The Role of False Memories

The Role of False Memories

Elizabeth Loftus’s research into human memory sheds light on the whistleblower’s long battle with her accused wrongdoers over their recollections of events. 

In “Brief Exposure to Misinformation Can Lead to Long-Term False Memories” study participants were shown slides depicting two incidents – a man breaking into a car and another man taking a woman’s wallet.  Thirty minutes later some participants were given false narrations of the incidents (e.g., the man placed the wallet in his jacket rather than his pants).  The participants were asked shortly afterward what they remembered from the incidents, and 1.5 years later they were asked again.  Loftus and her fellow researchers found that the mistaken memories were retained just as well as the correct memories were.

In “Make-Believe Memories,” Loftus observed that memories are malleable.  After-the-fact suggestions can contaminate what is recalled, and false memories can be implanted as though true.  Her controversial conclusion has been that eye-witness evidence of a wrongdoing – say, sexual abuse, corporate misfeasance, or individual misbehavior on the job – is not reliable on its own.

Attorney Joanne Hoeper disclosed fraudulent billings of sewer repairs and was fired by the City of San Francisco.  After a jury decided unanimously to award Hoeper $2 million at the end of her three-year long retaliation suit in March, the City’s attorney said, “We are surprised and disappointed.  We take our responsibilities to our clients and to the public seriously.”  In this instance, her recollection held.  Hoeper celebrated, “The 12 jurors looked at the same thing I saw back in 2012.” 

Sometime around 2005, Wells Fargo Bank began to form its narration of employees who revealed the opening of false customer accounts: they were not friends of the bank.  The creation of up to 2 million unauthorized accounts continued, of course.  By the time of its $35 million settlement with the U.S. Comptroller of the Currency in 2016, the bank was proud to say it “neither admits nor denies” an assortment of misbehaviors, including having engaged in reckless, unsafe or unsound banking practices that were part of a pattern of misconduct.

Corporations accused by the government of wrongdoing frequently settle the matter with the payment of a large sum of money but without admitting they did anything wrong[1].  Wells Fargo’s recollection of the facts was so well shaped – and so contrary to, for example, Senator Elizabeth Warren’s view which calls for criminal prosecution – that its board-sponsored investigation could conclude the problem was merely one of lax oversight, particularly on the part of former CEO Stumpf and former head of Community Banking Tolstedt.  There was no evidence, the report said in a passing footnote, of systematic retaliation against the employees the bank hurt after they reported the misconduct.

In my dance with HomeFirst, two sorts of recollections came into play.  The first was small and discrete: in August 2013, shortly after I disclosed the County overbilling externally and the licensing violation internally, the board’s executive and finance committee members met.  There, Board Chair St. John-Crane told me not to reveal any more problems externally. 

Separately after the meeting, Audit Committee Chair Scordelis confirmed the directive, but he encouraged me to talk with him on such matters.  A November letter from Scordelis and St. John-Crane (responding to my whistleblower complaint to Scordelis) again tacitly affirmed the directive.  The day after my March 2014 admission that I had reported the bid collusion issue externally, Board director Chin suggested to other directors that I had disobeyed the order.  St. John-Crane then informed their attorney that the board members had decided I should be fired for insubordination.

The attorney warned that the word “insubordination” should not be used when dealing with a whistleblower.  The facts then changed.  When St. John-Crane recalled the August incident three weeks later, she had not told me not to report compliance problems; quite the contrary, compliance was a top priority.  HomeFirst’s recollection continued in that vein a year-and-a-half later in their response to my retaliation complaint.

A second, more conventional strategy for molding memories is the organization’s repeated pronouncement of its honesty and integrity.  Faced with a new lawsuit relating to its improper opening of customer accounts, this time on behalf of immigrants, Wells Fargo declared, “These allegations are inconsistent with our policies, values and the relationships we work hard to build with all parts of our community.”  Echoing HomeFirst’s reaction to my complaints, Wells Fargo felt, “These assertions are offensive.”  The bank had similarly proclaimed its virtue in this matter in 2013, 2015, and 2016.

