Al Dunlap
In 1996, turnaround specialist '
Al Dunlap' (“Chainsaw Al”, because of his fondness for firings) was hired to resurrect
Sunbeam Corporation, an appliance maker in deep trouble. According to the SEC’s complaint, Mr Dunlap unnecessarily declared large losses, providing a “cookie jar” of reserves to boost profits. Sunbeam then shipped out more in 1997 than merchants could sell, a practice known as “
channel stuffing”. That boosted revenues that year, but had a terrible effect on results leading Dunlap to “conceal the company’s mounting financial problems”. Charged with arranging a "massive financial fraud", Dunlap agreed to pay a $500,000 SEC civil fine and be barred from ever serving as an officer or director of a public company. Sunbeam Corporation ultimately filed for
Chapter 11 bankruptcy protection.
Bernard Ebbers
Bernard John Ebbers
, also known as 'Bernie Ebbers', is a
Canadian-born businessman. He co-founded
telecom company WorldCom and is a former
CEO of that company.
In
2005 he was convicted of
fraud and
conspiracy in the largest (to date) accounting scandal in
U.S. history, as a result of WorldCom's false financial reporting, and subsequent 11 billion dollar loss to investors.
On July 13, 2005, federal judge Barbara Jones, of the U.S. District Court, Southern District of New York in Manhattan, sentenced Ebbers to 25 years in a federal prison in Mississippi, the toughest sentence yet among other recent
corporate accounting scandals.
US District Judge Barbara Jones granted bail for Bernard Ebbers on Wednesday, September 07, 2005, allowing him to remain free while he appealed a conviction. His sentence was affirmed on Friday, July 28, 2006, by the United States Court of Appeals for the Second Circuit.
On
September 26,
2006, Ebbers reported to the low-security Federal Correctional Institution in
Oakdale, Louisiana to begin serving his sentence. The earliest date he can be considered for parole is 2028 when he will be over 85 years old.
Andrew Fastow
'
Andrew S. Fastow' was the chief financial officer of
Enron Corporation until the
U.S. Securities and Exchange Commission opened an investigation into his conduct in
2001.
On
October 31,
2002, Fastow was indicted by a federal grand jury in
Houston,
Texas, on 78 counts including fraud, money laundering, and conspiracy. On
January 14,
2004, he pled guilty to two counts of wire and securities fraud, and agreed to serve a ten-year prison sentence. He also agreed to cooperate with federal authorities in the prosecutions of other former Enron executives.
On
May 6, 2004, his wife
Lea Fastow, a former
Enron assistant treasurer, pled guilty to a
misdemeanor tax charge and was sentenced to one year in a
federal prison in
Houston, Texas, and an additional year of supervised release. Lea was released to a halfway house on
July 11,
2005.
Heinrich Florian, Günter Hefner, Peter Schaefer, and T. Rudd Corwin
Four
Infineon executives were the first to plead guilty to charges of
DRAM price fixing in violation of the
Sherman Antitrust Act. The four executives were sentenced to 4 to 6 months in jail and paid $250,000 in fines. They also agreed to aid the
US Department of Justice with the ongoing investigation of the international cartel of several other chip makers including
Samsung and
Hynix Semiconductor. The DOJ probe into the actions of the companies began in 2002 at the urging of computer makers, including
Dell Inc. To date, both Samsung and Hynix have plead guilty to their role in the conspiracy and have been slapped with $300 million and $185 million fines respectively. Additional indictments are speculated to individuals from both companies involved in the scandal as well as pending civil suits by computer makers.
Walter Forbes
'Walter Forbes' was the former CEO of
Cendant Corporation. In
1998, Cendant Corporation was accused of
fraud after their company's merging of
CUC International and 'HFS Incorporated' in
1997. At the time, Vice Chairman
E. Kirk Shelton had arbitrarily inflated the company's revenue by $500 million over a period of three years. When this report was released to the public, the resulting damage to the company due to market value was reportedly $14 billion, with stock trading from a high of $41 down to nearly $11. At the time, this fiasco was the largest case of accounting fraud in the country. The first two trials of Forbes ended in mistrials, but he was convicted in November, 2006 and faces 25 years in prison.
Martin Grass
'Martin Grass', the former CEO of
Rite Aid Corp. was sentenced in 2004 to eight years in prison for his role in a massive accounting fraud at the drugstore chain his father co-founded. His sentence also included a $500,000 fine and three years' probation. Five other executives were also found guilty.
Mr. Grass is currently Inmate #11444-067 at the Miami Federal Correctional Institution.
[1]
Dennis Kozlowski
'Leo
Dennis Kozlowski' , a former
CEO of
Tyco International, was convicted of misappropriating more than $400 million of the company's funds.
Kozlowski has been tried twice. The first attempt ended in a mistrial, as one of the jurors who sided with Kozlowski later claimed that she was threatened. Kozlowski testified on his own behalf during the second trial, stating that his pay package was "confusing" and "almost embarrassingly big", but that he never committed a crime as the company's top executive.
