CRS Updates Corporate Scandals Report
MAY 30, 2006
RL31866
DOCUMENT ATTRIBUTES
- AuthorsJickling, MarkJanov, Paul H.
- Institutional AuthorsCongressional Research Service
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2006-11321
- Tax Analysts Electronic Citation2006 TNT 113-10
Citations: RL31866
CRS Report for Congress
Received through the CRS Web
Order Code RL31866
Updated May 30, 2006
Mark Jickling
Specialist in Public Finance
Government and Finance Division
Paul H. Janov
Information Research Specialist
Knowledge Services Group
Criminal Charges in Corporate Scandals
Summary
Since the collapse of Enron Corp. in late 2001, there has been a series of scandals involving major U.S. corporations. Recurring elements in the scandals include improper or fraudulent accounting, self-enrichment by corporate officers, stock trading on inside information (insider trading), and the destruction or falsification of business records. A number of cases have resulted in criminal indictments, some followed by guilty pleas. This report tracks post-Enron criminal charges. Companies are listed alphabetically, and individuals who have been charged, indicted, or have pleaded guilty are identified. A longer list of companies with recent accounting problems (not all of which have resulted in criminal indictments) may be found in CRS Report RS21269, Accounting Problems Reported in Major Companies Since Enron, by Mark Jickling.
The 107th Congress responded to the series of corporate scandals that began with Enron by passing the Sarbanes-Oxley Act of 2002. That law created a new oversight body for corporate auditors, imposed new disclosure requirements on corporations, including a mandate that CEOs personally certify the accuracy of their firms' public financial reports, and increased criminal penalties for a number of offenses related to securities fraud. For a summary of the legislation, see CRS Report RL31554, Corporate Accountability: Sarbanes-Oxley Act of 2002 (P.L. 107- 204), by Michael V. Seitzinger and Elizabeth B. Bazan.
This report will be updated regularly.
Contents
Introduction
List of Tables
Table 1. List of Charges, Indictments, and Guilty Pleas in Corporate Scandals
Since Enron
Criminal Charges in Corporate Scandals
Introduction
On July 30, 2002, President Bush signed into law the Sarbanes- Oxley Act of 2002, P.L. 107-204, which had its genesis early in 2002 after the declared bankruptcy of Enron Corporation. The act establishes a new regulator for corporate auditors, the Public Company Accounting Oversight Board, which is to be supervised by the Securities and Exchange Commission. The act restricts accounting firms from performing a number of other services for the companies they audit and requires new disclosures for public companies and the officers and directors of those companies. Other issues affected by the new legislation are securities fraud, criminal and civil penalties for violating the securities laws and other laws, blackout periods for insider trades of pension fund shares, and protections for corporate whistleblowers.
The ongoing criminal prosecutions are a complementary phase of the effort to improve corporate accountability. Many observers maintain that prosecution of individuals alleged to have abused the public trust, together with new legal and regulatory standards for corporate behavior, is crucial to restoring investor confidence in the fairness and transparency of the public securities markets. Table 1 identifies firms and individuals associated with a number of high-profile cases against whom criminal charges have been filed by federal prosecutors since the collapse of Enron Corp. (although in some cases the alleged misconduct occurred before Enron's fall). In addition to newspaper sources, Department of Justice press releases have been cited where available. See [http://www.usdoj.gov/03press/03_1_1.html].
A few of these cases, as noted in the table, have also resulted in civil indictments. These post-Enron criminal charges are listed in CRS Report RL31961, Civil Charges in Corporate Scandals, by Mark Jickling and Paul H. Janov.
Table 1. List of Charges, Indictments, and
Guilty Pleas in Corporate Scandals Since Enron
Company/Individual
Adelphia Communications
John J. Rigas (chief executive officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/23/02(C)
7/8/04 (G)
Charges
All charged with wire fraud, bank fraud, securities fraud, and conspiracy.
Sources
New York Times, 9/24/02,sec. C, p. 1, col. 5
______________________________________________________________________________
Company/Individual
Timothy Rigas (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/23/02 (C)
7/8/04 (G)
Charges
John Rigas and Timothy Rigas were found guilty of one count of conspiracy, 15
counts of securities fraud, and two counts of bank fraud.