Since 2003, HomeFirst has publicly declared as its purpose to end homelessness in Santa Clara County.  Also since 2003, the company has advertised the value of the housing first model it says it employs today to house the homeless.  The fact that area homelessness remains epidemic has not discouraged HomeFirst’s insistence on the value of its work. 

Like Wells Fargo’s delusional assertions – perhaps made with an eye toward a defense against possible lawsuits – HomeFirst’s contentions would be of no consequence if they were not reflected in public policy.  But Santa Clara County and HUD both relied on their recollection of HomeFirst’s good work to defer demanding repayment of money unfairly taken from them by HomeFirst.

While whistleblowers are no less susceptible to misremembering the past, the scale and reach of organizations enables them to use flawed descriptions to do far greater harm to those who challenge them and to the public in general.  The cases of Bill Bado, the whistleblower whom Wells Fargo fired, and the people associated with the 2 million accounts that Wells Fargo opened without proper authorization provide examples of that organizational misuse of power.

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[1] Cf. Khuzami, Robert.  “Testimony on ‘Examining the Settlement Practices of U.S. Financial Regulators.’” Committee of Financial Services, U.S. House of Representatives.  May 17, 2012.  See also the recent case of whistleblower Dr. Lance Garber.

Whistleblowing and Sisyphus

Whistleblowing and Sisyphus

The whistleblowing project can be a depressing one.  Initially, it is far from that: we find it exciting, challenging intellectually and emotionally.  The thrill stems from our sense that we are doing something good and we demonstrate a moral courage that others lack. 

Maybe it remains exciting for big-time whistleblowers, who receive media attention and whose complaints are echoed by millions.  I wouldn’t know.  Media had no interest in my case; authorities didn’t care, either.  The National Whistleblower Center didn’t respond to my email.  I attended no congressional hearings about my complaints, and I published no much-read opinion pieces. 

For me, the project became the long slog it is for all who don’t reach a quick settlement.  Soon after I filed my wrongful termination complaint with the State of California, I was told that it would be acted on within 6-8 months.  Instead, 15 months passed before my case was assigned to an investigator.  It took her 6 months to write a report, which has been under review for 7 months now, as the third anniversary of my termination approaches.

Many whistleblowers keep fighting for years.  Some continue unsuccessfully until no court remains to which they can appeal or they have run out of money.  But others, seeing the battleground ahead of them, just give it up.

Nothing came of my ten disclosures of suspected wrongdoing.  Even where there was no debate – the HUD and Santa Clara County overbillings, for example – the government agencies took no action against the company.  They considered HomeFirst too valuable to disturb with retribution.  Instead, the County granted the company a bail-out so it could make its payroll and then advanced more money on its contracts.  HUD stopped replying to my FOIA requests about the repayment that the company claims it continues to negotiate ten years after discovery.

Today, only a handful of HomeFirst’s 14 Board members and few current employees would recognize my name.  My retaliation complaint is reduced to a one-sentence mention in the company’s audit report.  It is common, of course, for boards to shuck their whistleblowers: a footnote to Wells Fargo’s 110-page internal investigation report said it discovered no any intent to harm those who objected to fraudulently opening customer accounts; the HomeFirst board considered my complaint of retaliation and found no big problem.

My whistleblowing project failed in key respects – it achieved nothing beyond causing me pain.   But I had reason to expect failure.  Like nearly all whistleblowers, I sensed what I was getting myself into before I started.  Arguably total failure is unique to my case or perhaps to small-time whistleblowers in general.  But I don’t think so.

Daniel Ellsberg, for example, ranks among the most famous of U.S. whistleblowers for his 1971 disclosure of the Pentagon Papers, which revealed government lies in support of its conduct of the war in Vietnam.  However, by the time of his disclosures the public had already endured years of vocal protests that caused President Johnson not to seek reelection in 1972.  The bombing of North Vietnam, which Ellsberg hoped to stop, continued well after the disclosures, and the U.S. did not withdraw from Vietnam for three more years.  From this perspective, Ellsberg achieved nothing at all.

