Financial Times

Corporate fraud cases in the world

The most high profile corporate fraud cases in recent history centre around Tyco International, WorldCom and Enron, multi billion dollar corporations whose names and reputations were marred by the fraudulent actions of its chief executives who were convicted and sentenced to lengthy prison terms.

Corporate Fraud
Former Tyco CEO Dennis Kozlowski, who headed the company from 1992 to 2002, was convicted in 2005 of misappropriating more than US$400 million of company funds and is currently serving at least eight years and four months in prison in the United States for his role in the scandal. Sordid details about his extravagant lifestyle which were funded from the stolen were made public during the trial including a US$30 million apartment in New York City, shower curtains costing US$6,000 and a US$1 million 40th birthday party he threw for his wife on the Italian island of Sardinia.

Co-founder and former CEO of telecommunications company WorldCom, Canadian born Bernie Ebbers was convicted of fraud and conspiracy in the largest accounting scandal to date in US history back in 2005. The company's false financial reporting caused a subsequent loss to investors amounting to US$11 billion. Ebbers is serving a 25 year prison sentence in the US state of Louisiana. In 1999, Forbes Magazine estimated his worth at US$1.4 billion.

The late Kenneth Lay was CEO of Enron from 1986 to 2002 and is infamous for his role in the corruption scandal that led to the downfall of the company. In 2004, Lay was indicted by a grand jury on 11 counts of securities fraud and related charges and was found guilty in 2006 of 10 counts. He died in 2006 of an apparent heart attack a few months before his scheduled sentences. Legal experts said Lay could have faced between 20 to 30 years in prison was each count carried a maximum of 5 to 10 year prison sentences.

Other cases of Corporate Fraud
Chief Financial Officer of Targus Group International, William Lloyd was indicted in California in 2001 on 25 counts of wire fraud, money laundering and aiding and abetting. He pleaded guilty and was sentenced to 37 months in prison and was ordered to pay US$18,000 in restitution. Targus is a company that designs and produces laptop cases and accessories.

Director and President of Smith Technologies, Gilbert Holloway III, pleaded guilty to tax/income tax conspiracy, tax evasion, money laundering, mail and wire fraud and providing false statements to a government agency. The case filed in 2001 in California resulted in a five month prison sentence with three years of supervised release as well as US$1.5 million in restitution.

Sri Lankan-born, US National Jailed on Fraud and Obstruction of Justice
Former Chief of a California based company called Computer Associates International, Sri Lankan-born Sanjay Kumar, was sentenced to 12 years in prison and fined US$8 million in 2006 after being charged with securities fraud and obstruction of justice following a two-year investigation of an improper accounting scheme. According to investigators, the scheme resulted in a shareholder loss of more than US$ 400 million. The charge of obstruction of justice stemmed from Kumar tampering with a laptop in an attempt to conceal incriminating evidence, lying to federal investigators and directing company employees to also provide false information.

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