The wealthy elite are known for creating innovative businesses for the future and providing much-needed services to the public. Some chief executives rise and fall on the basis of money and corruption. Some let their greed get the best of them and end up sabotaging entire businesses and taking other’s money along with them. From Bernie Madoff to Bernie Ebbers, these are the top scamming CEO’s who committed extreme fraud and money theft.
7 of the Biggest CEO Frauds in History
They secured the bag and then the sentence
7. Bernie Ebbers
Bernie Ebbers was the CEO of Worldcom. His wrongdoings were discovered in 2002 and the company was forced to write off $50 billion in losses and file for bankruptcy.
Ebbers came up with a new-age business strategy to obtain multiple acquisitions as well as merge with Sprint. Ebbers had to cut ties with Sprint for business marketing purposes and the company hit a wall. Eager to still appeal to investors Ebbers fabricated financial statistics and lied to investors to make the company appear as if they were meeting Wall Street's expectations or exceeding it.
WorldCom’s internal audit team discovered improper accounting numbers over five quarters and unveiled the corruption.
6. Dennis Kozlowski
Dennis Kozloski was CEO of Tyco International and a subordinate for a prestigious security systems unit. He was found guilty on 22 of 23 charges of grand larceny, violating general business law, and falsifying business records.
Kozlowski and company were convicted of stealing an estimated $600 million for expensive art, exclusive parties, and a lavish Manhattan apartment. He was convicted of taking more than $120 million without the approval of any directors, deliberately lying to investors to boost the company's stock price while selling $575 million in stocks. For his crimes, Kozlowski received a sentence of eight to 25 years in prison.
5. Elizabeth Holmes
Elizabeth Holmes was the CEO and founder of Theranos, a company that claimed to be able to diagnose illnesses using just a drop of blood with next-level technology. It turned out that the technology her company claimed to have did not work but that didn't stop Holmes from becoming the youngest female billionaire.
In 2015 a Wall Street Journal report opened eyes and made people question the technology and medical methods that were used to help patients at Theranos' facility in Silicon Valley. Holmes just flat out lied to investors about the legitimacy of the tools and practice methods as they poured billions into her company.
The SEC ultimately agreed that Holmes misled her partners, using modified third-party machinery instead of its’ own to process patients tests. The SEC charged the company with massive fraud for over $700 million.
4. Richard Scrushy
Richard Scrushy was the CEO of the largest outpatient surgery provider, and diagnostic rehabilitative services HealthSouth Corporation.
He was fined by the SEC on charges of massive accounting fraud. The federal district court in Birmingham, Alabama concluded that Richard Scrushy exaggerated his earnings at HealthSouth by over $1.4 billion to meet or exceed Wall Street's expectations. By the third quarter of 2002, HealthSouth assets were overstated by $800 million.
Scrushy was indicted on 85 criminal charges of massive corporate fraud becoming the first executive to be charged under the new federal law that makes it mandatory for CEOs to personally report financial results.
3. Stephen Hoffenberg
Steven Hoffenberg a public figure in the New York business world was found guilty of fraud and criminal conspiracy with connections to more than $460 million. Hoffenberg admitted to being the head operator of a small group that was selling fraudulent notes and bonds to investors while using a majority of that money to pay off older investors and interest rates.
The rest of the illegal money Hoffenberg accumulated was used to run the New York Post for a brief period and finance the Potemkin-village, which was a financial empire that inflated revenues and fabricated numbers to make the company appear to be a prestigious health care financing company.
On February 17th, 1994 Hoffenberg was officially charged and arrested in the case a year after the SEC imposed fines and sanctions on the CEO.
2. Franklin Raines
Franklin Raines was the CEO of Fannie Mae, the once well-respected company that bought home mortgages and sold them back as securities. Raines gained a high level of suspicion after the Office of Federal Housing Enterprise began to investigate Fannie Mae’s accounting practices.
Raines manipulated accounting and awarded himself millions of dollars in undeserved bonuses, deceiving investors. The government-sponsored company was fined $400 million for several civil penalties. The company also agreed to slow down its growth and had a cap of $727 million. According to Time Magazine, Raines was a "person to blame for the financial crisis."
Time reported that "Raines, who was at the helm when things really went off course. A former Clinton Administration Budget Director, Raines was the first African-American CEO of a Fortune 500 company when he took the helm in 1999. He left in 2004 with the company embroiled in an accounting scandal just as it was beginning to make big investments in subprime mortgage securities that would later sour."
1. Bernie Madoff
Bernie Madoff pulled off the greatest Ponzi scheme in history. Madoff was able to convince thousands of investors out of $65 billion while he falsely promised consistent high returns on profit. For decades Madoff went undetected by luring investors through a Ponzi scheme, guaranteeing high returns. The scheme worked by using vague investing strategies to “ protect” their business and only tell investors what they are making occasionally without any physical proof or returns. In December of 2008 Madoff, was charged with 11 counts of fraud, money laundering, perjury, and theft. Madoff was sentenced to 150 years in prison for running the biggest fraudulent scheme in U.S history.
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