Kozlowski was convicted on
June 17,
2005 for misappropriation of Tyco's corporate funds, among other charges. The prosecution won a total of 22 counts of grand larceny for $150 million in unauthorized bonuses. He was convicted of fraud against the company shareholders for an amount of more than $400 million.
On
September 19,
2005 he was sentenced by Judge Michael Obus in the
Manhattan Supreme Court to prison for a minimum of eight years and four months and a maximum of twenty five years in prison for his role in the scandal.
Sanjay Kumar
'
Sanjay Kumar' was
Chairman and CEO of
Computer Associates International, resigning from those positions in April 2004, following an investigation into securities fraud and obstruction of justice. On November 2, 2006 Kumar was sentenced to 12 years in prison and fined $8 million after pleading guilty to leading a $2.2 billion accounting fraud at the software company.
Prosecutors said the former CEO and other executives backdated contracts to inflate revenue at Computer Associates, the world's second-largest maker of mainframe computer software. The case is U.S. v. Kumar, 04-CR-846, U.S. District Court, Eastern District of New York (Brooklyn).
Ken Lay
'
Ken Lay' was the chief executive officer and chairman of
Enron Corporation (with a brief intermission) until his resignation on
January 23,
2002 after Enron went bankrupt in December
2001.
Lay was indicted by a grand jury in
Houston,
Texas on
July 7,
2004 on counts of
securities fraud,
wire fraud and making false and misleading statements. On
May 25,
2006 he was convicted on all counts. However, Lay died on
July 5,
2006 in
Aspen,
Colorado of a massive
heart attack. As a result of Lay's death prior to exhausting his appeals, his conviction is abated, and Lay is legally considered never to have been indicted or convicted of criminal charges. Civil suits are expected to continue against Lay's estate. However, claimants may not seek punitive damages against a deceased defendant, only compensatory damages. He would have been sentenced on
September 11,
2006.
Joseph Nacchio
'
Joseph Nacchio', was chairman of the board and chief executive officer of
Qwest Communications International from 1997 to 2002.
Nacchio resigned in June 2002 amidst insider trading rumors. On March 15, 2005, Nacchio and six other former Qwest executives were sued by the
U.S. Securities and Exchange Commission. They were accused of a "massive" $3 billion financial fraud between 1999 and 2002 and of benefiting from an inflated stock price.
Nacchio was indicted on December 20, 2005 on insider trading charges in
Denver, Colorado. He was forced to surrender his passport for fear that he would flee the country. The indictment against Nacchio charges him with 42 counts of insider trading. Each count carries a potential 10-year jail term and corresponds to a sale of Qwest shares, including a flurry in April-May 2001, when Nacchio sold almost $39 million in stock. At the time, Qwest was trading between $41.12 and $38.31.
On July 27th, 2007, Nacchio was sentenced to 6 years in a federal prison, forfeit $52M, and pay $19M in fines. He will appeal.
Jamie Ollis
'Jamie Ollis', the former vice president of finance and attorney for
Dynegy Inc., was sentenced to 24 years in prison without the chance of parole for his role in an accounting scheme. His sentence was overturned by the Fifth Circuit court of appeals, and he is now awaiting re-sentencing by district court judge Sim Lake. He was resentenced to 6 years in September 2006.
Frank Quattrone
'
Frank Quattrone' is a former securities banker at
Credit Suisse First Boston who has been serving time in prison for
obstruction of justice and
witness tampering. During his peak at Credit Suisse he was earning roughly $160 million a year.
After one mistrial, he went to trial for the second time and was convicted on charges of obstruction of justice relating to
Credit Suisse First Boston's handling of
IPO's. He was sentenced to 18 months, which was two months over the Federal guidelines.
On March 20, 2006, this conviction was overturned and a new trial ordered by the U.S. Court of Appeals for the 2nd Circuit, on grounds of erroneous jury instructions.
[2]
John Rigas
'
John J. Rigas' was one of the founders of
Adelphia Communications Corporation which at its peak was one of the largest cable companies in the United States. He was also the majority owner of the
Buffalo Sabres NHL Hockey Team.
He was forced to resign from his position as CEO in May 2002 after being indicted for bank, wire, and securities fraud. Timothy J. Rigas and Michael J. Rigas, his sons, as well as Peter Venetis, his son-in-law, and Michael Mulcahey were also charged with participation in these crimes. The executives are accused of looting the corporation by concealing $2.3 billion in liabilities from corporate investors and of using corporation funds as their personal funds.
Rigas was convicted of the charges in the summer of
2004 and on June 20, 2005 was sentenced to 15 years in federal
prison. Adelphia Corporation was forced to file for bankruptcy after it had acknowledged that the three Rigases had taken $3.1 billion in loans that were not recorded on the books.
In
2005 John Rigas and his sons, Timothy Rigas and Michael Rigas, and Ellen Rigas, were charged with tax evasion and pled not guilty in October
2005.
