Corporations in the United States
greatly impact the financial, social, and political aspects of everyday life
for billions of people in the U.S. and across the world. We expect them to be
accountable for their actions since many receive generous tax breaks and other
exemptions. This explains the scandals that accompany corporate money scams and
the huge repercussions for both individuals and the nation’s economy as a
whole.
- Famous Corporate Money Scams
Below are some of the most famous corporate money scams of all time. They show the regulatory system working to
catch criminals and much more needs to be done to prevent this kind of fraud
from causing a financial collapse in the future. The general public rarely has
access at these levels, but encouraging representatives in government to
support legislation protecting investors and requiring unbiased inquiry into
their fiscal documentation.
- Enron Corporation
The Enron Corporation scandal in
2001 permanently linked their name to the definition of corporate money scams.
The company provided energy services and other commodities from their base in
Houston, Texas and traded publicly. They employed thousands of employees and
many lost their jobs, investors lost $74 billion, and both lost their
retirement funds when Sherron Watkins, an Enron employee, witnessed corporate
fraud and whistle blew. Kenneth Lay and Jeffrey Skilling, the first and second
CEOs, and the Chief Financial Officer used the services of the shady Arthur
Anderson Company to inflate stock by hiding large debts from failed deals and
projects. Skilling was sentenced to 24 years in prison, but Lay died before he
could serve his sentence, and the company filed for bankruptcy.
- Freddie Mac
The Federal Home Loan Mortgage
Company, better known as Freddie Mac, scandal may be the most well-known
corporate money scams following Enron. The federally supported company
purchases mortgages and sells them to investors. Many of Freddie Mac’s executives,
including David Glenn, President, Leland Brendsel, CEO, and Vaughn Clarke, the
former Chief Financial Officer, understated earnings in prior to and during
2000 and 2002 and overstated them in 2001. This caused an inflating of earnings
by more than $5 billion. After the investigation concluded, Freddie Mac was
fined $125 million and fired Glenn, Brendsel, and Clarke.
- Fannie Mae
Another mortgage-financing company,
Fannie Mae, gained fame for their money scams in 2004 when the Office of
Federal Housing Enterprise Oversight published an incriminating report about
the company’s accounting practices. Franklin Raines, the CEO, Timothy Howard,
the Chief Financial Officer, and Leanne Spencer, the previous controller stood
accused of doctoring financial records to increase their bonuses by over $115
million over six years. The case never reached a conviction due to insufficient
evidence from the government.
- Bernard L. Madoff Investment Securities, LLC
Bernie Madoff founded and chaired
Bernard L. Madoff Investment Securities, LLC where he and other senior
executives conducted the largest Ponzi scheme in corporate history. So famous
is Bernie Madoff scandal that his name is personally associated with these
kinds of money scams. He used his investment firm to steal from his investors.
Instead of paying them from profits earned by the company, Madoff paid
investors with their own money or from the money of fellow investors. The
inquiry revealed this involved $65 million. In 2008, Madoff confessed the
scheme to his sons and they reported him to the SEC. He received a 150-year
prison term and $170 billion in fines for restitution.
