DUMB AND DUMBER
This week: Drunken Behavior and Sleazy Yeezy Knockoffs
Happy Friday! Happy Happy Hour!
Here's my roundup of the dumbest moves in the world of business this week, and also something wonderful.
DUMB — PR FIRM FAILS OWN PR
We've spent much of the last year stuck at home consuming copious amounts of booze. God knows I did. We’ve lost some social skills.
This may explain what happened to Declan Kelly.
Kelly was the CEO of Teneo, a corporate consultancy firm which advises big companies on how stay out of trouble.
He got into trouble.
Kelly attended a “high powered charity event” for Global Citizen in May, chaired by Prince Harry and Meghan Markle, because you can’t get away from them.
At the event, witnesses say the CEO was drunk and “behaved inappropriately toward some women and men,” behavior which included “non-consensual touching of a number of women.”
Kelly stepped down from the board of Global Citizen the next day, but we didn’t hear anything about it until the Financial Times did a big story last week.
That’s when things went south.
GM cut ties with the company. The Detroit Free Press says GM was paying Teneo $250,000 a month on retainer. That’s $3 million in annual revenues which instantly vanished.
Kelly resigned after the news broke. He has apologized, taken responsibility for what happened, and he's promised to stop drinking.
I hope he gets healthy. My issue is with Teneo for trying to sweep the incident under the rug until reporters found out.
For a firm hired to handle crisis PR, it gave itself bad advice.
DUMBER — TRUMP CFO ACCOUNTABLE FOR FUNNY ACCOUNTING
I’m no tax genius, and I’m certainly not a veteran CFO of an (allegedly) multi-billion dollar company, but even I recognize that if my boss pays for my rent, cars, tuition, and flat-screen TVs, that might constitute a form of income!
The Trump Organization and its CFO, Allen Weisselberg, are charged with “the crime of SCHEME TO DEFRAUD IN THE FIRST DEGREE” (caps not added, that's just how they scream at you in court documents). Charges also include conspiracy in the fourth degree, grand larceny in the second degree, criminal tax fraud in the third degree, etc.
It’s a lot of counts of VARYING DEGREES.
The New York AG and Manhattan DA claim Weisselberg received $1.76 million in freebies over several years and covered it up to avoid paying $1 million in various taxes, which is a 57% tax rate. Yowza!
Perhaps the dumbest part of this (alleged) SCHEME TO DEFRAUD IN THE FIRST DEGREE is that the Trump Org (allegedly) kept internal spreadsheets detailing the freebies as compensation. Brilliant!
Of note: the charges are not coming from the IRS, which is, you know, in charge of tax compliance.
However, this is not the great smoking gun which will take down the Trump Organization. I get the feeling Trump’s own children will turn on him before Allen Weisselberg does. “Mr. Weisselberg has served as the Trump Organization’s financial gatekeeper for more than two decades,” according to the New York Times.
He’s no Michael Cohen. If Cohen is Tessio, Weisselberg is Clemenza. No, wait. He's Luca Brasi.
DUMBERER — WALMART STEPS ON YEEZY’S SHOES
Walmart is worth $400 billion on the stock market.
But Yeezy is a $2 billion god.
The world’s largest retailer may have knocked off the wrong product when it started selling an alien-looking, Croc-like foam shoe which looks very much like an alien-looking, Croc-like foam shoe sold by Kanye West.
The Yeezy Foam Runner sells for $75-$80 and is very popular on the resale market. The Walmart knockoff starts as low as $21.99. Kanye is concerned buyers will confuse the two, confusion that will cost him “hundreds of millions,” so he’s suing. Hundreds of millions? Have you seen these shoes?
Walmart told the New York Post that the shoes are from a third party, so… I guess that’s a defense. “We take allegations like this seriously and are reviewing the claim.”
This is just the latest spat between the two. It all started in April, when Walmart sued Kanye's company over a logo he wants to use which looks similar to Walmart's sunburst logo.
Kanye replied to that lawsuit in court papers this week with, “You’re kidding, right?” What his lawyers actually wrote is, “Opposer (Walmart) certainly knows, as does the consuming public, that the last thing Applicant (Kanye) wants to do is associate itself with Opposer.” Or with a poser.
Why did Walmart even start this war? If Kanye West wanted to knockoff my logo and confuse people into thinking that he was affiliated with my brand, I WOULD POP THE CHAMPAGNE. IN THE FIRST DEGREE.
DUMBERERER — ROBINHOOD’S EXPENSIVE GROWING PAINS
So you decide to gamify the stock market and charge nothing to trade and make it cool for the kids, and then suddenly the kids are losing loads of money on GameStop and their accounts are frozen and one commits suicide after you greatly exaggerate how much he owes you.