The case of Eric Ben-Artzi demonstrates that even a multimillion dollar win against a big international bank can feel like failure.  Another high-ranking whistleblower, Sharon Watkins, who blew the whistle on Enron’s fraudulent accounting, “succeeded” only by causing the collapse of a 10,000-employee company and its top-tier auditor.  Ellsberg, Watkins and Ben-Artzi have since converted whistleblowing into speaking opportunities, if not whistleblowing successes.

Whistleblowing is, at base, meaningless; it is absurd.  We can hope to drown out that absurdity by blathering about how we will make the organization or the world a better place.  We can praise the heroism of the whistleblower, but the absurdity of the role remains. 

The only path available to one who is conscious of an organizational misdeed – and not every observer is conscious of the wrong – is a sort of death.  She may kill her career by speaking out or her moral self by remaining silent.  Whistleblowers revolt through our disclosures.

In The Myth of Sisyphus, Albert Camus wrote of the person who faces the meaningless absurdity of life without yielding to the temptation of suicide, “That revolt gives life its value. Spread out over the whole length of a life, it restores its majesty to that life.”  He declared three consequences of the absurd: “my revolt, my freedom, and my passion.  By the mere activity of consciousness I transform into a rule of life what was an invitation to death—and I refuse suicide.”

The whistleblower’s motivation comes not from the moral egoism that C. Frederick Alford identified in his whistleblowers but from a choice to live.  That is our revolt, freedom, and passion.

Fighting Secrecy

Fighting Secrecy

Defenders of whistleblowing support their argument by pointing to the individual’s right to free speech and the social benefits that result from whistleblowing.  They contend that when whistleblowers shine a light into dark spaces we all benefit from what is seen.  Notwithstanding their justifications, it is a deeply opaque business when organizations demand confidentiality, as the case of Ben Barlyn demonstrates.

Following 11 years as New Jersey Deputy Assistant Attorney General and 2 as head of the State Commission to Review Sentencing, Barlyn joined Hunterdon County (New Jersey) as Assistant Prosecutor in 2007.  In May 2010, Hunterdon County Sherriff Trout and two of her staff were indicted after a grand jury identified 41 counts of official misconduct and other crimes.  Governor Christie, who had political ties to Trout, put his Deputy Attorney General O’Grady in charge of the Hunterdon Prosecutor’s Office, and the indictments were dropped three months later.

On August 23, 2010, Barlyn approached O’Grady and objected to his dropping an ironclad case for, he believed, political reasons.  The next day he was suspended and escorted out of the building.  On September 15, he was fired.

When Barlyn sued for wrongful termination, he requested copies of the grand jury evidence.  The State fought the request and suit for three years.  Then interest in the case was displaced by the Bridgegate scandal – in which Christie appointees conspired to cause a traffic jam in Fort Lee, New Jersey, as reprisal for that mayor’s refusal to endorse Christie for reelection.

In early October 2016, the public learned of Barlyn’s settlement with the State of New Jersey, which agreed to pay him $1.5 million after expending $3.8 million for its own legal fees.  The contents of that settlement, however, were concealed by a confidentiality clause in the agreement.  The following week, the New Jersey Assembly began work on Bill 4243, which would require that settlement agreements and related claims involving government employee whistleblowers be made public.

The New Jersey law, which still requires a Senate vote, covers only government employees and, of course, applies only within the state.  Nationally, the Securities and Exchange Commission has addressed confidentiality requirements embedded in the employment agreements of publicly traded companies.  In April 2015, the SEC announced an enforcement action against KBR Inc., its first defense of whistleblower protection.  

KBR had warned witnesses in certain internal investigations that they could face discipline and even be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department.  That confidentiality could impede the investigation of security violations, giving the SEC authority under the Dodd-Frank Act to intervene.

