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My guest for Episode #202 of the My Favorite Mistake podcast is Shaun Hayes. He was the cofounder and former CEO of Allegiant Bancorp, headquartered in St. Louis, Missouri. Shaun started multiple successful businesses, was involved in the casino business, and bought, owned, and sold hundreds of residential and commercial properties. He is an entrepreneur, an author, a speaker… and a felon.
He was a principal at three banks that failed in 2011 and 2012. Five years after selling a company for an enormous profit, Shaun committed a felony (bank loan fraud). He was incarcerated for his crime eight years later. Now out of prison, he’s the author of The Grey Choice: Lessons on My Journey From Big-Time Banking to the Big House (and Back).
In this episode, Shaun tells two favorite mistake stories. The first was about “going crazy and wanting to fire somebody” when he then realized that the problems were the result of his mistakes as CEO of the bank. The second story is about the mistakes and bad choices that led to his conviction.
Shaun discusses the impact of his experience on his personal and professional life and how he has worked to rebuild his reputation and move forward. The episode offers valuable insights into the challenges of entrepreneurship and the importance of taking responsibility for one's actions.
Shaun provides valuable insights into the challenges of entrepreneurship, discussing how his ambition and drive to succeed led him down a path that ultimately resulted in his downfall. He emphasizes the importance of taking responsibility for one's actions and not making excuses, acknowledging that he made mistakes and accepting the consequences of his actions. Despite the difficulties he faced, Shaun remains optimistic and determined to use his experience to help others learn from his mistakes. We also discuss the challenges of being a CEO, the importance of transparency and honesty in business, and the need for forgiveness and second chances.
Questions and Topics:
- At an early age – making decisions that are not illegal but grey in the “interpretation of the rules”?
- How he justified it…
- Why go forward with it even knowing it was illegal?
- Did this lead to bank failures?
- Why did the legal process take 7.5 years to play out before being indicted?
- The dynamics / decision around pleading guilty?
- Do you remember something early on that got you 1% off course?
- The need to specifically define your moral compass?
- What’s it like starting a business once out of prison?
- Being a speaker today to help others?
Scroll down to find:
- Video clips from the episode
- Quotes
- How to subscribe
- Full transcript
Find Shaun on social media:
Video Clips:
Quotes:
!["I wanted to fire someone [for that mistake]. And by the end of the week, I went back to my management team and I said, 'I figured out who it is — it's me.'" SHAUN HAYES](https://www.markgraban.com/wp-content/uploads/2023/03/Shaun-Hayes-My-Favorite-Mistake-Quotes-1.jpg)
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Automated Transcript (Likely Contains Mistakes)
Mark Graban (0s):
Episode 202, Shaun Hayes, author of the book, The Gray Choice,
Shaun Hayes (5s):
Your Mistake. It was my mistake. It was my mistake not to listen. It was my mistake not to understand.
Mark Graban (15s):
I'm Mark Graban. This is my favorite mistake. In this podcast, you'll hear business leaders and other really interesting people talking about their favorite mistakes because we all make mistakes. But what matters is learning from our mistakes instead of repeating them over and over again. So this is the place for honest reflection and conversation, personal growth and professional success. Visit our website at my favorite mistake podcast.com. To learn more about Shaun Hayes, his book, and more look for links in the show notes or go to markGraban.com/mistake202. As always, thanks for listening.
Mark Graban (55s):
Hi everybody. Welcome back to My Favorite Mistake. I'm Mark Graban. Our guest today is Shaun Hayes. He was the co-founder and former CEO of Allegiant Bancorp, which was headquartered in St. Louis. Shaun started multiple successful businesses, was involved in things including the casino business he bought, owned, and sold hundreds of residential and commercial properties. He's an entrepreneur and author, a speaker and a felon. You don't always expect to see that at the end of someone's list of labels or, or titles, but I appreciate that Shaun is willing to talk with us today. He's the author of the book. I'll hold up a copy for those on, on YouTube, the Gray Choice: Lessons on My Journey from Big Time Banking to the Big House and Back.
Mark Graban (1m 41s):
So Shaun is joining us as part of his and back journey, and we're gonna have a lot to talk about today. So, you know, Shaun, thank you for joining us and, and being with us. How are you?
Shaun Hayes (1m 52s):
I'm wonderful, Mark. Thank you for having me. I really look forward to this.
Mark Graban (1m 56s):
So I don't know if you know the title of the book and a little bit about your story there. It is Probably doesn't ruin your story and I, I don't know which story you consider to be your favorite mistake. So I'll, I'll, I'll, I'll just ask you, and I think we have two stories actually here. What, what's the first favorite mistake story that, that you'd like to share, Shaun?