Robinhood has to pay $70 million for screwing up big time in 2020 as its platform became phenomenally popular during the beginning of the meme stock craze. At one point it froze the ability of customers to sell and get out of losing positions because Robinhood didn’t have sufficient funds to handle the avalanche of trades. A lot of people lost a lot of money.
It is the largest fine ever imposed by FINRA, a self-regulating organization for the financial industry.
FINRA says Robinhood misled customers and failed to keep people off the site who had no business trading options.
Of the $70 million fine, $57 million goes to, um, I’m not sure, the regulators? And then nearly $13 million goes to thousands of customers, the people who actually suffered. You think it would be the other way around, and $57 million would go to customers, but who am I kidding?
DUMBERERERER — THE OLYMPICS TAKE A HIT
The Tokyo Games will go down as the greatest financial loss in modern Olympic history. (Fun fact: The ancient Olympics were on the brink of insolvency until King Herod the Great of the Christmas story bailed them out.)
Japan has spent over $15 billion to put on an event that won’t allow fans. Still, NBC expects great ratings to help offset the massive $7.75 billion deal it signed with the IOC in 2014 to extend their partnership through 2032.
One of the most exciting athletes is American track phenom Sha’Carri Richardson, considered the best chance for the U.S. to win gold in the 100 meters. She’s a 21st Century Flo-Jo, flamboyant and fast.
Now there will be no gold medal for Richardson in the 100. She tested positive for marijuana following her victory at the U.S. Olympic Track and Field Trials in Oregon last month. The U.S. Anti-Doping Agency slapped her with a one-month suspension, which means she won’t run at least some races in Tokyo. There's a chance she could qualify for the 4x100 meter relay.
Richardson feels terrible, and says she used marijuana after learning her biological mother died.
Yes, what she did was dumb.
But making marijuana a banned substance for sprinters is even dumber.
Michael Phelps was caught smoking pot in 2009, back when it was a much bigger deal, and he was suspended by USA Swimming for three months.
It's 2021. Marijuana is legal in many places, including Oregon. Pot is not a steroid or some other banned substance which could make someone run faster. Quite the opposite!
Keeping Sha’Carri Richardson off the track is heartbreaking. It will have an impact on ratings and revenues, and it will put even more pressure on Simone Biles to bring home the bacon for America and NBC.
DUMBEST — THE BILL COSBY DEBACLE
Hey, hey, hey, it’s Free Cosby.
Bill Cosby is a free man on a technicality.
I know this isn't exactly a business story, but I'm gobsmacked.
The Supreme Court of Pennsylvania ruled Cosby should’ve never been tried for aggravated indecent assault in 2018, because 13 years earlier he agreed to speak about the same incident in a civil case after prosecutors promised there would be no criminal charges.
And then there were criminal charges. And then what he said in the civil case was used in the criminal case.
“This is for all the people who have been imprisoned wrongfully regardless of race, color or creed,” Cosby said, “because I met them in there.”
I’m sure you did.
What we have here are two miscarriages of justice: one for Cosby, another for his victims.
How did this even happen in the first place? Who’s the biggest idiot? The prosecutor who made the deal? The prosecutor who brought a case despite the deal? The state Supreme Court? The original trial judge?
I’m calling out the trial judge for allowing the testimony into the criminal case, knowing the testimony was given only after Cosby waived his constitutional rights because he was assured it wouldn't come back to bite him.
Jessica Levinson at Loyola Law School is surprised it took so long to correct the legal error, but she’s not quick to put the blame on one person.
"I don’t know that we can separate any one moment of stupidity, it’s really everything together,” she says, “but the state Supreme Court got it right.”
Levinson says the case will present problems for future investigators trying to convince witnesses to cooperate. ”We want people, in general, to be able to trust prosecutors.”
FINALLY, SOMETHING WONDERFUL!
We gotta go out on a high note. And this one is 62 miles high.
Way back in the '60s, as NASA was training future astronauts in the Mercury program, it was training women astronauts, too, just for the hell of it.
The so-called “Mercury 13” included Wally Funk. She never achieved her goal of space flight, but she spent a lifetime in aviation.
Now, at age 82, Funk's dream of reaching the edge of the atmosphere is finally coming true. On July 20th, she will join Jeff Bezos on Blue Origin’s first passenger trip.
Here’s a wonderful video showing the moment she learns the news. Fly, Wally, Fly!
Feel free to nominate Dumb and Dumber candidates in the comments section, or email me at jane@janewells.com.
Have a great weekend!