Timothy Rigas was sentenced to 20 years and Michael Rigas was sentenced to 15 years. They were supposed to begin prison sentences September 19. They are currently out on appeal.
Richard M. Scrushy
'
Richard M. Scrushy' is the founder and former CEO of the physical rehabilitation healthcare giant
HealthSouth Corporation, based in
Birmingham, Alabama.
On March 18, 2003, the
FBI raided HealthSouth headquarters and the
U.S. Department of Justice leveled charges of inflated earnings reports amounting to over $2 billion from the mid 1990s. Many of the charged executives pled guilty to fraud and agreed to testify against Scrushy. He was indicted in November of that year, charged with 85 counts of fraud, money laundering, conspiracy, and making false statements. In 2005, after 21 days of deliberation, Scrushy was acquitted on all 36 counts of fraud and conspiracy stemming from the $2.7-billion fraud.
On October 26, 2005, just four months after being acquitted, Scrushy was indicted on new charges in connection with former
Alabama Governor
Don Siegelman. On June 29, 2006, a Federal jury found both Scrushy and Siegelman guilty on multiple charges under the RICO act. Scrushy was sentenced to 6 years and 10 months in prison and fined $417,000.
Jeffrey Skilling
'
Jeffrey Skilling' is the former CEO of
Enron Corporation, and was convicted of federal felony charges relating to Enron's financial collapse. After a 56-day trial ending with a jury verdict on May 25, 2006, Skilling was found guilty of 19 out of 28 counts against him, including one count of conspiracy, one count of insider trading (although he was acquitted of the other nine counts of this particular charge), five counts of making false statements to auditors, and twelve counts of securities fraud. Each conviction carries a maximum sentence of 5 to 10 years. Court observers estimate Skilling faces at least 25 years in prison for having used off-the-books partnerships to manipulate Enron's finances, as well as additional jail time for using inside information to sell Enron stock.
On October 23, 2006, Skilling was sentenced to 24 years in prison for his role in the collapse of Enron. He plans to appeal.
Scott D. Sullivan
'
Scott D. Sullivan' is an American Certified Public Accountant and the former
CFO, Treasurer, and Secretary of WorldCom, who engineered WorldCom's $11-billion accounting fraud, the largest scandal of its kind in U.S. history.
Sullivan entered a guilty plea and was sentenced to five years in prison as part of a plea agreement in which Sullivan testified against former WorldCom CEO Bernard Ebbers, who received a 25-year sentence (the maximum sentence that Sullivan could have received if he had not accepted the plea agreement and was found guilty).
Mark Swartz
'
Mark Swartz', former
CFO of
Tyco International found guilty of looting the industrial products and services company of hundreds of millions of dollars to fund an extravagant lifestyle.
In 2005 a state court jury deliberated over 11 days before returning the verdict in the second prosecution of Swartz on charges of grand larceny, securities fraud, and falsifying business records. The verdict came after a four-month trial in
Manhattan Supreme Court. Swartz was sentenced to eight-and-a-third to 25 years and ordered to pay $72 million in fines and restitution.
Samuel D. Waksal
ImClone Systems founder, '
Sam Waksal', was sentenced to seven years and three months in prison for insider trading. Besides insider trading, Waksal was ordered to pay more than $4 million in fines and back taxes. Waksal was charged with acting on information which was 24 hours shy of being made public, telling his father and his daughter to lie for him, and directing an ImClone employee to destroy documents. He also forged the signature of a corporate officer to fraudulently obtain a bank loan, and he avoided more than $1 million in New York State sales tax by shipping $15 million in artwork he bought to an ImClone address in New Jersey.
Stuart Wolff
'
Stuart Wolff', former CEO of
Homestore Inc. was sentenced to 15 years in prison for directing a $67 million fraud at the online home-listings company. Convicted of using sham transactions to inflate sales and to boost the stock price of the company, Wolff was also ordered to pay $8.64 million in restitution and a $5 million fine in addition to the prison term.
Others
★
Jack Abramoff, guilty of conspiracy and fraud at
SunCruz Casinos
★
Conrad Black
★
Ivan Boesky
★
Alan Bond
★
Diana D. Brooks aka "Dede", Sotheby's CEO who resigned in disgrace in a price-fixing scandal
★ Fred Cooper, CEO of BICO who attempted to sell fake "needleless" machines to check
blood sugar in
diabetics.
★
Bernard Cornfeld
★
John De Lorean, charged with drug trafficking, but was acquitted
★
David Duncan
★
John Elliott
★
Leona Helmsley, hotel operator and investor, guilty of tax fraud
★
Charles Keating
★
Adam Kidan, guilty of conspiracy and fraud at
SunCruz Casinos
★
Dennis Levine
★
Michael Milken, guilty of fraud at bankrupt
Drexel Burnham Lambert
★
Michael I. Monus, former COO of
Phar-Mor accused of embezzlement, as well as jury tampering
★
Rene Rivkin
★
Martha Stewart
★
Robert Vesco
★
Patricia C. Dunn
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