Shaun Hayes (2m 17s):
Well, in, in 19, well, in, when we started in '89, I bought my partner in '92. In many of your listeners who are in business for themselves can relate to this, but if they have anything to know about banking, it's hard for banks to realize. But in nine years, we grew 50-fold. That's just unheard of. And so along the way, one of the key things I learned, and I think this goes across all businesses, is that it is for the little guy because it's, you know, you know what have big investments in systems and there's a lot of off the shelf things you can do that solve problems. And so we brought in an IT guy in 93 after I'd failed at buying the bank he was with, and things were just unbelievable. The next years we did things that the big banks couldn't do.
Shaun Hayes (2m 58s):
And, and then in, in 1995, he had personal issues and said, I'm moving to Florida. And he said, my lieutenant can hold this together for about a year, but you need to find someone. So the, the long and the short of it was, he was right about a year later. The good news is we found a woman who I just think walks on water. The bad news is it took a whole year. And so she got there in, in in August and I said, Kim, we're gonna do whatever you wanna do because I saw what Jim was able to do for us over about two and a half years and, and I trust you. So she came back in about six weeks and said, we need to do this. And for us it was 1,700,000 investment, which was a lot of money. And this was in November. And she said, and it'll be done the next November. I said, okay.
Shaun Hayes (3m 38s):
I went to the board about two weeks later, we approved it. Well, in my mind it's solved being an entrepreneur, you know, there he goes, well, here's, here's where my mistake kicks in. So she said, there's one thing, Shaun, you can't buy another bank between now and next November. Well, mark, you know, that went in this there and out the other year. Yeah, in March I got a chance to buy one. And she said, John, you can't do that. And I said, I'm gonna,
Mark Graban (4m 2s):
Sorry to interrupt, but why, why was she saying that it would, it would, it would cause problems with the IT implementation.
Shaun Hayes (4m 7s):
Well, and this is what I didn't realize till we get to September, this is when I learned my lesson and it truly was a mistake that, oh my gosh, when I tell you the mathematical error in it, you'll, you'll, you'll get the, the magnitude. What she was saying was, first we're buying all this hardware and software. Second, you know, we have to train people for months, then it takes weeks to install it and train 'em and using it, and then we turn it all on. So it wasn't like, you know, my mind is, you went to the store, you bought a program, you came home, you popped it in your computer, and you know, a few hours later you were playing ball and she didn't, it didn't work that way. So in March when I bought this bank, I said, Kim, no problem. Here's what we'll do. I won't merge it in till next March.
Shaun Hayes (4m 48s):
Cuz it was small, it was only 30 million, it was about 20th our size at that time. And so that calmed her down and, and we, we made it through that. Well, we get to May and in St. Louis, what's now US Bank made a big acquisitions of a savings and loan. And yet in the Federal Trade Commission made him divest. And we were borrowing, we were a 600 million bank and we were borrowing a hundred million overnight, which is not a good resolution for a business. It'd be like a, a company saying, I need, I need a six to my balance sheet. And I wanted on demand, meaning the bank can agree not to renew it the next day. And all of a sudden I could buy a hundred million in deposits. And, and the price was right. It was two markets we weren't in. And Kim said, Shaun, it's gonna be a problem now.
Shaun Hayes (5m 31s):
She had only been there about eight months in nine months, so she didn't really have the ability to communicate the level of magnitude of problem as an entrepreneur problems. No problem. So we signed a contract and the announcement came Memorial Day weekend. We had to close Labor Day weekend. So Labor day weekend, we, I go to all these ba these banks on that Friday afternoon that weekend. I, we have a great zoo in St. Louis for people who never been here. It's one of the best in the world. And so I take my kids to the zoo and my debit card doesn't work and it doesn't really resonate, you know? Okay, no big deal. Well, by the time I got by Tuesday, a bank in those days would close at two o'clock and then start a new day.
Shaun Hayes (6m 15s):
What that meant was, is you started processing in most banks, and we were, we were considered a large bank then. Not a huge bank like we became, but we would start processing at two and we'd be done around seven. Well, these banks we bought had so many transactions, transaction accounts, they took us from two o'clock till noon the next day to process. Oh, whoops. Yeah. Yeah. And so what happened Memorial day, so this is going on, and by by the middle of that week, we figured out that if you went to a bank and cash a check our bank, or if you went to one of our ATMs, we didn't capture it. There was no what's called on us.
Shaun Hayes (6m 55s):
So therein lies of mistakes of, and I had all kinds of people who called me up a month later and said, Shaun, I got $250 and you never charged my account. But 1,549,000 walked out the door that weekend that we couldn't find. Oh my gosh. Yeah. Now two pieces of that, and then I'll get to, to to to real. The mistake that I found in it was one that year we made about 6 million after tax. So it was about 20% of our 15, 16% of our after tax earnings. Our earnings, we were public, were up over 20% that year. No one noticed. And if you read the annual report, it was so buried in the footnotes, but I'll never forget 1,549,000.
