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The 10 Biggest Corporate Frauds in the US

Wondering about some of the biggest corporate frauds in the US? It’s a fact that corporations are, from time to time, involved in diverse scandals and gossip, no different than the people who run them. These scandals are often centered on corporate corruption, schemes, and frauds, along with other felonies such as tax evasion, bribery of public officials or misapplication of funds in receiverships and bankruptcies.

The last two decades have been marked by diverse corporate frauds and scandals concerning some of the biggest corporate entities in America. Some of these frauds lead to economic recessions and social protests, such as the Occupy Wall Street movement. Nevertheless, it is important to consider the fact that recessions which follow some of these frauds are not always the effect of the companies’ crises.

The intensification of diverse economic processes involving governmental measures, accommodative monetary policy, interest rates, or balance of payments instability might lead to different economical dynamics, which in turn provide the opportunity for some companies and corporations to augment their income through doubtful or outright corrupt methods. And their fraud and collapse might just end up precipitating a global crisis and recession.

Well, these business corporations’ scandals have a significant impact on the state of the economy. And indeed these scandals always catch the attention of the media and the public eye. Some of these stories have been taken to the first page of all newspapers, and ended up making history. There are some pretty well known scandals over the past few decades. We’ve made a list featuring The 10 Biggest Corporate Scandals In Modern History, including the Lance Armstrong and SRAM Corporation scandal, and the Mining Scandal of Canadian mining company, Bre-X.

This time we’ve gathered some of the biggest corporate frauds in the US, from the last decade and a half. It is hard to make a countdown of these frauds, as most of them influenced the economy greatly and eroded public trust in the financial sector. Here’s a list of the ten biggest corporate frauds in the US, since 1998. Check it out!

No. 10 Waste Management (1998)

This company, based in Houston, reported $ 1.7 billion in fake earnings in 1998. The company allegedly falsely increased the depreciation time length for their property, plant and equipment on the balance sheets. After a new CEO and management team went through the books, the fraud was exposed. The SEC fined Arthur Andersen $7 million, and settled a shareholder class-action suit for $457 million.

No. 9 WorldCom (2002)

WorldCom’s CEO Bernie Ebbers was caught by his internal auditing department. Mr. Ebbers inflated assets up to $11 billion, which lead to 30,000 lost jobs and $180 billion in losses for investors. This $3.8 billion fraud was penalized with a 25 year sentence for fraud, conspiracy and filing false documents with regulators.

No. 8 Tyco (2002)

This company, dedicated to blue-chip Swiss security systems, was caught in a scandal in 2002, when CEO Dennis Kozlowski and former CFO Mark Swartz were caught tapping money through unapproved loans and fraudulent stock sales. The two players stole $150 million and inflated company income by $500 million, and were sentenced to 8-25 years in prison. A class-action lawsuit brought against Tyco forced them to pay $2.92 billion back to investors.

No. 7 HealthSouth (2003)

HealthSouth is one of the largest publicly traded health care companies in the U.S. The company’s CEO Richard Scrushy was involved in a scheme, inflating earnings numbers up to $1.4 billion to meet stockholder expectations. He had told underlings to make up numbers and transactions from 1996-2003. Finally he was caught, but was later cleared of all charges concerning the accounting fraud, though he was convicted for the bribing of the Governor of Alabama

No. 6 Freddie Mac (2003)

The company misstated $5 billion in earnings. A SEC investigation uncovered and convicted its main players, President/COO David Glenn, Chairman/CEO Leland Brendsel, ex-CFO Vaughn Clarke, former senior VPs Robert Dean, and Nazir Dossani for $125 million in fines.

No. 5 American International Group (AIG) (2005)

This multinational insurance corporation’s CEO Hank Greenberg performed an accounting fraud of $3.9 billion, by purportedly booking loans as revenue, directing clients to insurers with whom AIG had payoff agreements, and telling traders to inflate AIG’s stock price. A SEC investigation revealed the fraud, and settled more than $2 billion in fees.

No. 4 Lehman Brothers (2008)

The well-known financial services firm’s fraud came up in 2008, when the company finally collapsed. Lehman executives and the company’s auditors, Ernst & Young, had hidden over $50 billion in loans disguised as sales. The $600 billion in assets of the firm when they went bankrupt is now considered the largest bankruptcy in U.S. history.

No. 3 Bernie Madoff (2008)

Bernie Madoff, a financial investor who had founded Bernard L. Madoff Investment Securities LLC, performed one of the largest schemes ever done by an individual. Along with his accountant, David Friehling, and Frank DiPascalli, Madoff tricked investors out of $64.8 billion through a Ponzi scheme: investors were paid returns out of their own money or that of other investors rather than from profits. Madoff was caught when he told his sons about the scheme, and they reported it to SEC. He was convicted to 150 years in prison and $170 billion in restitution.

No. 2 Satyam Scandal (2009)

The Indian IT services accounting firm was falsely boosting revenues by $1.5 billion, falsifying revenues, margins and cash balances. Founder Ramalinga Raju admitted his fraud to the company’s board of directors and was convicted for trust breach, conspiracy, cheating and falsification of records. Yet, he was ultimately released, as the Central Bureau of Investigation failed to file charges on time.

No. 1 Enron (2001)

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The energy and service corporation was caught keeping a huge debt off balance sheets, which lead to shareholders losing $74 billion, and thousands of employees and investors’ retirement accounts. CEO Jeff Skilling and former CEO Ken Lay were found guilty of fudging Enron’s accounts and got 24 years in prison.