By Geoff Gloeckler and Jennifer Merritt

Several hundred MBA applicants have failed their first test in business ethics after being caught hacking into software to check on the status of their applications. Several top-tier B-schools that discovered they were hacked have decided to reject those hackers' applications.

The problem was first discovered at Harvard last week. The school said 119 prospective students hacked into the files of ApplyYourself Inc., an admissions outsourcing company that handles Harvard's admissions applications.

Instances have also been uncovered at Stanford, MIT, Duke, Carnegie Mellon, Dartmouth, and possibly others. Using instructions posted by anonymous users on several Internet B-School bulletin boards, including at BusinessWeek Online, many of the hackers were able to discover their acceptance status weeks before decision letters were sent. BusinessWeek Online removed the posting on its message board as soon as it was discovered.

"LACK OF INTEGRITY."  Harvard decided these potential students are not tomorrow's leaders. In a statement, Harvard Dean Kim B. Clark called the hacking "unethical," saying Harvard wants to educate principled leaders with "a strong moral compass and intuitive sense of what is right and wrong." Says Clark: "Those who have hacked into this Web site have failed to pass that test." Still, the school won't alert competitors to the dishonest applicants. Says Harvard spokesman Jim Aisner, "[We're] looking out for our own interests, our own turf."

Other schools are still assessing their stand. Stanford Graduate School of Business says it's asking the applicants who used the information to check on their status "to take ownership of their actions, take the initiative in contacting us, and offer any possible explanation for these actions." The school's decisions will be made on a case-by-case basis, although in a statement, Derrick Bolton, assistant dean and director of MBA Admissions, said: "In the best case, what has been demonstrated here is a lack of judgment; in the worst case, a lack of integrity."

Carnegie Mellon University's Tepper School of Business is trying to verify that two applicants hacked in -— and then will likely deny them admission, a spokerperson says. Still other schools that had their admissions information hacked refused to allow ApplyYourself to identify them by name.

NO INFO.  Paul Danos, dean of Dartmouth College's Tuck School of Business, says he's taking the situation very seriously and will carry out a full investigation before determining the school's action. "We want to be thoughtful about this process. We feel it's important to collect as much information as we can before we make a decision," says Danos. "We will convene a meeting with representatives from our admissions team, ethics professors, and deans on Friday to discuss the options."

MIT's Sloan School of Business is rejecting anyone it discovers has attempted to hack into its application files, while Duke University's Fuqua School of Business remains undecided on how to proceed.

Ironically, applicants who hacked into MIT, Duke, and Carnegie Mellon didn't find out whether they might have been accepted. Those schools don't keep admission decisions on their internal intranet system until the entire process is complete. "No one who sought unauthorized access to his or her account was able to access information about the admission decision," MIT Dean Richard Schmalensee said in a statement.

Of course, some of these rejected applicants may turn to other schools now. What are their chances there? While Harvard won't be sharing the names of those who hacked into its system, an alert has gone up among B-schools across the country, and many will be on the lookout.

APPLAUSE?  Emphasizing that she was speaking hypothetically, Beth Flye, admissions director at Northwestern's Kellogg School of Business, says: "Let's just say if some information of this nature came to our attention, we would want to get the most factual information possible and discuss it internally. Then we might take action." Kellogg doesn't use ApplyYourself for admissions. But Flye says she believes those who hacked in erred. "It comes down to making good choices with good judgment."

On many of the bulletin boards where the instructions on how to hack first appeared, debate over the incident still rages. Surprisingly, some applicants and other message-board posters at BusinessWeek Online and various MBA-related chat groups say they failed to see the ethical issue presented. Some went so far as to say that these individuals should be applauded. "Exploiting weaknesses is what good business is all about. Why would they ding you?" wrote one poster on accepted.com's message board last week.

Yet many of those who expressed an opinion about the hackers agreed with the decision to reject their applications. With all the talk of ethics and B-schools these days -— looks like this was score one for ethics education.