Shaun Hayes (7m 35s):
The lesson in it. And the mistake was that week I wanted to fire someone. I went crazy by the way. I didn't mention Kim managed to have a child during this period. We had to set up in a hospital room a a computer system because that was in the days when you had laptops that did what they did now. And that whole week I'm screaming, we have to fire someone, we have to hold someone accountable. And by the end of the week, I went back to my management team and I said, I figured out who it is, it's me. Ah. And when you say your, your mistake, it was my mistake. It was my mistake not to listen. It was my mistake not to understand. It was my mistake to buy. This is important acquisition.
Shaun Hayes (8m 15s):
It was in all this rested on me. But it's so easy, especially in our culture today, to look for someone to blame. And as I, I learned from that that at the end of the day, you know, you're, you're the person at the top. It's your, it's your child. That's what I call my company. You're the one responsible. And that was an unbelievable lesson in making a very expensive mistake because three years before, we didn't make 1,000,005 47 pre-tax, you know, so it was the magnitude of the loss and it was just how quick it disappeared. And then really what it did was it sucked the life out of our culture for about a year. For a year.
Shaun Hayes (8m 55s):
We were a different company. Now, what we did in that year was we made a lot of tough decisions. We consolidated, we did some things that we would never have done. So I would say the mistake you always have to remember, and I think Harry Truman had the thing on his desk, the buck stops here, it stops with a CEO. And that's the one lesson. The other lesson is, is when you make a mistake like that, what can you do with it? And in our case, we sold some things that didn't fit. We spun some businesses off, we did things. And we didn't really grow for one year, which was ironic for us as much as we grew in that nine year span. But we made more money and we were a better company. So good came from it. But, but the mistake was horrific.
Mark Graban (9m 32s):
Wow. But I mean, that's a great story and I appreciate you sharing the reflections and, and the lessons learned from that. Did, did somebody have to talk you out of firing somebody in that, in that week?
Shaun Hayes (9m 47s):
Well, the other I had, I had, I had seven great, great direct reports and the woman that run HR ran hr. She was just unbelievable. And the whole time I had someone I wanted to fire, cuz to me it rested on the, the man that oversaw the processing because how could it take 20 hours with a new system when it, you know, should have taken two or three and not five or six even because we weren't using anymore near the capacity. And, and, and she and Kim were close course Kim was in the hospital this whole, this whole week period having a newborn with her. And I said, what Karen was able to communicate to me was, Shaun, this man was just executing your orders, doing your job in a chain of command. And yes, you want there to be consequences.
Shaun Hayes (10m 28s):
And I, and I love that about you and our culture. If you do something right, we recognize if you do something wrong, we don't necessarily fire you, but we hold you accountable. But you gotta look in the mirror. And, and, and she really had the ability that she'd been there longer than Kim had to look me in the, in the eye and say that. And that's another point I'll make. I I would say, well, I believe every business is its people. I said, for years my HR people could interview you and they would say, you're gonna love these seven things about Mark and you're not gonna like these two, but he's really gonna fit in our culture. He's gonna be a high performer, but you, Shaun, have to adjust your style to those two. Meaning I'm not gonna change you, but I, I'm not gonna say I'm gonna change.
Shaun Hayes (11m 9s):
But I had to adapt. And so she had my ear in that way and she saved Mike's job because left of my own devices, I would've fired him by Friday. I was so darn angry.
Mark Graban (11m 19s):
At least you listened then to the HR person and, and, and you know, I appreciate you, you know, mentioning, you know, you're not blaming Kim for not convincing you of the, the, the level of magnitude of the risk or the problem. You weren't blaming her. And I mean, how, how did that lesson, that moment of, of, of realizing, like you said, you found, you found the problem in the mirror, you took responsibility for it. How, how did that affect the way you handled other situations going forward as a CEO?
Shaun Hayes (11m 52s):
Well, it, it, it, it humbled me, you know, you don't, one, you like to believe you're perfect, and yet we know we're not. But it was humbling to have to go back, especially to the seven people that I spent so much time with because I just was on a tangent of we had someone had to serve a con serve, you know, serve a consequence for that. And I didn't. And it made me more cognizant of my decision making. And yet we're gonna talk about my next mistake in a little bit. And you're gonna see by then I had forgotten my lesson. And as many of us, especially again, back to our culture today, we have short memories and whatever, we have short memories, we pay a price and I I I pay a much greater price in my next mistake.
Mark Graban (12m 37s):
Yeah. Well, and and before we get to that, just one other comment I was gonna make you talk about the tendency to blame, and I, I don't think that's even a modern society thing, it's almost more human nature. You know, there are, you know, you could look at, you know, from a evolutionary standpoint, there's, there's an old story, I'll tell it quickly of Coco a gorilla that the handlers, for lack of a better word, had taught American sign language. And there's a famous story of, you know, Koko had a pet cat, like a real live living cat. Koko was, you know, taught to do these things and love the cat. And one day the handlers came back and saw a sink had been torn out of the wall.