Sources
New York Times, 7/9/04, sec. A, p. 1, col. 1
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/20/05 (G)
Charges
John Rigas was sentenced to 15 years in prison, and Timothy Rigas was
sentenced to 20 years in prison.
Sources
New York Times, 6/21/05, sec. C, p. 1, col. 6
______________________________________________________________________________
Company/Individual
Michael Rigas (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/23/02 (C)
Charges
Michael Rigas was acquitted of conspiracy and wire fraud, but the jurors said
they were still undecided on the securities fraud and bank fraud charges
against him. The judge said he planned to give the jurors additional
instructions to try to break the deadlock, but a mistrial was declared after
the deadlock continued. It is not clear whether the government will schedule a
new trial.
Sources
New York Times, 7/10/04, sec. C, p.1, col. 5
______________________________________________________________________________
Company/Individual
James R. Brown (vice president for finance)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/23/02 (C)
9/14/02 (G)
Sources
New York Times, 9/24/02, sec. C, p. 1, col. 5, and 11/15/02, sec. C, p.
7, col. 1
______________________________________________________________________________
Company/Individual
Michael C. Mulcahey (director of internal reporting)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/23/02 (C)
7/8/04 (A)
Charges
Michael C. Mulcahey was acquitted on all counts.
Sources
New York Times, 9/24/02, sec. C, p. 1, col. 5
______________________________________________________________________________
Company/Individual
Timothy Werth (director of accounting)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
01/10/03
Charges
(G) Securities fraud, wire fraud, and bank fraud
Sources
New York Times, 1/11/03, sec. C, p. 3, col. 1
______________________________________________________________________________
Company/Individual
Arthur Andersen
David Duncan (former partner)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/10/02 (G)
Charges
Obstruction of justice (related to Enron audit). Arthur Andersen (the firm)
was convicted on the same charge in June 2002.
Sources
New York Times, 4/11/02, sec. A, p. 1, col. 2
______________________________________________________________________________
Company/Individual
Charter Communications
Kent Kalkwarf (chief financial officer)
David Barford (chief operating officer)
James Smith (senior vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/24/03 (I)
Charges
Conspiracy to commit wire fraud
Sources
New York Times, 7/25/03, sec. C, p. 3, col. 1
______________________________________________________________________________
Company/Individual
David McCall (executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/25/03 (G)
Charges
Conspiracy to commit wire fraud
Sources
New York Times, 7/26/03, sec. C, p. 2, col. 3
______________________________________________________________________________
Company/Individual
Credit Suisse First Boston
Frank P. Quattrone (banker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/12/03 (I)
Charges
Obstruction of justice and destroying evidence
Sources
New York Times, 5/13/03, sec. C, p. 1, col. 2
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/24/03
Charges
A federal judge declared a mistrial in the obstruction of justice trial of
Frank P. Quattrone.
Sources
New York Times, 10/25/03, sec. A, p. 1, col. 1
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
12/2/03
Charges
A federal judge set a March 22, 2004, date for the second trial of Frank P.
Quattrone.
Sources
New York Times, 12/2/03, sec. C, p. 5, col. 1
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/3/04 (G)
Charges
Quattrone was found guilty of trying to impede government investigations into
how stock offerings were doled out to investors.
Sources
New York Times, 5/4/04, sec. A, p. 1, col. 6
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/8/04
Charges
Quattrone was sentenced to 18 months in prison and fined $90,300.
Sources
New York Times, 9/9/04, sec. A, p. 1, col. 1
______________________________________________________________________________
Company/Individual
Dynegy Inc.
Gene S. Foster (vice president)
Helen C. Sharkey (accounting manager)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/5/03 (G)
Charges
Conspiracy to commit securities fraud
Sources
New York Times, 8/6/03, sec. C, p. 4, col. 1
______________________________________________________________________________
Company/Individual
Jamie Olis (director for tax planning)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/5/03 (I)
Charges
Conspiracy to commit securities fraud
Sources
New York Times, 8/6/03, sec. C, p. 4, col. 1
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/25/04 (G)
Charges
A federal judge sentenced Jamie Olis to more than 24 years in prison for his
role in a secretive project to disguise Dynegy's financial difficulties. He
had been found guilty in November 2003.
