Patrick Kuhse, Former International Fugitive and Convicted Felon, Addresses HBS Students

Patrick Kuhse first started to feel dissatisfied at Arizona University. The Iowa country boy joined a fraternity where he confronted the painful contrast between his plain replica watches ordinary roots and his friends’ wealthy families.

Despite growing up in a “very tight family unit” Kuhse began to believe, “I didn’t grow up so good.”

As he began to comprehend the power of wealth, envy and desire captured Kuhse’s consciousness until he began to feel entitled.

Wasn’t he just as deserving, after all, of all that wealth as his friends? As he lived and traveled with his fraternity brothers, the desire to become wealthy eclipsed everything that had ever been important to Kuhse, including family. Finally, too impatient to wait until graduation //, Kuhse dropped out of college and went to work as a salesperson at a securities firm.

During his first few weeks in his new office in New York City’s Chrysler Building Kuhse remembers thinking, “These people are obsessed with money – they never sleep!” His new peer group was filled with 50 to 60 “hard chargers” and “type As.”

“I thought I had finally died and gone to Heaven,” he said.

The group soon ran into a little problem. The company presentations didn’t always get them the sale because details that were disadvantageous to some customers were clearly spelled out. This was troublesome because they weren’t making as much money as they could if the “deal killers” weren’t there. The solution was simple enough – just delete those details from the presentations.

Their incomes quickly responded in a positive way.

The group’s rationalization process centered on the fact that technically they weren’t lying – if a client asked about those details they would certainly divulge them. But if no one asked, no information was given and all was fine until their “details” wreaked havoc on retirement plans, new house purchases, college tuitions, weddings, and other “details” that ordinary people had planned into their lives.

At this time, Kuhse did not “consciously think about ethics. It was like I was pulling a veil or curtain over my consciousness.”

In 1986 a financially successful Kuhse moved his wife and two kids to San Diego where he opened his own financial practice making $225,000 per year. “I had surpassed everything I had ever visualized as a teen,” he said.

But it wasn’t enough, so he started working with professional athletes, who
had far more money to invest. In 1989, he received a fateful call.

This is how it starts.

According to Kuhse, it will come from someone close to you – a good friend, a family member, someone you respect. In his case one of his branch managers from Oklahoma called him up and told him she might be quitting if a friend of hers was successful in a bid for State Treasurer because she would be appointed to a position in that office. Would Kuhse like to be her deputy bond trader for Oklahoma’s “general fund”, which later turned out to contain $9 billion?

Unfortunately things were not that simple, and he found himself agreeing to pay her kickbacks for the preferential treatment of deals. Soon, they found a way to increase his commission rate from less than one percent to 4.75 percent (5 percent was the maximum allowed under the law). The problem? It complied with the letter, but not the intent, of Oklahoma law.

So they left the .25 percent for the state, trying not to be greedy.

Kuhse’s message to the HBS student group was that a seemingly unimportant decision is usually what sets the unethical behavior in motion. Short-term thinking, arrogance, a need for instant gratification, and an overly optimistic view of his chances of not being caught all helped cement his decision to go ahead with the scheme, as did the rationalization that everyone in government “was on the take.” Why not him?

Of course, he was only going to do it for a few years and get out.
Two years later, a disgruntled former state employee ruined Kuhse’s plans by going to the FBI and revealed the wrongdoing.

During Thanksgiving week, 1993, the FBI showed up at his door at 6:00am demanding information. Nightline also ran a story, causing clients from all over the world to personally fire him over the telephone the next morning.

Kuhse started a cat-and-mouse game with the authorities that began with him gathering his family and fleeing to Costa Rica where Interpol, armed with big guns, finally caught up with him – but did not catch him – because his wife used their dog to hold them off at the front door while he escaped out the back. Asked why Interpol didn’t catch him, Kuhse said, “’cause I was hauling ass.”

Kuhse and his family continued to evade the law until they ran out of money two and a half years later, at which point his wife took the two kids and left him, catching a flight back to the U.S. Kuhse’s “crash” came as he watched his family climb on the plane while he stayed behind with his bodyguard. Seven months later, he turned himself in and went back to the U.S. to serve time in prison.

After serving four years, Kuhse is on probation and travels the country giving talks in an effort to earn the $3.89 million restitution that he owes the state of Oklahoma. Kuhse reimburses the state at a rate of $150 per month.

Asked if an ethics class, such as HBS’s newly required course being taught next semester under the instruction of Professor Lynne Paine would have changed the course of his life, Kuhse hesitated. He’s been to ethics classes that philosophize and “they’re boring.” However, he suggested, the impact of having outside speakers come in could be significant. “Harvard could get anybody to come here – you should take advantage of that,” he said.

Reached late Thursday evening, Professor Paine said that the idea is being considered.

“Now is the time to raise your ethics to the concourse level,” Kuhse told the students as he concluded his presentation.