Mark Graban (13m 18s):
Well, it was clear Koko had done this and they asked Koko and Koko supposedly in sign language, replied cat did it. Which of course Koko didn't get away with with with that lie. But there, you know, there, there, there is, I mean, I think something very human nature, it's a, I could see where it's a survival technique, even if it's a matter of corporate survival, if you can blame someone else, I could see why we would have a tendency to try that, you know?
Shaun Hayes (13m 46s):
Yeah, no, it, it is a society and it is, it has been around 10,000 years, but I, it it just seems more prevalent today because every we live in a society that's become more victim oriented.
Mark Graban (13m 58s):
Well that, that's, that's a different dynamic. Yeah. Of yeah. A more modern, modern day dynamic. But, so I didn't wanna sidetrack you though, Shaun, from the second story. I think I know what it is. I could be wrong, but let me just tee you up to, to talk about this other favorite mistake.
Shaun Hayes (14m 15s):
Well, I'll, I'll start with, and you, and I know you've heard this, there's a saying in that seldom in life are your greatest dreams, realized are your worst fears. And I'm gonna say that I certainly have had both. I never thought I would start a company, take it public, and have unbelievable success and sell it at the pinnacle of, of the industry's height in, in, in sales. At the same time, I never thought I would go to prison. So in my mind, the only thing that worse could happen would be losing a child. I can't think of anything better could have happened in a, in a career since yet I've done both. Yeah. Yeah. And I think the segue I would use into this is, the title of the book is a great choice.
Shaun Hayes (15m 1s):
And I won't tell the story, but I'll tell the example cause there's a story somewhere in my personal experience. But if you leave Los Angeles on a plane headed for Washington DC and you're off by one degree giving time, speed, and distance, you end up in New York City. Yeah. And I started at an early age in my career of making decisions that were not illegal are even not, not, not, not even not criminal, illegal, but sometimes in the, in the interpretation of the rules. And I told my lawyers this, and this is what got me in trouble, and I did it to myself absolutely was, don't ever tell me I can't do something.
Shaun Hayes (15m 42s):
Tell me how I can do what I want to do. And the example is, I'm in St. Louis and to be logical, for me to take Vander Avenue to Vander Avenue and get on Highway 64 and take 55 to Chicago, that's a simple way. Or I could go to the airport and take a, take a flight in, but my lawyers might say, no, you have to take I 70 to Kansas City, 35 to Des Moines, hitchhike to Minneapolis, and ride the train to Chicago. And then I would be left with a decision. Do I want that much time and that much money in my effort to get to Chicago? I can do it. But, and so that was the, that was the culture that I, that I instilled in myself and in my company.
Shaun Hayes (16m 22s):
So we pushed and we would get legal advice on how to interpret how to do things. And once you start doing that, what happens, Mark is this, you have it in your mind, one, you become successful so you think you can do anything. And two, because you're seeking an answer that's gonna let you do what you want to do, you now think you can do about anything. And, but that didn't just, you know, someone asked me this question, not, not not on a show like yours, but they asked me, they, I said, no, you don't just wake up and, and now there are people that are wired that will do something criminal. But it took me many, many years of operating like that. And then what happened to me was when the recession hit and the collapse in oh eight, I was losing tens of millions of dollars a month.
Shaun Hayes (17m 9s):
Personally, what I didn't realize, and it's pretty obvious when you look back, was all my investments were in ba banking, financials are in real estate, and real estate collapsed and what went down with real estate financials. So I'm literally bleeding to death at the rate of 10 million a month. And so I went out to recreate what I'd done before and I had a way of doing it. That part was sound. I will say, then we'll get to where I got of course. But what I'd lost is, and these are back to your listeners, is when you're entrepreneurial and you're doing it, you have your, your ear to the ground. I call it guerrilla warfare. You're very basic, you're very tactical, you have great market intelligence.
Shaun Hayes (17m 49s):
Wide spent four years with a Fortune 200 as one of the top 35 people out of 36,000 and you just didn't have, I lost four years of market and not only did I lose four years of market intelligence, I lost it when the world changed, when subprimal and real. So I now walk into a world, not an excuse, but the reality of that I'm out of touch with. And what had worked so well for me for 15, 20 years before, let's say didn't work any longer. And then because, and this is backing into your listeners, especially if you're in business for yourself, surround yourself with bright people. I talked about the seven people who worked for me, but I had a board of directors in particular that there were four other people that we met a couple of times a month for 15 years.
Shaun Hayes (18m 35s):
And they helped me in a level accountability. And they ma made me successful because they were the kind of people they, none of 'em had any banking experience. And they would say, why do you do what you do the way you do it? And when they asked that question, the answer better not be because we've always done it that way. That meant we had to retool. That's how bright these people were. Mark. So after 15 years, one, they were all 15 or 30 years older than I was. So they were either dying or retiring and I lost. So I lost a group around me, I lost my own market intelligence. And then because I was losing so much money, I didn't use good professionals. Now I'm not making the excuses at the end of the day, I made the decisions I made.
