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The 10 Worst Corporate Accounting Scandals of All Time

THE 10 WORST

Corporate Accounting Scandals of All Time



Corporate malfeasance has earned a place among the defining themes of the last decade-and-a-half, helping give birth to the present global recession and the Occupy Wall Street movement.

Here���s a look back at the who, what, when and how of some of the worst corporate accounting scandals.



WASTE MANAGEMENT SCANDAL [1998]

COMPANY -Houston-based. publlcly traded waste management company

HOW THEY DID IT The company allegedly falsely waste increased the depreciation time lengt for their property. plant and equipment on the balance sheets

WHAT HAPPENED Reported $1.7 billion in fake earnings

HOW THEY GOT CAUGHT A new CEO and management team went through the books

PENALTIES Settled a shareholder class-action suit for $457 million; SEC fined Arthur Andersen $7 million.

MAIN PLAYERS Deal L Buntrock and Arthur Andersen

FUN FACT

After the scandal, the new CEO Q Founder/CEO/Chairman n Arthur Andersen A Maurice Meyers Set up an anonymous company hotline where employees could report dishonest or improper behavior.



ENRON SCANDAL 2001

COMPANY Houston-based commodities energy and service corporation

HOW THEY DID IT Kept huge debts off the balance sheets

WHAT HAPPENED

Shareholders lost $74 billion thousands of employees and investors lost their retirement accounts, and many employees lost their jobs

HOW THEY GOT CAUGHT

Turned in by internal whistle blower Sharron Watkins; high

stock prices fueled suspicions

PENALTIES

Lay died before serving time; Skilling got 24 years in prison. The company filed for bankruptcy. Arthur Andersen was found guilty of fudging Enron's accounts



WORLDCOM SCANDAL 2002

COMPANY WORLDCOM Telecommunicauons company; now MCI, Inc,

HOW he got caught Worldcom's internal auditing department uncovered $3.8 billion in fraud.



What happened Inflated assets by as much as $11 billion leading to 30,000 lost jobs



Penalties: CEO was fired , controller reassigned, and the company filed for bankruptcy.



Main player: CEO Bernie Ebbers



How he did it: underreporting line costs by capitalizing rather than expensing and inflated revenues fake accounting entries



Fun facts:

Following the scandal, congress passed the sarbanes-oxley act , introducing the most sweeping set of new business regulations since the 1930's



TYCO SCANDAL [2002]

Company

New Jersey_based blue chip swiss security systems company



How they got caught SEC and Manhattan D.A. investigations uncovered unquestionable accounting practices including large loans made to Kowzlowski that were then forgiven.



What happened

CFO and Ceo stole $150 million and inflated company income by $500 million



Penalties

Kowzlowski and Swartz were sentenced to 8-25 years sentence in prison.

Tyco to pay $2.92 billion to investors.



Main players

Ceo Dennis Kowslowski and former CFO Mark Swartz



How they did it

Siphoned money through unapproved loans and fradulent stock sales. Money was smuggled out of the company disguised as executive bonuses and benefits



Fun fact

At the height of the scandal, Dennis threw a $2.5 million birthday party for his wife on an island with a complete Jimmy Buffett performance.





HEALTHSOUTH SCANDAL [2003]

Largest publicly traded health care company in the U5.



How he got caught

Sold $75 million in stock a day before the company posted a huge loss, triggering SEC susplclons



WHAT HAPPENED

Earnings numbers were allegedly inflated billion to meet stockholder expectations.



PENALTIES

Scrushy was acquitted of all 36 counts of accounting fraud, but convicted of bribing the governor of Alabama. leading to a 7-year prison sentence.



How he did it

Allegedly told underlings to make up numbers and transactions lrom 1996-2003.



FUN FACT

Scrushy now works as a motivational speaker and maintains his innocence.

The 10 Worst Corporate Accounting Scandals of All Time

shared by absolutelytrue on Nov 12, 2012 in Business

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If there is one theme to rival terrorism for defining the last decade-and-a-half, it would have to be corporate greed and malfeasance. Many of the biggest corporate accounting scandals in history happ...
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