[IP] Status of High-Profile Corporate Scandals
Begin forwarded message:
From: "Robert J. Berger" <rberger@xxxxxxx>
Date: December 28, 2005 6:02:01 PM EST
To: Dave Farber <dave@xxxxxxxxxx>, Dewayne Hendricks
<dewayne@xxxxxxxxxxxxx>
Subject: Status of High-Profile Corporate Scandals
Status of High-Profile Corporate Scandals
By The Associated Press
http://www.salon.com/wire/ap/archive.html?wire=D8EPGJ7G0.html
December 28,2005 | -- A look at some of the high-profile
corporate scandals of recent years and the status of legal
action in each.
ENRON CORP. -- Former top Enron accountant Richard Causey
pleaded guilty to securities fraud Wednesday and agreed to help
pursue convictions against Enron founder Kenneth Lay and former
Chief Executive Jeffrey Skilling. The three had been scheduled
to be tried together Jan. 17 on conspiracy, fraud and other
charges. After Causey's plea the judge granted a defense request
to delay trial to Jan. 30. Causey will serve seven years in
prison and forfeit $1.25 million to the government, according to
the plea deal. Former Chief Financial Officer Andrew Fastow
pleaded guilty in January 2004 to two counts of conspiracy,
admitting to orchestrating schemes to hide the company's debt
and inflate profits while pocketing millions of dollars. He
agreed to serve the maximum 10-year sentence, which will begin
in July 2006, after he testifies against his former bosses.
Fastow's wife, Lea Fastow, completed a yearlong sentence in July
on a misdemeanor tax charge for failing to report her husband's
kickbacks. Former Enron treasurer Ben Glisan Jr. is serving a
five-year sentence for his role in the scandal. And two former
Merrill Lynch & Co. executives were sentenced to short prison
terms for their roles in a bogus Enron sale of power barges.
QWEST COMMUNICATIONS INTERNATIONAL INC. -- Former Qwest CEO
Joseph Nacchio was indicted last Tuesday on 42 counts of insider
trading accusing him of illegally selling off $101 million in
stock. In July, Robin Szeliga, former CFO, pleaded guilty to one
criminal count of insider trading to become the highest ranking
officer to admit wrongdoing in a scandal that forced the
telephone company to erase billions of dollars in revenue. She
has reached a plea bargain in the SEC case, agreeing to
cooperate with federal investigators. Qwest agreed last year to
pay $250 million to settle SEC charges of fraud in a deal that
did not include individuals.
ADELPHIA COMMUNICATIONS CORP. -- Michael Rigas, a son of the
founder of Adelphia Communications Corp., pleaded guilty last
month to a charge of making a false entry in a financial record,
eliminating the need for his retrial on securities fraud and
bank fraud charges in a scandal that forced the cable giant into
bankruptcy. John Rigas and his son Timothy were convicted in
federal court last year of conspiracy, bank fraud and securities
fraud. On June 20, John Rigas was sentenced to 15 years in
prison, and Timothy Rigas to 20 years. They are free pending
appeal. A fourth executive, Michael Mulcahey, was found not
guilty of conspiracy and securities fraud. In October, John and
Timothy were indicted in Philadelphia on charges they and other
family members didn't pay $300 million in taxes.
WORLDCOM INC. -- Bernard Ebbers, who as CEO of WorldCom oversaw
the largest corporate fraud in U.S. history, was sentenced on
July 13 to 25 years in prison. The sentence was handed down in
Manhattan three years after WorldCom collapsed in an $11 billion
accounting fraud, wiping out billions of investor dollars. A
judge ruled in September that Ebbers can stay out of prison
while he appeals his conviction.
HEALTHSOUTH CORP. -- Former CEO Richard Scrushy was acquitted on
June 28 on all 36 counts of conspiracy, false reporting, fraud
and money laundering in an alleged $2.7 billion earnings
overstatement at the rehabilitation and medical services chain
over seven years beginning in 1996. He blamed the fraud on 15
former HealthSouth executives who pleaded guilty. Hannibal
"Sonny" Crumpler, a former HealthSouth executive, the second
person to stand trial in the fraud, was convicted last month of
conspiracy and lying to auditors for his role in the fraud. On
Dec. 10, Bill Owens, a one-time HealthSouth chief financial
officer, was sentenced to five years in prison. Owens was a main
government witness in the failed prosecution of Scrushy.
TYCO INTERNATIONAL LTD. -- Former CEO L. Dennis Kozlowski and
CFO Mark H. Swartz were convicted June 17 on 22 of 23 counts of
grand larceny, conspiracy, securities fraud and falsifying
business records. Prosecutors accused the two of conspiring to
defraud Tyco of millions of dollars to fund extravagant
lifestyles. The two were sentenced Sept. 19 to eight and
one-third to 25 years in prison. A judge refused to release
Kozlowski and Swartz on bail while they are appeal their
convictions.
CREDIT SUISSE FIRST BOSTON -- The company's former investment
banking star, Frank Quattrone, was convicted in May 2004 on
federal charges of obstruction of justice, after his first trial
ended in a hung jury. Quattrone, who made a fortune taking
Internet companies public during the dot-com stock boom, was
sentenced to 18 months in prison. He is free on bail, appealing
the conviction.
MARTHA STEWART: The founder of the homemaking empire was
released March 4 after serving five months in prison, and
finished serving an additional five months and three weeks of
home confinement at the end of August. She was convicted in
federal court last year of conspiracy, obstruction of justice
and making false statements related to a personal sale of
ImClone Systems Inc. stock. Her former broker at Merrill Lynch,
Peter Bacanovic, served a five-month sentence and was released
June 16. He still faces five months of home
confinement. Stewart's conviction was not related to the company
she founded, Martha Stewart Living Omnimedia Inc.
CENDANT CORP.: Former Cendant Corp. Vice Chairmen E. Kirk
Shelton was convicted in January of conspiracy and securities,
wire and mail fraud. He was sentenced on Aug. 3 to 10 years in
prison and ordered to pay full restitution for his role in an
accounting scandal that cost investors and the company more than
$3 billion. Shelton was ordered to pay $3.27 billion to Cendant
including an initial "lump sum" payment of $15 million last
month. He delivered cash, company stock and company-funded
insurance policies, a combination that Cendant said is at least
$2.4 million short and fluctuates daily. Shelton stood trial
with former Cendant Chairman Walter Forbes, whose case ended in
a mistrial and will be retried. Shelton is free pending his
appeal. Four other former executives have already pleaded
guilty.
––––––––––––––––––––––––––––––
Robert J. Berger - Internet Bandwidth Development, LLC.
Voice: 408-882-4755 eFax: +1-408-490-2868
http://www.ibd.com
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