Shaun Hayes (19m 15s):
But the point is, and the mistake here is when you lose those three things, and I think those are crucial to anyone's success in business. And quite honestly the same elements are key and personal relationships in life is then my backs to the wall and left to my own devices. And this is how I justified it. One, I had been successful in my decisions. Two, I had skirted out there with good legal advice and obviously not this time cuz they wouldn't let me do something criminal. And thirdly, because I wasn't taking money, this was my justification, I'm not taking money, I'm manipulating documents to buy myself time because I know given time in my prior experience, I'll make this right.
Shaun Hayes (19m 59s):
Well, I committed a crime
Mark Graban (20m 1s):
And, and, and, and what, what was the crime I guess, you know, I don't know enough about this world. You described manipulating the situation. That sounds bad, maybe not illegal, but what can, can you,
Shaun Hayes (20m 13s):
Well here's what, when you own a bank, and I own 54% of this bank, when you own more than 25%, you cannot do business with yourself on any terms, less than 25% down to say five. But you should be to one 10th of 1% or one share. You need to disclose it. So not only did I not disclose it, I couldn't do it to begin with.
Mark Graban (20m 40s):
And this was a matter of, of loans self-dealing is, I think
Shaun Hayes (20m 47s):
Self dealing would be, would be a much better term. Although I had to explain to the government, even though they knew I committed a crime, when I finally pleaded guilty, they brought a room full of accountants and forensic people and said, would you please tell us what you did? How did you do this? And what I'd done was I had watched a man in the late eighties and we did this as a bank to a much smaller degree, take banks and buy assets that were non-performing in those days as a resolution, trust and other banks. And the government doesn't like that. They want you to only make loans that are good when you make them. You were making loans that were bad when you made 'em. But I went to the trouble of, and it was a gentleman that I'd known for many years and, and he and I, and the irony in this is Mark, I knew this even before I did.
Shaun Hayes (21m 30s):
I described him, his brother was my securities lawyer at the largest firm in St. Louis. In the, in the mistake in his world. I described Tom as his world is 50% black and 50% white. There is no gray. And his brother, I would say in 1% black and 1% white and 98% of gray from light to dark. So I knew what I was getting into, but he had gotten into, he had tens, hundreds of millions of dollars of loans that were non-performing. And I saw an opportunity to buy him and, but I made him get other borrowers that could pay the debt. When was the doctor, was a real estate guy, was a car dealer. So you weren't really lying, relying on them because that made my argument cuz I'd watched a man do this and make hundreds of millions of dollars 20 years before.
Shaun Hayes (22m 11s):
The problem was he and I had a loan at one of the banks that I was buying it from. And in that loan they wanted, when they got rid of him, they wanted to get rid of everything to do with him. So to get to facilitate the transaction and let me buy his debt or my bank buy his debt for 50 cents on the dollar, we had to buy a loan that I owned half of. So the loan was already out there, but I didn't disclose in that package that I was in that loan. Therein is a crime and I knew it. And, and, and
Mark Graban (22m 46s):
So why, why go forward with that then in the moment?
Shaun Hayes (22m 49s):
Well, because the transaction was so lucrative for us that we were gonna, we were making over a a a million plus like that. And that really made things better because remember now I'm per, I own 54% of this and I'm personally struggling at this point. And the thing was, I had watched this man do this for years. What, what he was gonna do. And there in light, another mistake is I learned that people don't always want things as bad as you want them. And what he did was, and it's my mistake not his, is he, I didn't realize the depth of his problems at that time.
Shaun Hayes (23m 30s):
And this what the, the 16 million in debt we bought was about a 10th. That was about a 10th of his problem. And what he did was, as soon as we bought him, he didn't do anything where the 20 years I'd done visiting before he would, he worked through 'em because he was incentivized to the seven digit number, forget the savings on the debt, but he had that much to earn in getting these properties sold and leased and all these things. And that's how the other men made their money. And he just saw it as one 10th of his problems were solved. So not only did I make commit a crime and make a mistake there, I made a mistake. And unless another lesson I learned was, is don't assume the other person wants something as bad as you do. Or, you know, has a desire to see something in completion and all this lie on me because I knew the day I did it, I'd committed a crime.
Shaun Hayes (24m 16s):
The thing was, and this is again how I justified it, I wouldn't get any money and if he'd just done what I'd watched him do 20 years, I'd known him before that and the 10 years before he'd done that in business, it would've just self liquidated. It would've just disappeared and no one would've ever known. Cuz if, and it would've and it would've passed. But I didn't do the right thing. I committed the crime right off the bat.
Mark Graban (24m 39s):
And did, did that crime lead to bank failure or were there other factors?
