Corporate greed. This best describes these 10 infamous corporate scandals that rocked the U.S. When corporations can no longer handle success and the responsibilities that go with it, chaos is sure to ensue.
Regardless of whether you’re a corporate fraud lawyer or a regular Joe, chances are, if you’ve been around for the past 30 years, you’ve probably heard about these things.
7 of History’s Worst Corporate Scandals
1. Waste Management Scandal (1998)
This publicly-traded Houston-based waste management company falsely reported earnings worth $1.7 billion . The people responsible manipulated their balance sheets to reflect an increased depreciation period for their property.
2. Enron Scandal (2001)
Another Houston-based company, Enron cheated their balance sheets and took their huge debts off. This caused shareholders to lose $74 billion. A lot of investors and employees also lost their retirement accounts, and thousands of employees became jobless.
Such a shame because prior to the scandal, they were named by Fortune Magazine as “America’s Most Innovative Company” for six years straight.
3. Worldcom Scandal (2002)
This telecommunications company’s CEO falsified reports of line costs by capitalizing instead of expensing. He also used fake accounting entries to reflect inflated revenues.
This led to the company’s inflated assets amounting to $11 billion which resulted in a $180 billion loss for investors and displaced 30,000 employees.
4. Tyco Scandal (2002)
This security systems company based in New Jersey saw their CEO and CFO steal $150 million and inflate the company’s income by as much as $500 million. They pulled this off by smuggling money as executive benefits and bonuses.
5. Healthsouth Scandal (2003)
When the country’s largest publicly-traded healthcare company got involved in this mess, it caused a huge uproar.
It’s CEO allegedly ordered subordinates to come up with fake transactions. This was reportedly done between 1996 and 2003 to meet stockholder expectations with an inflated number of $1.4 billion.
6. Freddie Mac (2003)
If a company is a giant mortgage finance player that’s federally-backed, you would think this would be the farthest thing that could happen. Think again.
In 2003, Freddie Mac’s higher-ups intentionally understated and misstated the company’s earnings in their books. We’re talking about $5 million worth in misstated earnings here.
To add, a year after, equally huge mortgage finance company, Fannie Mae (also federally-backed) was involved in a similar scandal.
7. American International Group (AIG) Scandal (2005)
Multi-national insurance company American International Group (AIG) got caught in a scandal in 2005 when its CEO manipulated things behind the scenes for personal gain.
Allegedly, he asked traders to inflate the company’s stock price, directed clients to insurers that the company had payoff agreements with, and recorded loans as company revenue.
Because of this, an allegation of huge accounting fraud resulting in up to $3.9 billion was made on top of stock price manipulation and bid-rigging.
While there is nothing completely wrong from making a profit and earning, doing so in an underhanded and thieving way never pays off. Money is, indeed, a root of all kinds of evil. Don’t fall into that trap.