheme. Agents said each student pays upwards of $200,000 over two years, receiving only a signed piece of paper at the conclusion of the scam.
The use of free labor to attract new victims seems to set this case of abuse apart from previous cases. “It seems they don’t actually use any of their own employees to keep the operation going,” said Agent Darren Kipke. “These poor, poor kids do it all for them. I’m reminded of the Nike factories we busted in Malaysia all those years ago. So sad.”
Interviews with current victims reveal that they are trained to use several techniques to lure in future victims, including informational phone calls, coffee chats, screening interviews, and even personal tours of the Booth campus. So indoctrinated are the current students that they cannot discern this predatory behavior from what they’ve been told is simply “paying it forward.”
Each year Booth attracts over 500 new victims, putting the total value of the scheme into hundreds of millions of dollars over the years. Making matters worse, victims are often encouraged to incur personal debt to pay Booth. Records show that Booth even provided discounts to victims who weren’t able to pay the entire $200,000, with what they called “scholarships”.
The investigation was set off by former Dean Sunil Kumar’s sudden departure. Smelling blood in the water, the top administrator at Booth is rumored to have been scared into an early departure from his preeminent position. So concerned was he for his safety and security that he took a lesser position at a community college in Baltimore, Maryland.
“We started investigating when we heard Kumar had left,” said Kipke. “It made no sense to us that he would step down from Booth, especially just as it was being recognized across the world as the best business school in most categories.”
But it was accounting mastermind Doug Skinner that resumed the pyramid scheme right where Kumar left off. “You’ve never seen financial statements so masterfully manipulated. We didn’t know where to start,” said Kipke. “I guess in hindsight, there was no reason for Booth to have hundreds of millions of dollars in capitalized leases.”
Despite the Ponzi scheme, Booth graduates are actually among the most sought-after MBA candidates in the world. Investigators attribute the Ponzi scheme’s success to the quality of the social environment that administrators created at the school. Their use of costume parties, free coffee and biscotti, and cleverly named Friday afternoon happy hours were enough to keep the victims blissfully ignorant.
Patrick Burke is a second-year MBA student at Booth. He is grateful for Dean Kole’s sense of humor over the past 18 months and still wants his signed piece of paper in June.