As someone lost to history once said, “follow the money”. We’ve found that in our Los Angeles and California whistleblowing cases, along with our national Federal False Claim and Qui Tam matters, that axiom is generally good advice.
Here are ten of the most incredible corporate accounting scandals of all time:
The company reported $1.7B in fake earnings by allegedly increasing depreciation times for their properties, plan and equipment. Thanks to a new CEO and his team, then found it. The case settled a class action shareholder settlement for $457M and the auditor, Arther Andersen, paid $7M.
Shareholders and employees lost $74B and the company closed, costing thousands of jobs. The company kept large debts off the balance sheets and were turned in by internal whistle-blower Sherron Watkins. Funny, Fortune Magazine once called Enron “America’s Most Innovative Company.”
Another “asset inflation” case, line costs unreported by capitalizing rather than expensing, along with fake accounting entries. Internal auditors discovered $3.8B in fraud. This case led to the Sabine’s Olay Act, which brought about the most significant changes in business regulations since the 1930s.
Large loans totaling $150M were made to CEO Dennis Kozlowski and the CFO, which were then forgiven. Questionable accounting practices, including inflation of revenue by $500M. Class action by shareholders resulted in a $2.92 billion dollar payback. Dennis was able to hold a $2M birthday party for his wife on a private island with some of his stolen loot.
This was the largest publicly-traded health care company in the US in 2003. Earnings were allegedly inflated by $1.6B to meet stockholder demands. The CEO Richard Scrushy allegedly told subordinates to make up numbers and transactions for a prior 7 year period. The CEO sold $75M in stock a day before the company posted huge losses, and the SEC got suspicious.
Stay tuned for the next five largest corporate accounting scandals of all times, including Bernie Madoff.
Stephen Danz & Associates is a Los Angeles-based employment law firm representing corporate whistleblowers throughout California and qui tam (federal false claims) whistleblowers throughout the country.
Call us for a free consult. 877-789-9707.