Bernard Madoff who bilked investors of billions of dollars, was sentenced in 2009 to 150 years in prison. (Lucas Jackson/Reuters)

Renae Merle covers white collar crime and Wall Street for The Washington Post.

When Harvard business school professor Eugene Soltes set out to discover what motivated white-collar criminals, he unearthed something quite telling — and troubling — about self-perception. For his book, “Why They Do It: Inside the Mind of the White-Collar Criminal,” Soltes spent years trading letters and phone calls with dozens of former business executives turned convicts, including Ponzi-scheme legend Bernard Madoff; the former chief financial officer of Enron, Andrew Fastow; and the former chief executive of Tyco International, Dennis Koz­lowski.

In many cases, Soltes finds, the perpetrators struggle to understand their wrongdoing even after spending years in prison. After all, they hadn’t murdered or robbed anyone, and their victims were not right in front of them. “None of the former executives I spoke with saw himself as a fraud,” Soltes writes. “Some, of course, clearly recognized that they had committed a crime, but the person they saw in the mirror was successful, entrepreneurial, and ambitious.”

"Why They Do It: Inside the Mind of the White-Collar Criminal," by Eugene Soltes (PublicAffairs)

Many of the cases Soltes chronicles have already been examined extensively in movies and books. But he takes a unique approach, looking for the connections between what motivated these men — and yes, they are all men — and asking not what they did but why they did it. The former executives said they were largely driven by their instincts and didn’t see the criminality of their actions.

Soltes creates some fascinating portraits. Some of the men appear stunned that their actions were in fact criminal. They had been boardroom celebrities, backed by the confidence of shareholders and employees, and they believed they could do no wrong.

That is certainly the case with Fastow, the former star CFO of Enron, who was a key player in the complex web of off-balance-sheet special-purpose entities the Houston energy company used to conceal massive losses. Fortune magazine had named Enron America’s most innovative company for six straight years, and Fastow was CFO of the year in 1999. “My intentions were good. I was trying to do what was best for Enron, but the way we as a company defined success was incorrect,” Fastow said.

Enron had a problem, and Fastow found an “anomaly” in the law that he thought allowed him to fix it. And when regulators and the company’s auditors didn’t push back, Fastow did it again and again, until, finally, Enron was forced to file what was then the largest bankruptcy in U.S. history. Fastow, once one of the most respected corporate executives in the country for his seemingly brilliant ability to keep Enron’s profits steady and rising, is now clear about the cause of his undoing. But at the time, he told Soltes, he was driven by a desire to be the best at his job. “If I had the character I should have had, I would have said time out . . . but I didn’t. But the reality is, if at any point in my career I said ‘time out, this is bull----. I can’t do it’ . . . they would have just found another CFO, but that doesn’t excuse it. It would be like saying it’s OK to murder someone because if I didn’t do it someone else would have,” explained Fastow, who served six years in prison.

In his interviews with Soltes, Kozlowski appears needy and insecure. He wanted the “rock star status” of Jack Welch, the legendary chief executive of General Electric, and began to emulate him. Kozlowski built Tyco into one of the world’s largest companies through acquisitions across various industries, including undersea telecommunications systems and electronic security. He ultimately became a symbol of corporate greed, exemplified by the $6,000 shower curtain in his Fifth Avenue home in New York and the $2.2 million party he threw for his wife on the island of Sardinia. Even after he was convicted of grand larceny, conspiracy, securities fraud and eight of nine counts of falsifying business records, Kozlowski continued to look outward for excuses. “Every CEO before me” had used company funds in a similar way, he argued.

Of all the criminals Soltes interviewed, Madoff is the most irredeemable and most difficult to understand. His crimes have been well chronicled in at least half a dozen books, and Soltes doesn’t come any closer to explaining one of the greatest Ponzi schemers in history. For five years, he corresponded with Madoff, who is serving a 150-year sentence for bilking billions of dollars from investors. At no time did Madoff express remorse; he dismissed the financial distress of his victims as overblown. “It’s not like going into a bank with a gun and saying ‘give me your money’ and running out. All I did was make rich people richer and I made some rich people poorer, but not poor. . . . When I was generating all these profits, a lot of these clients were throwing caution to the wind,” Soltes quotes Madoff as saying.

Madoff’s inability to empathize with his victims is bad enough, but his disregard for the pain he caused his family is stunning. When his son Andrew died of cancer, Madoff called Soltes and asked him to read the obituary. Soltes, feeling the weight of the moment, says he read Madoff the article and did his best to be compassionate. But Madoff was soon distracted. “Shortly after finding out his son had died, Madoff wanted to discuss interest rates. . . . In some way, it almost seemed as though I was more personally moved by the death of Andrew in those moments than his father.”

Madoff can be dismissed as an oddity, so heartless that he drags down the curve of white-collar criminals. What is left are men driven by ambition and greed who failed to see the difference between crime and smart business tactics, usually because they weren’t looking for it and assumed they were too smart to cross the line.

Why They Do It
Inside the Mind of the White-Collar Criminal

By Eugene Soltes

PublicAffairs. 448 pp. $29.99