Since the KBR case, the SEC has challenged other companies’ confidentiality stipulations, including severance agreements at BlueLinx, Health Net, Merrill Lynch, and Anheuser-Busch InBev, and an undisclosed matter at Barnes & Noble.  But its interest in confidentiality is limited to securities-related issues at public companies.  Further, its ability to investigate confidentiality agreements is severely constrained by its limited resources to pursue more than 4,000 whistleblower tips a year.  It is, then, an open question whether other companies – for example, Wells Fargo, Advanced Micro Devices, and Fifth Third Bank – have violated SEC guidelines in their severance agreements.

Why do confidentiality agreements offend?  My attorney advised me that the deal he arranged with HomeFirst was typical of settlement agreements he worked on.  What he proposed included:

“Veuve agrees to regard and preserve as confidential and will not divulge, at any time after his employment, information, or anything of a secret, confidential, or private nature connected with the business of HomeFirst without the written consent of HomeFirst’s Board President, or unless required to do so by legal process or court order.  Included within the meaning of the foregoing are matters of a technical nature, such as computer programs, software and documentation; matters of a business nature, such as information about programs, costs, profits, markets, and employees (including salary, evaluation, and other personnel data); plans for further business development; and any other information of a similar nature.

“Veuve agrees that he will make no disparaging comments about HomeFirst, its officers, directors, or employees. Veuve agrees that he will not speak or write disparagingly about any programs of HomeFirst, nor will he encourage others to do so.

“Veuve acknowledges the confidential nature of this release, and agrees that the existence and terms are to be treated as confidential.”

These agreements can be infuriating.  This one angered me, anyway, by threatening me with a lawsuit if I ever said anything about my experience at HomeFirst.  The millions that the State of New Jersey paid for legal fees fighting Barlyn is one example of the expense that organizations are willing to incur in dealing with their whistleblowers.  After I refused their offer, HomeFirst sent a letter in March 2015, responding to my continued pursuit of my complaints, threatened lawsuit again.

Other than commonly ignored internal policies, the two main approaches to encouraging whistleblowers have been penalties imposed on organizations that retaliate against whistleblowers and rewards for relators from the fines and penalties imposed on wrongdoers.  These approaches fail to recognize whistleblowing as a game of information. 

New Jersey’s Assembly Bill 4243 and the SEC’s actions against restrictive employee agreements are two examples of ways in which the effectiveness of whistleblowing can be enhanced by promoting the flow of information.  Over the past 40 years, disclosures have increased as supportive technologies have advanced. 

In 1969, Daniel Ellsberg laboriously photocopied batches of 7,000 pages of the Pentagon Papers and concealed them in his briefcase as he left his office each night, but Edward Snowden and Chelsea Manning were able to copy electronically hundreds of thousands of classified documents in moments.  From my office desk, I reviewed emails of the HomeFirst CEO colluding with the President of a competing nonprofit and planning with the Board to fire me.  Although documents may be disclosed through trustworthy established media, they can also be released anonymously through Wikileaks, which claims to have a store of 10 million documents, and an assortment of other sites.

As new technologies emerge, whistleblowing is likely to increase.  Government agencies can boost the effectiveness of these disclosures by publishing on a timely basis more information about complaints.

But agencies too often stumble in reporting these matters.  An example: the 2014 Retaliation Complaint Report (the most recent available) of the California Department of Industrial Relations, with whom I filed my complaint, stated that it had closed 1,508 cases in the year.  Of those, only 227 resulted in determinations by the Department and just 47 – 3% of closed cases – concluded in favor of complainants.  Details about the parties, complaints, and final actions are not published.

Actions by the New Jersey Assembly and the SEC illustrate how more information about whistleblower complaints can serve the public interest.  Although they might do more, states and federal agencies can continue this work by promptly making available to the public detailed decisions and settlements relating to whistleblowers.

When It Comes to Nothing

When It Comes to Nothing

As it faced newly mandated blood testing expenses of more than $1 million a year, the Blood Bank of Alaska announced in 2008 that it would construct a modern Anchorage facility to consolidate its operations and allow space for in-house blood testing.  The building cost, which would eventually run to $45 million, would be paid, management planned, with government grants, private contributions, and the sale of its existing building.

