What goes around ... :

The other night I was talking to a group of business school students, when someone asked why I do what I do (you know, poke around at the underbellies of companies). My response: "I hate people who cheat." Couldn't stand them in school; can't stand them now.

So, when I heard that David Lipson, the former chairman of


, had been found guilty by a federal jury of illegal insider-trading charges, I felt a sense of accomplishment. Supercuts was the third of three companies I spent months chasing back when I was with

The San Francisco Chronicle

. This wasn't your run-of-the-mill column item; like the others, I took a brief time off the daily grind of the column to build a case on each company.

The first two --

California Micro Devices



Media Vision

-- resulted in investigations by the


and the

Department of Justice

. Cal Micro's former CEO and CFO were convicted of fraud, sentenced to about three years each and ordered to pay $100,000 in fines apiece. The two are now out on appeal. Media Vision's former CEO was indicted and is awaiting trial.

Lipson, however, was different: There was nothing illegal about how he ran the company, but his business practices pushed the far edge of what is considered acceptable and suggested possible poor judgment. In fact, two ex-CFOs filed lawsuits against the company alleging a variety of misdeeds, including the manipulation of earnings. Unlike the CEOs of Media Vision and Cal Micro, Lipson never got charged with anything quite as extreme. He was accused of insider trading tied to his sale of Supercuts' stock prior to the release of bad news. Lipson's attorneys say he's appealing the verdict.

In the meantime, he'll continue running

Knightsbridge Partners

, a merchant banking operation in Chicago, and

Frederick's of Hollywood

, the women's lingerie chain, which he bought after leaving Supercuts. But the insider-trading conviction, besides being a public embarrassment, will be a public mark against his integrity. Which is the least you can hope for cheaters.

School daze:

Last time we checked in on

ITT Educational Services

(ESI) - Get Report

, the Indianapolis-based operator of 68 technical schools was being

taken to task by

Bear Stearns

analyst David Nadel, who had downgraded the stock to a neutral, for extending the enrollment deadline at its schools for an additional week, to 14 days. Nadel's concern -- that the unexpected inclusion of extra days lowers the quality of the company's earnings -- held weight because he was one of the first to prick the balloon of

Sylvan Learning Systems


, and Bear Stearns had served as one of ITT Educational's investment bankers.

The company has since reported stronger-than-expected first-quarter total enrollment, with new student gains up an impressive 10%. Impressive to some investors, perhaps, but not Nadel, who is back with more questions about the quality of those numbers. This time he notes that much of the gain came from the company's new Computer Network Systems Technology program, on which bulls are hanging their hats for ITT's future.

His concern, however, is sparked by what he found during a survey of ITT schools. He found that contrary to the company's own policy, ITT recruiters tried to lure potential students with information about the kind of salaries they might make after graduation. (The trouble with that is that there's no way ITT can know, because so far it hasn't graduated any students from that program.) According to a report by Nadel, who declined to comment on the record, the recruiters also steer potential students to the Web site of the Information Technology Association of America, the tech school industry's trade group, which talks about industry salaries. (The trade group's president, Harris Miller, as it turns out, is also on ITT's board. I couldn't get a hold of Miller, who didn't return two calls over the past two weeks, so we'll refrain from asking what the prez of a trade group is doing as a director of one of its member companies.)

What's more, Nadel also questions whether the entrance exam for ITT's new Computer Network Systems Technology program is designed to exclude students who'd be better off


in the program. "Recruiting reps at the surveyed sites assured us that applicants would have no trouble passing the ... exam," Nadel wrote.

Meanwhile, ITT recently reported banner enrollment growth, thanks largely to the new Computer Network Systems Technology training program. And that's the reason for Nadel's gripe: The results of his survey "raises questions about the sustainability of its enrollment growth." In other words, if they can't push the envelope on recruiting, enrollment growth could fall.

Time will tell, but this much I know: Just as Harris, the trade group prez, didn't return two calls over a two-week period, neither did ITT CEO Rene Champagne. Silence, in these circumstances, is rarely golden.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.