When teaching negotiation ethics, it is important to discuss false offers being used as leverage in negotiation.  In my experience, most people use them when time is short and the existence of the competing offer cannot be verified – which makes it difficult to know what to do.  From here on out, use this example when discussing this issue  in class.

As reported in the Chronicle of Higher Education

In January 2015, Brian R. McNaughton, an associate professor at Colorado State University, sent his administration an offer letter he’d received from another university.  To entice McNaughton to stay, Colorado State raised his base pay by $5,000, a university spokeswoman said. . . .

There was just one problem with McNaughton’s case: The offer letter was fake.

McNaughton now faces a criminal charge of attempting to influence a public official for allegedly falsifying an offer letter from the University of Minnesota. He has since resigned from his position at Colorado State.

The specific criminal charge here is related to the fact that the victim of the scheme is at a public university.  But think about it, any prosecutor can come up with a number of potential charges here – forgery and fraud readily come to mind.  The false offer is going to be a material fact inducing action – the employer is making a counter offer to induce someone to refrain from taking a course of action that the person could not take.  This is the case in every situation where a false offer takes place.  The best defense here is to ask about the details of the offer, and gauge the  responses to do your best to see if someone is lying.  Even go so far as saying, if it weren’t for this other offer, you would not have increased your offer.  If you make a deal based on the offer, follow up on it, investigate if there were  other offers or not.  If it turns out to be false, then hold those who made the false offer accountable, just like Colorado State did.

While it’s not clear how CSU found out from the article, McNaughton’s letter to the Provost – which is embedded in the article – indicates that his ex-wife who was in on the letter kept using it for leverage in what can at best be described as a nasty divorce.  It appears that ultimately she was the one who turned him in.   There’s no mention of criminal charges for her, but a conspiracy charge sounds possible.

Update – After writing this post I have a vague recollection of a company (Target?) investigating what turned out to be a false offer after acquiring a company.  If this rings a bell, please provide details in the comments.  Thx.

Hat tip – Taxprof blog