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Status of High-Profile Corporate Scandals
From: David Farber <dave () farber net>
Date: Wed, 28 Dec 2005 18:52:54 -0500
Begin forwarded message: From: "Robert J. Berger" <rberger () ibd com> Date: December 28, 2005 6:02:01 PM ESTTo: Dave Farber <dave () farber net>, Dewayne Hendricks <dewayne () warpspeed com>
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. 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- Status of High-Profile Corporate Scandals David Farber (Dec 28)