What is the recommended way to deal with such a situation?
When the CEO was caught blatantly lying to a customer to make a sale, it became clear about the totality of the situation - he's a full blown sociopath, I just hadn't put it all together, but kept picking up clues. Then the guy who introduced me to him finally told me about how this CEO deliberately got fired from Goodyear in France back in the 80s, when such a thing was impossible (France's unemployment laws and all), he then moved to England and defrauded the French government of unemployment insurance for over a year. The amount of risk taking there...! Like I said, Patrick Bateman from American Psycho isn't much of an exaggeration of this guy's behavioral patterns and character. I'm serious... Then I realized how I'd been manipulated for 4 years.
I was so fried after all the stress I didn't think through things enough and I quit, after some months of hassle dealing with his wife over getting paid for the outstanding invoices. She was Marie Antoinette Macbeth... 4 years of my life down the drain.
I'm in a bit of a pickle now as I'm still burnt out, and am finding it hard to get interviews or survive them. I'm too old to get some worker bee job in a tech company now, I fear, and I can't stand IT at some level. This is one hell of a mid life crisis...
But my conscience is clear. The rational thing to do would have been to keep working there and overcharge them on the hourly rate, which I could have without any trouble (given I was 90% of the It staff with no supervision). But then I'd be playing their game... But I could have spent my time mostly looking for another job. But the stress and everything else... I'd be waking up every morning pissed as hell. Not a good thing. I sort of wish I had now, but it's because things are getting dicey for me on a personal level. I have the resources to stay afloat for another year, so I'm shouldn't complain but I hate burning savings.
So my advice is think this through first and decide how to find another job or what you will do before quitting. I was too impulsive. I can relate to the 'blood, sweat and tears" too since I realized the founders were lazy people who let me do all the work and didn't give a damn about anything but money (this was a 4 person company, and I the only one w/o equity). but you have to let it go - if you don't have any equity, and the people you deal with have no ethics, you will get screwed every which way, even for the sheer fun of it possibly. What's to stop them from manipulating you? People like this do not have any internal brakes on what they will do or rationalize away. How do you know this is the only morally bankrupt decision they have made?
To actually answer your question, how have you been legally impacted by their actions? I'm not sure you could make a case. If you have equity, then figure out how to extract yourself without triggering their alarm bells that you're leaving because you know they are bastards. If you don't have any sort of financial stake in the company (like I did) and can't claim damages (e.g. I was paid for my time, just constantly late), then walk away. I couldn't make a case that I had any claim to equity or etc. The law does not care about philosophical stuff like ethical treatment of employees or contractors unless the situation is very clear cut, like sexual harassment. Manipulation of people is entirely legal. So if there is no money involved, or broken contracts, you don't have any legal avenues.
I do wish I had thought things through and been better able to reveal to the customer who got screwed about the situation - I ended up saving the contract by writing the system to generate the data they thought they'd paid for, but I was in a bind - either not do that and have the customer sue the company (and never get my invoices paid) or do this and get my invoices paid and then quit. Do you feel any sense of responsibility or guilt about what was done? You shouldn't. I did, now that I realize this, and that drove my actions (unconsciously). I would do so many things differently now...
so perhaps you can inform the person who was impersonated somehow? Then your sense of duty to do something has been dealt with and the people directly affected can decide what to do.
According to what you've written, you lead engineering. Unless you're somehow complicit in the deception, you're blameless as long as you pass that information on, because engineering doesn't involve recommendations.
I would imagine most CEO's would quietly correct/retract the recommendation, and take up (or not) the issue with the employee. There's your fix right there. If they fail to, that says more about their leadership than a rogue employee does, and either way, probably time to start looking for a move up to somewhere else. 3-4 years is the longest you should be working somewhere without substantial financial reason to stay. The cachet of a long time in a position saturates out at about 3-4 and unless you plan to retire in this position, you'll be in a weaker negotiating position with 5, 10, or 20 years in the same job.
- depending on the severity of the action, this is identity theft and punishable by law. If you have indicting proof, report it
- if it poses harm to your career in anyway, think of your family and usually the safest route is to resign
If it was carried out without approval, report the employee.
But by all means, don't turn a blind eye at it unless you really have to.
There is a funny thing about corruption, it's the same every where. Nothing would be special or particularly harmless about it be it in a startup or a larger organization.
Best of luck
Tell management how you feel about the dishonesty.
Perhaps they could come clean to the potential client, and/or figure out how to make sure something like this never happens again.
Depending on the structure of the company (it sounds like you might be in a small company) it probably is time for some people to go, or at least take some time off and figure out their moral compasses.
If this was a clear impersonation of a specific individual then it is a serious fraud (presumably the company expects financial gain). If it is "These guys are amazing - A Fortune 50 CTO" then half of Hollywood does it every day.
I think that morally overdrawn is the natural state of much of the business world - morally bankrupt is rarer.
So for some actual advice - if it was a crime, report it and leave. If you cannot stomach the ethics even if it is not criminal, then prepare a good resignation letter and leave - but I would counsel that in doing so you are setting a tremendously high bar for your future behaviour - which is a good thing but it has implications. I would suggest making a public note on your leaving and reasons maybe on your blog. no point in being ethical if no one notices.
but lastly I would look inside yourself - are there any other reasons why the last three and a half years have upset you? What decisions did you not agree with - what relationships have gone sour? Is this all plain sailing then one horrible fraud? if so it seems out of character for the company? if not then what things have lead to this - for example this sort of behaviour is usually seen under real stress, so why did the company end up not getting the sales last year, what shortcuts in engineering have lead to a lower product, what lack of marketing ab tests lead to lack of a sales pipeline?
This maybe the right wake up call the company needs to turn around - do you want that? Or do you think this is not a wake up call but the last straw?
I am rambling on but I have found many ethical decisions rarely come out of simplicity and rarely have simple resolutions.
good luck
No meaning to ethics if this is your philosophy.
What's the basis for the belief (you seem to hold) that it's more ethical to silently tolerate unethical practices instead of outing them publicly?
And in practice, publicly stating that you turned in your company for something (even if morally right) can hurt you when you apply to other companies since if they learn of it they are likely wondering if you would accuse them of something if you worked there.
The way it should be stated it's against my moral values. Not everyone's moral values are aligned. Thus rendering this discussion unusable for me as I don't know against what moral value we are judging these actions.