Shaun Hayes (24m 48s):
No, the crime did not lead to the bank failure. But the bank did fail. And it had problems when I bought it back to ground intelligence, but I contributed as failure. That would've been a piece and, and a whole lot of other things, the lack of market intelligence that I, I I blamed myself for that bank failure. Absolutely. But the crime in itself wasn't, but because the bank failed, now there was a real forensic audit and, and it's like I described years ago, it's not like when somebody robs a 7-Eleven or a QuikTrip, you know, where they go in and then they call the police and they, and they go get 'em and they try to get find 'em immediately. That happened in, in August 31st, 2009. And I was questioned in 13 and I actually, because I had a, a good bankruptcy lawyer friend that I'd done business for years, had contact in US attorney's office.
Shaun Hayes (25m 36s):
He goes, well they passed on you at the end of September of, of 2013. But right at the end of 15, they were on this other man for a whole lot of other reasons. And then when they did forensics, I was a much juicier target as, as I should have been. I was in a position, I broke trust and I was a position of trust and, and I broke the rules and I broke the law and, and I paid a terrific price that I wouldn't want anyone to have to do.
Mark Graban (26m 3s):
And, and, and, and this took years then, it sounds like from being, getting on the, getting the attention of, of law enforcement to the point of pleading guilty. Yes. Did you go through waves where you thought, well, okay, this isn't gonna lead to criminal prosecution?
Shaun Hayes (26m 21s):
Yeah, it, it won when it first came out in 12, in early 13. And then by the end of 13 they said, no, we can't find anything. And then it came back up at the end of 15. So from the time I committed the crime till I got indicted was almost seven years, and it was, and seven and a half, almost eight years before I served a day. So, you know, and, and the consequence of that is in itself is another cost. I mean, and, and in this, you know, I deserve everything I got, but it's what I did to my family, in particular, my children, excuse me, my marriage. And then I, I own only own 54%. So I heard a lot of shareholders, other shareholders and, and most of whom, almost all of whom I think, yeah.
Shaun Hayes (27m 5s):
Almost all whom were employees. So I betrayed their trust too. So I, the damage I did was horrific. And that's, that's a lesson I learned in there is I never, until that happened, I won't say I never, but I seldom thought of the law of unintended consequences and the unintended consequences of my crime were far, i I threw a boulder in a pond, you know, it wasn't a, it wasn't a pebble
Mark Graban (27m 29s):
Can, can you talk, Shaun, about, you know, the dynamics, you, you were sentenced to 68 months in federal prison. The dynamics of deciding to plead guilty?
Shaun Hayes (27m 39s):
Well, one, they first indicted me on three counts and then about 10 months later they expanded it to 10. But as my attorney said, Shaun, you've really been charged with the same thing 10 different ways. Because the way the system works, and, and I hope none of your listeners have to have to figure this out for themselves, is they want to charge you to where if one thing doesn't work, but a slice of paper next to it does they've got you. And quite honestly, my attorney, as I described my crime was so complicated. If I could have had my trial bifurcated from my co-defendant, I would've gone to trial. Because he says, I don't think jury can convict you of something that they can't describe as prosecutors.
Shaun Hayes (28m 20s):
And, you know, the average man or woman isn't gonna understand. But what happened was, and the reason that that drove me in December of 2017, I lost a motion to bifurcate my trial. And the co-defendant had a business that I had nothing to do with, I wasn't involved in, but he had done carry back mortgages for people for 212 families. And he didn't pay the first, he took their money. And so I would've been sitting at a table for weeks and they would've brought in, they said, we're gonna bring in 212 families and talk about how they lost their homes. And at that point, the jury doesn't care whether you owned or did anything, you're sitting at the same table. And my lawyer said, you're gonna get 20 years. He goes, it, that that's gonna be the, the consequence.
Shaun Hayes (29m 3s):
And once, once we lost that, I, I knew it was over. Yeah.
Mark Graban (29m 7s):
So looking, looking back, I mean, Shaun, you talk about the idea of getting 1% off course, things that were in the gray area, not illegal. Do you remember what one of those early, like what an example of one of those early moments or decisions would've been? Yeah,
Shaun Hayes (29m 22s):
Absolutely. In the, in the early nineties, the, the Fed came out with a regulation that constrained real estate lending that was a derivative of the savings and loan collapse of the mid, late eighties and early nineties. And so Beckon, I went to my attorneys, cause we had a niche that we lent money on. We owned a market for foreclosures, short sales and things like that, tax sales. And the niche in that was, is that the sales were at noon in St. Louis city and county and you had to have the money there by two o'clock. And most people that played in that market, or most people wanna play it didn't have the money to do that. If you wanna buy a hundred thousand dollars house, you had to have a hundred thousand dollars, you had to have it there in less than two hours.
Shaun Hayes (30m 3s):
So we'd set up a department that just did that. And we, at that time, we probably had 20 or 30 million out before we were sold, we had a hundred million and it was, we charged huge fees and high interest rates because we could. And so I went to the attorneys and I said, this is a niche. And so they spent a lot of time and, and good money and said, here's how we believe you can legally comply. Now they had to say believe because it was new law, you know, it was an interpretation. And, and sure enough, the government came in for the next 10 years after that and we passed the flying colors. But we created a system within inner law that was totally in the gray. Now the irony in it was, is that part of it was we track things and if we lent you a hundred thousand dollars to buy a house, we did a six month loan.
