Defy Ventures Founder Steps Down Amid Accusations of Misconduct
by Christopher Zoukis
Catherine Hoke used to work on Wall Street, employed by a private equity firm. She left the world of high finance to start the Prison Entrepreneurship Program for Texas prisoners in 2004. But after five years Hoke was forced out and banned from all Texas prisons, after she admitted to having relationships with program graduates following their release.
Hoke is a big believer in second chances, though, so she gave herself one. In 2010 she founded Defy Ventures, a nonprofit dedicated to helping former prisoners stay out through training and mentorship to help them start their own businesses. Defy, based in New York City, now has programs in over 20 prisons and jails in Nebraska, California, Colorado, Connecticut, New York and – as of October 2018 – at the Monroe Correctional Complex in Washington State. It also has a large Internet presence, teaching business classes via online lectures. [See: PLN, Feb. 2018, p.20].
According to the organization, the recidivism rate for program graduates is less than five percent over a three-year tracking period, based on March 2018 data.
Defy Ventures, whose tagline is “Transforming your hustle,” has become a Silicon Valley darling, receiving grants from supporters ranging from Google to the Koch brothers. Facebook COO Sheryl Sandberg wrote the foreword to Hoke’s newly-released memoir, A Second Chance: for You, for Me, and for the Rest of Us.
However, sexual harassment claims and other allegations of misconduct involving Hoke surfaced in March 2018 in an article published by the Daily Beast, an online news site.
According to that article, one unidentified employee told the Daily Beast she had been sexually harassed by Hoke. That female staffer said she was forced to sleep in a hotel bed with Hoke, who told her that “she ‘doesn’t usually like blondes, but that I am really hot.’” On another occasion, Hoke allegedly commented on the woman’s derriere.
The allegations were apparently passed along to the Daily Beast by Roger Gordon, who had served as Defy Venture’s president for one month. He also reportedly blew the whistle on financial improprieties and fraudulent use of data by the organization. Gordon stated in a letter to Defy’s Board of Directors that he became concerned about Hoke’s conduct within a few weeks of accepting the position, and said no one could provide him with a list of businesses started by program graduates. Instead, he claimed, “the same ‘stars’ are showcased over and over again.”
With respect to the allegations of financial irregularities, the Daily Beast reported that several former Defy clients said they paid anywhere from a few hundred dollars to over a thousand dollars to take the organization’s courses.
Coss Marte, a Defy Ventures participant and graduate, defended the organization and its operations. According to Marte, Defy was instrumental in helping him launch the business he envisioned while he was locked up – his now successful fitness company, ConBody. [See: PLN, Feb. 2018, p.20].
“My experience with Defy was holistic, [it is] an incredible partnership and reentry program,” Marte said.
Catherine Hoke voluntarily resigned as the organization’s CEO on March 21, 2018; she was replaced by Andrew Glazier, who also assumed the role of Defy’s president. “Despite the obstacles, Catherine has promised her unwavering commitment to Defy’s continued success, and her resolve is an inspiration to our Board and staff,” the Board of Directors said.
Hoke issued her own lengthy statement, citing the “deceitful allegations” against her and saying the smear attack “was not an attempt to reveal truth. It was part of an intentional, pre-meditated, malicious plan” facilitated by the Daily Beast.
She added, “[t]he article in question repeated false claims of sexual harassment and sexual assault against me from 2014. This is old news. In 2014, Defy retained a law firm in connection with the claims. The claims were untrue then, and they remain untrue now.”
Hoke flatly denied that she had ever sexually harassed or assaulted any Defy staff members or participants, calling such claims “categorically untrue and deceitful.” She added her decision to resign, so as not to endanger Defy’s mission, was “the most difficult decision I have ever made.”
Roger Gordon was subsequently fired for “communicating with donors and supporters of the organization in a manner that the Board believed was damaging to Defy and inconsistent with Mr. Gordon’s fiduciary obligations” against the Board’s directives, the Board said.
Defy Ventures retained the law firm of WilmerHale to investigate the accusations of financial misconduct, inaccurate program outcome data and sexual harassment, and posted a statement regarding the results of that review on May 8, 2018.
According to the Board of Directors, the investigation uncovered “no evidence to support the allegations of financial impropriety, including claims of possible embezzlement and misuse of Defy funds. The investigation also found that the claims of financial deficiencies – including allegations of insufficient or inadequate financial controls and records, and lapses in insurance – were either unsupported by the evidence or overstated.”
While the review determined that Defy “lacked adequate controls over the program outcome data contained in its communications” with donors, staff members and participants, it had already taken steps to improve its data reporting in 2017. And although there were some issues with the organization’s calculation of recidivism rates for program graduates, there was “no intent to mislead Defy donors, staff, program participants, or any other third parties.” Even when recalculated using a new methodology, the recidivism rates were under five percent.
Further, the Board reported, “The investigation found no evidence to support any allegations that Ms. Hoke ever engaged in sexual harassment or misconduct directed at Defy program participants, known as Entrepreneurs-In-Training.” The WilmerHale investigation said “the facts are not certain,” but there was some evidence of an incident in which Hoke “engaged in non-consensual touching of a sexual nature with a Defy employee on one occasion in 2014” – which Hoke denied – and evidence that she had made “sexual and inappropriate comments to Defy employees on multiple occasions” – which Hoke frankly acknowledged in her letter of resignation.
In response to the investigative results, the Board said it had “strengthened sexual harassment training, adopted a whistleblower policy, clarified procedures regarding complaints to and about senior staff, and strengthened Defy’s financial controls and recordkeeping practices.”
Under new leadership, the organization continues to provide entrepreneurial training and support to prisoners who want to start their own businesses once they are released.
Sources: www.dailymail.co.uk, www.thedailybeast.com, www.defyventures.org