In 2012 – when the building was still four years from completion – Robert Scanlon was hired as BBA’s CEO, and Linda Soriano began working as a consulting grant writer for the company.  BBA’s employment level then began a steady decline, dropping from 120 to 80 in 2016.  Hit by Alaska’s oil-impacted economy, fundraising was not going well, so in 2015 BBA arranged for an $8.5 million loan to cover the final construction costs.  The loan threatened the strapped nonprofit with $450,000 in annual interest costs until it could be paid down; still, it was necessary at that point.

Blood banks occasionally arrange to sell units of blood to other operations rather than let them expire, but BBA went further.  Serving hospitals across the state as the only blood bank in Alaska, in 2015 the company contracted to sell to southern California-based LifeStream one-sixth of its weekly blood collections.  Now an employee, Soriano was skeptical of the arrangement, especially given the low blood stocks that she observed in BBA’s inventories and the company’s urgent calls to blood donors.

Also questionable for Soriano, in light of BBA’s difficult financial situation, was the misleadingly optimistic budget she was given to provide to potential granting foundations.  She informed the CEO that false reports would be fraudulent, and she refused to participate in such deception.  The information seemed to her to confirm the company’s reluctance to be transparent in its communications.

Soriano took her concerns to a BBA board member, staff at a foundation, the Alaskan Director of Public Health, and, finally, the Alaska Journal of Commerce, which published an article in July 2016.  Rather than addressing the problems, management retrenched and attacked those who were critical, she thought.  The following month she sent her complaint to the U.S. Food and Drug Administration, which oversees blood banks.

Soriano’s story presents many familiar aspects of the whistleblower’s experience.  Like HomeFirst, BBA was a company under pressure that cut some corners; like me at HomeFirst, Soriano was an individual unhappy with her workplace who identified possible problems; she took her concerns to senior management, to authorities, and then to the media.  She was unusual in that she collaborated with other employees to compile her complaint.  Also unusual, she resigned shortly after sending her letter to the FDA and before she was identified by management as a whistleblower.

HomeFirst’s board quickly dismissed my complaints, and a special investigating committee of the BBA board concluded that Soriano’s allegations were without merit.  When the FDA conducted its annual audit of BBA operations in March 2017, it found no irregularities and no support for Soriano’s claims.  Authorities reported that HomeFirst broke no rules after allowing the company time to fix its licensure and food handler card problems; my other complaints were dismissed or ignored.

The whistleblower begins his project by identifying suspected a misdeed.  The value of his stepping forward is cast in doubt when his accusations are not found convincing – whether because of biased investigators or insufficient evidence of a violation.  Why he put himself through the painful ordeal and whom he really hoped to benefit then become unclear.  It is little wonder that friends and family abandon him if they suspect that his charges are probably groundless, just as his accused suggests.

Although Soriano’s complaint described dubious business practices, it did not clearly call out current criminal acts.  As a result, Alaska’s limited whistleblower protections might well have left her vulnerable to attack if she had remained an employee.  Her subsequent public notoriety exposed her to the danger, common even to whistleblowers protected by law, that she would be unable to find a new job in the small Anchorage market.

Soriano’s gamble that her act – her disclosure – would amount to nothing is one that we all take all the time.  But whistleblowing makes that risk obvious to an array of people who are not our friends.

Whistleblowers can usually point to the scars from retaliation as proof of our fearlessness.  Whatever legal wins we achieve seldom compensate us fully for our losses.  Soriano gave up that slim chance of vindication and bet all on being right in her claims.  Then, it seems, she lost that wager, and the world moved on.

The whistleblower’s challenge remains how to stand up despite our justifiable fear – even our expectation – that nothing will come from our complaint and we will suffer as a consequence.  The narrative that belongs to us is not that of the hero who triumphs over evil but of Camus’ dogged Sisyphus.