Shaun Hayes (30m 49s):
The average duration was about 92 or 93 days. But in virtually every case, if they didn't sell it, they went to another bank and the other bank loan 'em 120 or 150 or 160 on what we'd lend 'em a hundred on. And so we were able to statistically prove that we were in compliance. We just couldn't comply given the timelines. But that's that one step. And notice I had good counsel, I had good people, I did all the things I should have done because there's a lot of money in business in the margins or in the gray. But if you don't do it right, it's very easy to go from that step to the next step to the next step. And then in particular, you know, somebody actually sent me an email that I got early, early this morning that had read the book that had known me many years ago.
Shaun Hayes (31m 33s):
And, and he said, Shaun, he says, I now see how you got to where you got and, and not that I'm justifying it, but when everything's going against you in your back against the wall, your judgment gets cloud outed. You know, we start justify I know Jeff, we were talking earlier about blaming people whenever everything's against you and you're you're there, it's a lot easier to say, well I, if I do this and, and I let my moral compass go, it was, it's all on me. Yeah.
Mark Graban (31m 59s):
We're joined again today by Shaun Hayes. The book is the Great Choice Lessons on my journey from Big Time Banking to the big house and, and back. Let, let, let's talk, you know, before we wrap up about some of the, the and back story. You're, you're, you're out of prison now, you're doing other things and, and part of what you're sharing with people is around this phrase that you use moral compass and the need to define your moral compass. I guess that's, that to prevent help any of us not get 1% off track. Can can, can you share a little bit more about how we might go about defining that compass?
Shaun Hayes (32m 34s):
Yeah, and I, I wanna, I wanna say two things there. One, I was reading the interviews and there was a, a lawyer that I knew tangentially going down almost 40 years. And he used that quote when he was talking to the fbi. He said, Shaun lost his moral compass and he was right and it was, he had the nail on the head. Secondly, something that I, I like to remind people, there was a study done by Stanford professor about little over 50 years ago. And in the summon substance of it was given the right set of facts and circumstances. Any person can commit any crime and none of us like to think we could kill somebody or do some. But basically he proved that point, that given.
Shaun Hayes (33m 14s):
And so what I go back to the things that I, they said when I was looking at my own things, surround yourself with people who are gonna hold you accountable because left our own devices, we can do some pretty horrible things. And, and I don't even mean criminal things, that's one, surround yourself with people there. Two is don't take your eye off the ball. My thing was, and I wouldn't change one thing Mark, because if I change one thing, I wouldn't be in this position. And I believe my mission is, is to help people. It's truly to help people not end up where I did. But I didn't have a plan after I reached a mountain. And that was a mistake.
Shaun Hayes (33m 53s):
And you know, I was, I'm a big believer in plan, I'm b I'm a huge believer in goal setting. But once I reached them, I didn't have any. And, and, and, and, and, and then I was just lost. And, and that's a big thing I always said people, and I knew this inherently, but I just didn't apply it to myself, is, you know, when you sell a business it's like a death, it's like a divorce. It's a whole thing. And you have to have something else you're going to do and you should be thinking that long before you sell it. And, and I think those are the kind of things that if you surround yourself as good people. And the sad thing for me was, even though I mentioned that the men and women who helped me accountable for those 15 years, they were 15 to 30 years older.
Shaun Hayes (34m 33s):
But I had other people around me I could have gone to, but then again left to my own devices, I chose not to.
Mark Graban (34m 41s):
So restarting things, I mean, you know, so you're released from prison. What, what is it like trying to start a business and, and start working for others to help others? I mean you're, you're, you're, you've written a book, you're, you're working to, to make a living. But how, you know, I mean, what what have you experienced in, in this, this next phase of, of business and life?
Shaun Hayes (35m 7s):
Well, one, I'm not complaining, but I now understand why the system is broken from being in the system and now being out. It's still in the system. I, because I wanted to write the book and I wanted to speak, I was looking for a job cuz you're required to have, the government wants you to have a 30 hour paycheck job. That's, that's a requirement of virtually every fellow. And so I wanted to make beds in a hospital, the largest hospital system in, in, in the metropolitan area. Employees like 20 some thousand people. And they were so excited and then, and I told 'em I was a felon and then they came back and said, oh, we can't hire you. Then I went to the second largest hospital system and told them I was a felon cuz there's no reason to hide it.
Shaun Hayes (35m 48s):
And, and I was gonna work in the morgue moving bodies cuz I thought, wow, this is great. Cuz again, the hours worked where I could do calls like this, I could pitch for speaking and they didn't. And it was in a manner that I could take time off so I could go speak if I needed to travel. And I'm, I'm unqualified to move bodies in a morgue because I'm a felon. So when you look at those kind of jobs and you think, how do these men and women who get out that don't have the opportunities that I have make it, and that that's one lesson for society in this. So I ended up, I'm a school bus driver and I absolutely love it because I work from four, well I from five till eight 30 and from one 30 to four 30 or five. And then the middle of the day I do things like this.