Sources
New York Times, 3/26/04, sec. C, p. 2, col. 1
______________________________________________________________________________
Company/Individual
Enron Corp.
Michael Kopper (finance executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/21/02 (G)
Charges
Conspiracy to commit wire fraud and money laundering
Sources
New York Times, 8/22/02, sec. A, p. 1, col. 6
______________________________________________________________________________
Company/Individual
Andrew Fastow (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/2/02 (C)
Charges
Charged with securities fraud, wire fraud, mail fraud, money laundering, and
conspiracy
Sources
Department of Justice, 10/2/02, press release #568a;
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/31/02 (I)
Charges
Indicted by a grand jury on 78 counts of fraud, money laundering, and
conspiracy
Sources
10/31/02, press release #627;
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Charged with insider trading and tax fraud
Sources
5/1/03, press release #268
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
1/14/04 (G)
Charges
Under the terms of a plea agreement, Fastow will cooperate fully with the
government's investigation, serve a 10-year prison sentence on the two counts
to which he's pleading guilty, and forfeit more than $29 million. The
remaining 96 criminal charges against Fastow from a May 2003 indictment are
pending and will be dismissed if the government determines that Fastow has
cooperated fully and truthfully.
Sources
1/14/04, press release #19
______________________________________________________________________________
Company/Individual
Timothy N. Belden (senior trader)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/17/02 (G)
Charges
Pleaded guilty to engaging in a conspiracy that illegally manipulated the
California power market
Sources
New York Times, 10/18/02, sec. C, p. 1, col. 5
______________________________________________________________________________
Company/Individual
Lawrence M. Lawyer (finance executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
11/26/02 (G)
Charges
Pleaded guilty to filing a false income tax return and failing to report
taxable income
Sources
Department of Justice, 11/26/02, press release #696
______________________________________________________________________________
Company/Individual
Jeffrey Ricter (senior trader)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/4/03 (G)
Charges
Pleaded guilty to manipulating the California power market
Sources
New York Times, 2/5/03, sec. C, p. 2, col. 4
______________________________________________________________________________
Company/Individual
Kevin Howard (Enron Broadband Services [EBS] vice president of finance)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/12/03 (I)
5/1/03 (I)
Charges
Charged with securities fraud, wire fraud, conspiracy, and making false
statements to FBI agents
Sources
Department of Justice, 3/12/03, press release #153
______________________________________________________________________________
Company/Individual
Michael Krautz (EBS senior director of accounting)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/12/03 (I)
5/1/03 (I)
Charges
Charged with securities fraud, wire fraud, conspiracy, and making false
statements to FBI agents
Sources
Department of Justice, 5/1/03, press release #268
______________________________________________________________________________
Company/Individual
Ben Gilsan (treasurer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Securities fraud, insider trading, and tax fraud
Sources
Department of Justice, 5/1/03, press release #268
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/10/03 (G)
Charges
Pleaded guilty to conspiracy to commit wire and securities fraud and was sent
to prison to serve a five-year sentence.
Sources
Department of Justice, 9/10/03, press release #492
______________________________________________________________________________
Company/Individual
Dan Boyle (finance executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Securities fraud, insider trading, and tax fraud
Sources
Department of Justice, 5/1/03, press release #268
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
11/3/04 (G)
Charges
Convicted of conspiring to help Enron report bogus profits
Sources
New York Times, 11/4/04, sec. C, p. 1, col. 5
______________________________________________________________________________
Company/Individual
Kenneth Rice (EBS chairman)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Securities fraud, wire fraud, and money laundering
Sources
Department of Justice, 5/1/03, press release #268
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/30/04 (G)
Charges
Pleaded guilty to securities fraud and agreed to cooperate fully with the
government's ongoing criminal investigation into the collapse of Enron. As
part of his plea, Rice has agreed to the forfeiture of approximately $13.7
million to be used to compensate victims of the Enron fraud and to pay an
additional fine of $1 million.
