Fostering of Unethical Conduct

Business owners and managers sometimes take more active roles in fostering unethical and illegal conduct, with negative consequences for their businesses.

Case Example 

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Dr. Rajendra Gandhi and his wife were devout Hindus who wanted to redecorate their entire home with high-quality custom designer furniture and draperies. They hired Sonal Furniture and Custom Draperies, LLC, because Sonal’s owner, Shyam Garg, represented himself to be culturally and religiously like-minded. Garg told the Gandhis that he would use only the highest-quality materials in their home, and Dr. Gandhi gave Garg a $20,000 deposit. Garg later showed up at the couple’s home unannounced with four trucks full of furniture. The Gandhis paid Garg $190,000 (for a total of $210,000).

Within weeks, the Gandhis began noticing that the items provided were of inferior quality. Nearly every piece was damaged in some way. Eventually, Dr. Gandhi demanded a full refund from Garg. Garg threatened to pursue criminal action against Dr. Gandhi, among other things. The Gandhis sued Sonal Furniture and Garg. An expert testified that the furniture was “not actually intended for functional use, almost like movie set furniture,” and “would be very difficult to repair.” The court ruled in favor of the Gandhis and awarded a full refund of the price, plus $100,000 in damages. The court found that Garg had misrepresented the quality of the furniture and had preyed on the Ghandis’ cultural and religious heritage, using outrageous threats, coercion, and extortion. The judgment was affirmed on appeal.

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