Shaun Hayes (36m 29s):
And because of the way it's structured, the state of Missouri, you're all part-time. Even though I one week I hand 106 hours, normally I I do 40, but it lets me, I can as long as you 'em two days notice, which in speaking you have more, way more time that they'll let me have time off anything I wanted. Yeah. So I'm fortuitous and it's allowed me to rebuild my life and I'm so grateful for that. But it's also shown me how hard it is for society to adjust. It's almost impossible in my opinion. Yeah,
Mark Graban (36m 56s):
Well you talk about that requirement to get a job and then, you know, there's a lot of people these days who are advocates for, you know, encouraging companies to consider hiring felons, especially if the job is not related to what they have been, you know, convicted to do. And, and I, I don't, I don't mean this come out the wrong way. I'm surprised that school bus driver was a job that they would maybe, I'm sure that, you know, the type of conviction was part of it, but that, yeah, it's, I guess different organizations have different criteria.
Shaun Hayes (37m 31s):
No, it, it's an industry thing and here's what it's, if you have a sexual crime, you couldn't do it, but you can for that, you know, which is, but, but Home Depot in prison was one of the big names. They listened Amazon, home Depot, I went to Home Depot, they wouldn't hire me because I was a felon yet in prison on the board, when you, when you look for jobs, they're number two after Amazon. So it's just, it's, it's convoluted, it's sad and I'm, I'm not trying to be a social justice advocate, but I think you have enough listers out there that are gonna say, wait a minute, this is the way the world is. Cause they wouldn't believe that.
Mark Graban (38m 4s):
Yeah. And you, you, you mentioned investments and other things you're doing. You, you still have that job today?
Shaun Hayes (38m 11s):
No, I I, and by the way, I had gotten outta the banking business long before I was indicted. I made a, i I gave a speech in 2010 and I said, entrepreneurial banking is dead. And the government after the oh eight crisis, they've regulated it to where banks as, as I say in the book, it's like going to Chick-fil-A, you know, they want it to be a credit score, they want it to be simple. And that's why hedge funds and private equity are really the risk takers today. And they're, and I described that 13 years ago, that's when happened. I said, there'll be entities that will come out and replace community banking or whatever name you wanna put on it because the government doesn't want it anymore. They want utility and they're getting it.
Mark Graban (38m 53s):
Yeah. Well again, our guest has been Shaun Hayes. You can learn more about his book and, and the speaking that he does at his website. I'll put a link in the show notes. Shaun hayes.com.
Shaun Hayes (39m 6s):
Yes. And I spell it right by the way. I spell it Shaun – i I joke about that because there's three ways of spelling it and Yeah. And, and I have the you so I like to have fun with it. Yeah,
Mark Graban (39m 16s):
We'll, we'll put a link in the show notes. And what, what types of audiences, you know, you talk about wanting to help people avoid the mistakes you've made. Do you do speaking for banks, financial institutions? Who, who, where are you doing your speaking
Shaun Hayes (39m 31s):
Lot? You know, financial institutions, banks, accounting firms. You know, e why my former auditors, they just paid a 200 million fine for cheating on the CPA exam. Yeah. So you, you, you've got that I do a lot of universities because, you know, you like to hit kids young and, and, and, and young, young men and young women. And there's so much more entrepreneurial than my generation was. And when you're out in that world, you don't have the checks and balances that you have at a big company. So I talk a lot about how in a small company to instill those things. But I, I speak mainly on ethics. I, I do get a lot of requests and I did one last week that was a mixture of entrepreneurship and ethics cuz I was unique in the fact that I did have a successful entrepreneurial career before I committed a crime.
Shaun Hayes (40m 14s):
Right. And so, so I have fun with that too.
Mark Graban (40m 16s):
Yeah. Well, Shaun, thank you so much for sharing your story. Thank your stories in this case. And, you know, I really appreciate you, you know, coming on the podcast and, and and, and talking so openly about mistakes and lessons learned along the way. I really do appreciate you for being here.
Shaun Hayes (40m 34s):
Well, thank you Randy, and I enjoy your show, mark and have a wonderful
Mark Graban (40m 37s):
Day. To learn more about Shaun, his book, the Gray Choice and more, look for links in the show notes. Or go to markGraban.com/mistake 202. As always, I want to thank you for listening. I hope this podcast inspires you to reflect on your own mistakes, how you can learn from them or turn them into a positive. I've had listeners tell me they started being more open and honest about mistakes in their work and they're trying to create a workplace culture where it's safe to speak up about problems because that leads to more improvement and better business results. If you have feedback or a story to share, you can email me myfavoritemistakepodcast@gmail.com. And again, our website is myfavoritemistakepodcast.com.