Sources
Department of Justice, 7/30/04, press release #525
______________________________________________________________________________
Company/Individual
Joseph Hirko (EBS president)
Scott Yeager (EBS senior vice president)
Rex Shelby (EBS senior vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Securities fraud, wire fraud, and money laundering
Sources
Department of Justice, 5/1/03, press release #268
______________________________________________________________________________
Company/Individual
Kevin Hannon (EBS chief operating officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/31/04 (G)
Charges
Kevin Hannon pleaded guilty to conspiracy to commit securities and wire fraud.
He faces a maximum sentence of five years in prison and a fine of $250,000 and
will forfeit approximately $2.2 million to the government, to be used to
compensate victims of the Enron fraud.
Sources
Department of Justice, 8/31/04, press release #591
______________________________________________________________________________
Company/Individual
Lea Fastow (assistant treasurer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/1/03 (I)
Charges
Conspiracy to commit wire fraud, money laundering conspiracy, and filing false
tax returns
Sources
Department of Justice, 5/1/03, press release #268
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/6/04 (G)
Charges
Lea Fastow was sentenced to one year in jail and a oneyear period of
supervised release to follow her term of incarceration after pleading guilty
to one count of filing a false federal income tax return. Mrs. Fastow also
relinquished any claim to almost $30 million in forfeited funds seized by the
Enron Task Force in May 2003 for the benefit of victims of fraud at Enron.
Sources
Department of Justice, 5/6/04, press release #306
______________________________________________________________________________
Company/Individual
John M. Forney (trader)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/3/03 (C)
Charges
Charged with manipulating the California power market
Sources
New York Times, 6/4/03, sec. C, p. 6, col. 3
______________________________________________________________________________
Company/Individual
David Delainey (CEO of Enron North America and Enron Energy Services)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/30/03 (G)
Charges
Pleaded guilty to a one-count indictment charging him with insider trading
Sources
Department of Justice 10/30/03 press release #594
______________________________________________________________________________
Company/Individual
Richard Causey (chief accounting officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
1/22/04 (C)
Charges
Charged with five counts of securities fraud and one count of conspiracy to
commit securities fraud
Sources
Department of Justice, 1/22/04, press release #36
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/19/04 (C)
Charges
Charged in a superseding indictment with conspiracy to commit securities
fraud, 20 counts of securities fraud, eight counts of wire fraud, and two
counts of insider trading
Sources
Department of Justice, 2/19/04, press release #99
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
12/28/05 (G)
Charges
Pleads guilty to securities fraud
Sources
Department of Justice, 12/28/05, press release #695
______________________________________________________________________________
Company/Individual
Jeffrey K. Skilling (CEO)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/19/04 (C)
Charges
Charged with conspiracy to commit securities fraud, 20 counts of securities
fraud, four counts of wire fraud, and 10 counts of insider trading
Sources
Department of Justice, 2/19/04, press release #99
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/25/06 (G)
Charges
A federal jury convicted Skilling on 12 counts of securities fraud, one count
of insider trading, and five counts of making false statements to auditors.
Sources
Department of Justice, 5/25/06, press release #328
______________________________________________________________________________
Company/Individual
Kenneth L. Lay (chairman and CEO)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/8/04 (C)
Charges
Charged with conspiracy to commit securities fraud, four counts of securities
fraud, two counts of wire fraud, one count of bank fraud, and three counts of
making false statements to a bank
Sources
Department of Justice, 7/8/04, press release #470
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/25/06 (G)
Charges
A federal jury convicted Lay on two counts of wire fraud and three counts of
securities fraud. He was also convicted at a separate bench trial of one count
of bank fraud and three counts of making false statements to banks.
Sources
Department of Justice, 5/25/06, press release #328
______________________________________________________________________________
Company/Individual
Mark Koenig (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/25/04 (G)
Charges
Koenig pleaded guilty to securities fraud . If he abides by the terms of his
plea agreement, Koenig faces the statutory maximum sentence of 10 years in
prison and a fine of $1 million at this sentencing, which will be scheduled by
the court at a later date.
