Insurance producers should be leery of managers who push them to “find the gray areas to increase the corporate bottom line,” John Borbi warned them recently.
Borbi should know. A former financial advisor and investment specialist, he went from being one of the nation’s leading advisors, managing close to $100 million dollars for his clients and ranking in the top 1 percent nationally, to becoming a financial thief and spending two years in federal prison in West Virginia.
Borbi noted from his first-hand experience how easy it to “go down the wrong path.” When someone breaks the law by speeding, talking on a cell phone while driving, or stealing office supplies, it’s easy to justify those actions. But what happens every time someone crosses the line is that it becomes easier to justify those decisions, and the line keeps moving, he said.
In sharing his story with the insurance community in San Francisco, Borbi said he hoped others would learn to better manage their own moral and ethical dilemmas.
California requires all fire and casualty broker-agents and life agents to complete four hours of ethics training during their two-year license term. Personal Lines broker-agents are required to complete two hours of ethics training during their two-year license term, according to the state Department of Insurance.
“John got our attention because it’s ethics awareness month, and he presented the perfect message that fits that theme,” said Louise Monforte, underwriter for Risk Management Services at XL Group, and also president of the Chartered Property Casualty Underwriters Society Golden Gate Chapter. His lesson [for insurance the insurance industry] is to “not let greed get in the way [of doing what’s right],” she said.
Borbi, formerly a securities broker and investment advisor employed by MML Investor Services Inc., said he started out as an investment specialist because he enjoyed trading stocks ever since he was a teenager and he wanted to help individuals grow their personal income. “Society teaches us that if we’re passionate about something, we’ll be successful at it,” he said.
This proved to be true. As Borbi helped invest others’ money, he simultaneously grew his own income from $28,000 in his first year to $60,000 by his second year, $120,000 his third year, and eventually $500,000 within seven years. Because of that success, he also was asked to manage and train 140 other employees in his company. With such an excessive income and track record in advising others, Borbi said he “grew into an ego-driven person who had filled his head with all of this pride and ego. Greed became an addition.” He thought nothing of spending an entire two-week $44,000 paycheck in one weekend in Las Vegas, as an example.
Yet Borbi’s moral code was tested in 2001, when the stock market fell. One of his clients wanted to withdraw $50,000 that he no longer had in his account because of investment losses. And instead of admitting that his investment portfolio choices had lost their value, Borbi said he instead began to cover the client’s losses by transferring assets illegally from another customer and committing wire fraud. He said although he knew what he was doing was wrong, he justified his action because his pride and ego led him to believe that he would make up the losses without the customers noticing.
“Society teaches us that next year will always be better,” he said. “Tomorrow is always around the corner, but that doesn’t allow us to enjoy what we have today.”
Within a seven-month period, Borbi transferred close to $500,000 and was caught when his biggest client noticed the illegal transfers. Yet even when he admitted his guilt, Borbi said it took prosecutors two years to sentence him, because they saw him as a model citizen.
“Because [people thought] I would never commit that crime, I was the perfect person to commit the crime,” Borbi said, noting he was in the top of his class in college, in the national honor society, well-liked, and even the compliance officer within his firm.
Eventually, however, his crime led to a 30 month sentence in federal prison, in which he served from 2004 to 2006 in West Virginia — not a white collar crime facility. Instead of living in a 4500-square-foot home, Borbi lived in a 40-square-foot space, slept on a steel bed, and lived off prison food plus the 12 cents per hour he earned teaching a GED course in prison. He said he lost everything, including his wife, and is required to pay back his clients’ losses and taxes.
“I stole $500,000 and people said I was a good guy who just made a mistake,” Borbi said. “If I went down the street to the Wells Fargo and robbed the bank of $500,000, I’d be in jail [immediately,]” he said. So he emphasized how small decisions can lead into big problems and potentially turn into a public relations nightmare for a corporation.
“The law of large numbers says someone you know will wear this suit,” Borbi said, holding up the orange jumpsuit he wore while in prison. “I had everything, yet money consumed and controlled me and took over my life,” he said. “Someone in this room may be going down that path.”
Borbi recommended everyone “examine daily choices we all make that may be unethical and then explore how we all find ways to justify our own decisions, even though they may be unethical.”
Borbi was the keynote speaker at the Chartered Property Casualty Underwriters Society Golden Gate Chapter’s 61st Annual All Industry Day held March 12 in San Francisco. Read more about his experiences at www.toughlessons.com.
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