Marc J. Epstein and Daniel K. Young came to the Harvard Business School from different sides of the country. But their past work in the world of finance has followed--and haunted--both of them.

Epstein, a visiting professor of business administration, is accused of skipping out on a $1.5 million loan he owed Los Angeles-based Mitsui Manufacturers Bank for two investment companies he ran in Southern California. After the bank tracked him to Harvard and sued in Middlesex court, Epstein agreed to pay Mitsui $13,000 a year, meaning he will pay off the debt by the year 2200.

"It's the case of one more person from the '80s who got overextended with other people's money," says Dean of the Business School John H. McArthur. "Whether or not he handled in an honorable way his responsibility to the people who invested the money I have no way of knowing."

Young, a second-year Business School student, was indicted on insider-trading last month in New York and, as a result, won't receive his diploma today as scheduled. The Federal Reserve has also fined Young, a former trader for Manufacturers Hanover Trust, $500,000 and initiated proceedings to permanently bar him from banking. He could spend up to four years in jail.

"In the Young case, as in all of these kinds of situations, we've said we're not going to give a degree until we...know all the facts," McArthur says.

What is perhaps most remarkable--and similar--about the Epstein and Young cases was that the Business School did not become aware of either situation until legal action was taken.

In Epstein's case, a review led by faculty members and University Attorney Allan A. Ryan Jr. concluded that the professor should be allowed to remain at the school through the end of next year. After the allegations against Young went public, a Business School administrator stepped in to deny the student his diploma.

"I think short of going to court there's no way of determining it," McArthur says of the Epstein case. "If the question is if he handled it as well as he could have possibly handled it, I'd say no."

What is most embarrassing about the cases is that both men were connected, to varying degrees, with the Business School's stated commitment to promoting ethics. Young, like all Business School students, took a mandatory ethics course; Epstein, who was professor for a first-year course this fall in management accounting, came to Harvard to teach ethics.

But McArthur says there's little the Business School can do to make their students and professors ethical.

"He'd already done it before he came here," says McArthur. "If someone's a deadbeat, they're a deadbeat. I think that's not in any case a task that we can take on."

Epstein and Young both say there was nothing improper, or unethical, about their actions. The professor says he was simply guaranteeing a loan for a friend in the companies, even though his is the only name to appear in court documents about the firms. The students says he only traded debts and never engaged in insider trading.

As revealing as what the two men say is what they won't say, or simply can't remember. Epstein seems hazy on the basic details of his involvement with the two companies, Western Consulting Group Inc. and Western Business Investors Inc., including whether or not he was the founder of Western Consulting.

The professor also says he is pursuing legal action against others involved in the two companies, although he declines to specify the nature, time or location of such action. The Crimson checked courts in five Southern California counties, and found no court filings with Epstein listed as a plaintiff.

Likewise, Young would not say whether he was forced to resign from his job at Manufacturers in December 1990, shortly after he allegedly induced the bank to sell its share in Colombian debt to a business partner. Young allegedly knew the debt was about to be restructured in favor of the investment.