Sources
Department of Justice 8/25/04, press release #581
______________________________________________________________________________
Company/Individual
Timothy Despain (assistant treasurer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/5/04 (G)
Charges
Despain pleaded guilty to one count of securities fraud and faces a maximum of
five years in prison and a fine of $250,000 or twice the loss.
Sources
Department of Justice, 10/5/04, press release #682
______________________________________________________________________________
Company/Individual
Christopher Calger (vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/14/05 (G)
Charges
Calger pleaded guilty to a charge of conspiracy to commit wire fraud.
Sources
Department of Justice, 7/14/05, press release #372
______________________________________________________________________________
Company/Individual
HealthSouth
Weston Smith (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/19/03 (G)
Charges
Securities fraud and wire fraud
Sources
Department of Justice, 3/19/03, press release #165
______________________________________________________________________________
Company/Individual
William T. Owens (chief of financial operations)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/26/03 (G)
Charges
Conspiracy to commit wire fraud and securities fraud
Sources
Department of Justice, 3/26/03, press release #180
______________________________________________________________________________
Company/Individual
Emery Harris (vice president of finance)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/31/03 (G)
Charges
Conspiracy to commit wire fraud and securities fraud. Sentenced to a term of
five months in prison on each count to run concurrently, three years of
supervised release with five months of unsupervised home detention, and
payment of a $3,000 fine.
Sources
Department of Justice, 3/31/03, press release #198
Department of Justice, 12/10/03, press release #678
______________________________________________________________________________
Company/Individual
Kenneth Livesay (chief information officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/3/03 (G)
Charges
Conspiracy to commit wire fraud and securities fraud and to falsify financial
information
Sources
Department of Justice, 4/3/03, press release #205
______________________________________________________________________________
Company/Individual
Angela C. Ayers (vice president)
Cathy C. Edwards (vice president)
Rebecca Kay Morgan (group vice president)
Virginia B. Valentine (assistant vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/3/03 (G)
Charges
All charged with wire fraud and conspiracy to commit wire fraud and securities
fraud. All sentenced to four years of probation with six months unsupervised
home confinement and payment of a $2,000 fine.
Sources
Department of Justice, 4/3/03, press release #205
Department of Justice, 12/10/03, press release #678
______________________________________________________________________________
Company/Individual
Michael Martin (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/8/03 (C)
Sources
Conspiracy to commit wire fraud and securities fraud
Sources
Department of Justice, 4/8/03, press release #212
______________________________________________________________________________
Company/Individual
Malcolm McVay (treasurer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/21/03 (G)
Charges
Conspiracy to commit wire fraud and securities fraud
Sources
Department of Justice, 4/21/03, press release #245
______________________________________________________________________________
Company/Individual
Aaron Beam (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/24/03 (G)
Charges
Bank fraud
Sources
Department of Justice, 4/24/03, press release #255
______________________________________________________________________________
Company/Individual
Jason Brown (vice president of finance)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/8/03 (G)
Charges
Conspiracy to commit securities fraud, falsifying books and records, and wire
fraud
Sources
Department of Justice, 7/8/03, press release #401
______________________________________________________________________________
Company/Individual
Richard Botts (senior vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/31/03 (G)
Charges
Conspiracy to commit securities fraud, falsifying books, and mail fraud
Sources
Department of Justice, 7/31/03, press release #436
______________________________________________________________________________
Company/Individual
Will Hicks (vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/31/03 (G)
Charges
Conspiracy to make false statements to auditors and maintain false books and
records
Sources
Department of Justice, 7/31/03, press release #436
______________________________________________________________________________
Company/Individual
Richard M. Scrushy (CEO and chairman of the board)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
11/4/03 (C)
Charges
Charged in an 85-count indictment stemming from a wide-ranging scheme
to defraud investors, the public, and the U.S. government about
HealthSouth's financial condition
Sources
Department of Justice, 11/4/03, press release #603
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/29/04 (C)
Charges
A federal grand jury returned a 58- count superseding indictment
adding charges of obstruction of justice and perjury and
consolidating some of the other charges from the initial indictment,
which included conspiracy, mail, wire and securities fraud, false
statements, false certifications, and money laundering.
