Accounting fraud costs taxpayers tens of millions of dollars annually, if not more. Yet few people, including white collar defendants charged with similar crimes, have a complete sense of historical context for this type of fraud.
Companies and individuals found guilty of accounting fraud face felony charges that carry hefty sentences and fines. Some cases can be so egregious and outlandish, involving massive sums of money or curious circumstances, that they make national headlines. Below, we summarize and analyze five of the 21st century's intriguing stories.
The Most Scandalous Accounting Fraud Cases from the 2000s (So Far)
The infamous Enron scandal story broke in 2001 when the energy company's bankruptcy reduced the value of the stock market by $78 billion. Congress passed the Sarbanes-Oxley Act of 2002 in response to the allegations against the energy giant. Defendants submitted a class action suit against the company for $7.8 billion: the largest such suit of all time. Former Enron President, Jeff Skilling, is still in the midst of serving a 24 year jail sentence.
- Bernie Madoff
The subject of a Hollywood blockbuster, this money mogul pulled off a $65 million Ponzi scheme, arguably the most famous and largest of its kind in human history. Madoff's fraud began to come unraveled after he confessed his plan to his sons. Madoff was sentenced to 150 years in prison.
- Lehmen Brothers
Responsible for the now-famous moniker, "too big to fail," the Lehmen Brothers played a huge and decisive role in the economic meltdown of 2008. When the $600 million dollar company declared bankruptcy, the bankruptcy examiner claimed that there was justification for charging top executives with fraud. However, as of 2016, neither the Department of Justice (DOJ) nor the SEC has filed charges.
In 2002, this telecommunications company filed bankruptcy, wiping out a firm that had been valued at nearly $104 billion. The $6.1 billion dollar class action suit that followed remains one of the largest in recent history. Former CEO, Bernard Ebbers, was convicted of securities fraud, and he is currently serving 25 years in prison.
- Fannie Mae
According to post-hoc expert analysis, this loan company shouldered a fair share of the blame for the financial crisis of 2008. Critics accused Fannie Mae of selling sub-prime mortgages and artificially inflating the housing market. The company faced several scandals over the years before the 2008 catastrophe. In 2006, the government forced Fannie Mae to pay $400 million in penalties for creating misleading financial documents. Later, in 2011, the SEC brought charges against executives for securities fraud. The government finally took control of the company following the financial crisis of 2008.
Accounting fraud creates powerful headlines that inspire needs for justice and reform. These days, the SEC is more committed than ever to stopping fraudulent business practices and protecting the interests of American families and small businesses.
If you or someone you love stands accused of fraud, even on a much smaller scale, you may need an aggressive and strategic defense to prevent serious penalties. Call our team for a private, confidential consultation about your potential defense options.