Sources
Department of Justice, 9/29/04, press release #654
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/28/05 (A)
Charges
Richard M. Scrushy was acquitted on all 36 counts that he was charged
with.
New York Times, 6/29/05, sec. A, p. 1, col. 1
________________________________________________________________
Company/Individual
Catherine Fowler (vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
11/24/03 (G)
Charges
Conspiring to mislead the auditors and to maintain false books and
records
Sources
New York Times, 11/25/03, sec. C, p. 3, col. 1
________________________________________________________________
Company/Individual
Vincent Nico (vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/2/04 (G)
Charges
Wire fraud related to contracts with a hospital in Saudi Arabia
Sources
Department of Justice 3/2/04, press release #131
________________________________________________________________
Company/Individual
Thomas Carman (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/2/04 (G)
Charges
Making a false statement to the FBI
Sources
Department of Justice 3/2/04, press release #131
________________________________________________________________
ImClone Systems
Company/Individual
Samuel Waksal (chief executive)a
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/7/02 (I)
Charges
Trading on inside information
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/15/02 (G)
Charges
Sentenced to 87 months in prison and ordered to pay a $3 million fine
Sources
New York Times 8/8/02, sec. A, p. 1, col. 1; 6/11/03, sec. C,
p. 1, col. 5; 10/16/02, sec. C, p. 1, col. 2
________________________________________________________________
Just for Feet, Inc.
Company/Individual
Adam Gilburne (executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
5/12/03 (G)
Charges
Conspiracy to commit wire fraud and securities fraud
Sources
Department of Justice, 5/12/03, press release #283
________________________________________________________________
Company/Individual
Don-Allen Ruttenberg (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/25/04 (G)
Charges
Conspiracy to commit securities fraud, wire fraud, and submitting
false statements to the auditors of JFF
Sources
Department of Justice, 2/25/04, press release #110
________________________________________________________________
Kmart
Company/Individual
Joseph A. Hofmeister (vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/26/02 (I)
Company/Individual
Enio A. Montini Jr. (senior vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/26/02 (I)
Charges
Fraud, conspiracy, and making false statements
Sources
New York Times, 2/27/03, sec. C, p. 1, col. 5
________________________________________________________________
Martha Stewart Living Omnimedia
Company/Individual
Martha Stewart (chairman and CEO)a
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/4/03 (I)
Charges
Conspiracy, obstruction of justice, and securities fraud
Sources
New York Times, 6/5/03, sec. A, p. 1, col. 2
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/5/04 (G)
Charges
Found guilty of four counts of conspiracy, obstruction, and lying to
federal investigators
Sources
New York Times, 3/6/04, sec. A, p. 1, col. 6
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/16/04 (G)
Charges
Sentenced to five months in prison plus five months of home
confinement
Sources
New York Times, 7/17/04, sec. A, p. 1, col. 2
________________________________________________________________
Company/Individual
Peter Bacanovic (securities broker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/4/03 (I)
Charges
Criminal charges, including perjury
Sources
New York Times, 6/5/03, sec. A, p. 1, col. 2
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/5/04 (G)
Charges
Criminal charges, including perjury
Sources
New York Times, 3/6/04, sec. A, p. 1, col. 6
________________________________________________________________
Merrill Lynch
Company/Individual
Douglas Faneuil (stockbroker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/2/02 (G)
Charges
Pleaded guilty to obstruction of justice related to insider trading
of ImClone Systems
Sources
New York Times, 10/3/02, sec. C, p. 1, col. 2
________________________________________________________________
Company/Individual
Daniel Bayly (head of Global Investment Banking division)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/17/03 (I)
Charges
Conspiracy to commit wire fraud and to falsify books and records
Sources
Department of Justice, 9/17/03, press release #510
________________________________________________________________
Company/Individual
James A. Brown (head of Merrill Lynch's Strategic Asset Lease and
Finance group)
Company/Individual
Robert S. Furst (Enron relationship manager for Merrill Lynch)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
11/3/04 (C)
Charges
Convicted of conspiring to help Enron report bogus profits
Sources
New York Times, 11/4/04, sec. C, p. 1, col. 5
________________________________________________________________
Mutuals.com
Company/Individual
Richard A. Sapio (CEO)
Company/Individual
Eric McDonald (president)
Company/Individual
Michele Leftwich (compliance officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/15/04 (C)
Charges
Charged with a scheme to defraud mutual fund shareholders in
connection with market timing, a practice involving the short-term
trading of mutual funds
Sources
Wall Street Journal, 3/16/04, sec. D, p. 9
________________________________________________________________
NatWest Bank
Company/Individual
Giles R. Darby (banker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/27/02 (C)
Company/Individual
David J. Bermingham (banker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/27/02 (C)
Company/Individual
Gary S. Mulgrew (banker)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/27/02 (C)
Charges
All three are British bankers charged with wire fraud in connection
with Enron's off-the-books partnerships
Sources
New York Times, 6/28/02, sec. C, p. 1, col. 2
Department of Justice, 6/27/02, press release #377
________________________________________________________________
NewCom Inc.
Company/Individual
Sultan W. Khan (president and chief executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/5/02 (I)
Company/Individual
Asif M. Khan (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/5/02 (I)
Company/Individual
Steven C. Veen (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/5/02 (I)
Charges
Fraud, money laundering, filing false statements, and conspiracy
Sources
New York Times, 9/6/02, sec. C, p. 4, col. 3
________________________________________________________________
Quaker Alloy
Company/Individual
Thomas W. Lambach (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/3/02 (G)
Company/Individual
Joseph Stewart (human resource manager)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/3/02 (G)
Charges
Wire fraud and conspiracy
Sources
Harrisburg (PA) Patriot-News, 4/4/02, p. B12
________________________________________________________________
Qwest Communications
Company/Individual
Grant Graham (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/25/03 (I)
Charges
Corporate accounting fraud
Sources
Department of Justice, 2/25/03, press release #112
Company/Individual
Thomas Hall (senior vice president)
John Walker (vice president)
Bryan Treadway (assistant controller)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
4/16/04
Charges
A federal jury acquitted John Walker and Bryan Treadway of accounting
fraud, found Grant Graham not guilty on three counts and deadlocked
on the eight other counts facing him, and completely deadlocked on
all counts against Tom Hall. Judge Robert Blackburn declared a
mistrial on all deadlocked counts and scheduled a status conference
for April 26.
Sources
New York Times, 4/17/04, sec. C, p. 2, col. 5
________________________________________________________________
Rite Aid
Company/Individual
Martin L. Grass (chairman and chief executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/23/02 (G)
5/14/04 (G)
Charges
Various counts of securities fraud
Company/Individual
Franklin Brown (chief counsel and vice chairman)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/23/02 (G)
10/14/04 (G)
Charges
Grass signed a plea deal with prosecutors under which he will serve
up to 10 years in prison , pay $500,000 in fines, and forfeit $3
million to the United States to ensure that he does not receive
unjust enrichment
Company/Individual
Franklyn Bergonzi (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/23/02 (G)
Charges
Brown was sentenced to 10 years in prison
Company/Individual
Erik S. Sorkin (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/23/02 (G)
Charges
Lying to the grand jury
Sources
New York Times, 6/22/02, sec. A, p. 1, col. 1; 6/6/03, sec. C,
p. 3, col. 3; 6/18/03, sec. C, p. 12, col. 3; 6/26/03, sec. C, p. 6,
col. 3; 10/18/03, sec. C, p. 2, col. 1 5/14/04, sec. C, p.10, col. 1
10/15/04, sec. C, p. 3, col. 1
________________________________________________________________
Company/Individual
Timothy J. Noonan (president and chief operations officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/10/02 (G)
Charges
Withholding information from the company's internal investigators
Sources
Lancaster (PA) Intelligencer Journal, 7/11/02, sec. Business,
p. B-7
________________________________________________________________
Company/Individual
Philip Markovitz (senior vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/11/2003 (G)
Charges
Conspiracy to obstruct justice
Sources
New York Times, 7/11/03, sec. C, p. 12, col. 1
________________________________________________________________
Tyco International
Company/Individual
L. Dennis Kozlowski (chairman and chief executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/12/02 (I)
Charges
Grand larceny, enterprise corruption, falsifying records. Kozlowski
was also indicted June 4, 2002, for sales tax evasion, as was Swartz
on February 19, 2003.
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
6/17/05 (G)
Charges
L. Dennis Kizlowski and Mark H. Swartz were convicted on fraud,
conspiracy, and grand larceny charges.
Sources
New York Times, 9/13/02, sec. A, p. 1, col. 3; 6/5/02, sec. C,
p. 1, col. 2; 2/20/03, sec. C, p. 6, col. 3 6/18/05, sec. A, p. 1,
col. 6
________________________________________________________________
Company/Individual
Mark H. Swartz (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/12/02 (I)
6/17/05 (G)
________________________________________________________________
Company/Individual
Mark Belnick (general counsel)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/12/02 (I)
Charges
Falsifying records
Sources
New York Times, 9/13/02, sec. A, p. 1. col. 3;
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
2/3/03 (I)
Charges
Indicted on three additional charges
Sources
New York Times, 2/4/03, sec. C, p. 1., col. 2
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
7/16/04 (A)
Charges
A jury acquitted Belnick of charges that he stole millions of dollars
from Tyco in the form of unauthorized bonuses and loans. He still
faces charges brought forth by the SEC.
Sources
New York Times, 9/16/04, sec. C, p. 1, col. 2
________________________________________________________________
Westar Energy, Inc.
Company/Individual
David C. Wittig (CEO)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
12/4/03 (I)
Charges
Conspiracy to defraud, circumventing internal accounting controls,
falsifying books and records, wire fraud, submitting false
statements, and engaging in monetary transactions derived from an
unlawful activity
Sources
Department of Justice, 12/4/03, press release #663
Company/Individual
Douglas T. Lake (executive vice president)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/12/05 (G)
Charges
David C. Wittig was found guilty of 39 counts and Douglas T. Lake was
found guilty of 30 counts of conspiracy, wire fraud, circumventing
internal controls, and money laundering.
Sources
New York Times, 9/13/05, sec. C, col. 4, p. 12
________________________________________________________________
WorldCom
Company/Individual
Scott Sullivan (chief financial officer)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/27/02 (I)
Charges
Numerous counts of securities fraud and conspiracy
Sources
Department of Justice, 8/27/02, press release #494
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/2/04 (G)
Charges
Pleaded guilty
Sources
New York Times, 3/3/04, sec. A, p. 1, col. 5
________________________________________________________________
Company/Individual
Buford Yates, Jr. (director of general accounting)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
8/27/02 (I)
10/7/02 (G)
Charges
Securities fraud
Sources
Department of Justice, 8/27/02, press release #494; New York
Times, 10/8/02, sec. C, p. 9, col. 1
________________________________________________________________
Company/Individual
David Myers (former controller)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
9/26/02 (G)
Charges
Securities fraud
Sources
New York Times, 9/27/02, sec. C, p. 2, col. 3
________________________________________________________________
Company/Individual
Betty Vinson (an executive in the General Accounting Department)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/10/02 (G)
Charges
Securities fraud and conspiracy
Sources
New York Times, 10/11/02, sec. C, p. 10, col. 1
Company/Individual
Troy Normand (an executive in the General Accounting Department)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
10/10/02 (G)
Charges
Securities fraud and conspiracy
________________________________________________________________
Company/Individual
Bernard J. Ebbers (chief executive)
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/2/04 (I)
Charges
Accounting fraud
Sources
New York Times, 3/3/04, sec. A, p. 1, col. 5
Charged (C), Indicted (I), Guilty Plea (G), Acquitted (A)
3/15/05 (G)
Charges
Ebbers was found guilty of securities fraud, conspiracy, and seven
counts of filing false reports with regulators. Each count carries a
sentence of 5 to 10 years.
Sources
New York Times, 3/16/05, sec. A, p. 1, col. 1
________________________________________________________________
Note: A few of these cases have also resulted in civil
indictments.
DOCUMENT ATTRIBUTES
- AuthorsJickling, MarkJanov, Paul H.
- Institutional AuthorsCongressional Research Service
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2006-11321
- Tax Analysts Electronic Citation2006 TNT 113-10
