ENRON: From at least 1999 through late 2001, Some ENRON guys named Skilling, Causey, and others manipulated Enronʼs publicly reported financial results and made false and misleading public statements about Enronʼs financial condition and its actual performance. As a result of their scheme to defraud, Skilling, Causey, and others made millions of dollars, by unlawful insider trading and other means, at the expense of Enron shareholders, the investing public, and Enron employees.
Among the charges are: misleading shareholders, insider trading, 90 counts of fraud, breach of fiduciary responsibility, with estimated damages over $5 billion.
Prosecutors and regulators were after a bigger prize, where the real targets of the litigation Lay (past Chairman Kenneth Lay). Applying the fiduciary principle of “Ultimate Responsibility”, who prevailed? Well, Lay was convicted, but served no time. He never even appealed his conviction. He conveniently died. He had been found guilty in February, 2006, on ten counts of fraud, conspiracy, and other illegal financial shenanigans. However, awaiting his sentencing hearing and facing a possible prison term of twenty to thirty years, Lay had a massive heart attack and died while on a skiing vacation. He sprouted a booming industry in “Heʼs Not Really Dead” conspiracy theories, and has been seen appearing in unusual locations, often in countries with no extradition, alongside Elvis, Bigfoot and the Loch Ness Monster.
WorldCom: They allegedly did it all–they breached their fiduciary duty to 401(k) participants, breached their fiduciary duty to ESOP participants, misled investors, lied to shareholders and committed fraud while the company slithered down the sewer of Chapter 11. CEO Bernard J. Ebbers was charged with conspiracy and fraud and pled not guilty. He was also accused of freewheeling spending and aggressive dealmaking, contributing to WorldComʼs demise.
He was found guilty of nine counts of fraud, filing false reports and conspiracy. When sentenced in June 13, 2006, Ebbers faced 25 years (or about one year for every 1000 employees out of a job). He also got nailed with a hefty civil suit by his own former company and under the settlement, was required to pay (along with the other guilty parties who colluded with him) $6.3 billion dollars in restitution.
Quest/US West: Charged with breach of fiduciary duty to shareholders regarding value of company, breach of fiduciary to 401(k) participants and breach of fiduciary duty to ESOP participants. Perpetrators: CEO Joseph P. Naccio, various members of the Investment Committee, Quest Asset Management (a money manager subsidiary).
Estimated damages: $2.5 to $3 billion
Status: Joseph P. Naccio was arrested in 2005 and convicted on April 20, 2007, of 19 of the 42 counts of insider trading he was charged with. He apparently made over $100 million from the trading. Applying the maximum sentence possible (an activity that should be considered at every opportunity) he would face 190 years in jail and $19 million in fines.
Tyco: Tyco is almost a breath of fresh air compared to WorldCom and Enron because they get points for creativity. Tyco visionary Dennis Kozlowski and CFO Mark Swarts, a partner in corporate crime, were charged with looting their own company of $600 million. Regulators including the SEC alleged that Kozlowski used the pilfered coffers of Tyco as his, “Personal Piggy Bank”.
The Corporate, and ultimately shareholder money was used to fund a garish lifestyle. Among other things, he allegedly spent $2 million in Tyco money on a birthday bash for his second wife, Karen Mayo (now divorced). It featured an ice sculpture of Michelangeloʼs David, probably wasting away ice water nearly as fast as Kozlowski wasted away the company money. Kozlowski and his cohorts also allegedly plundered corporate accounts and skimmed company profits to buy themselves swanky apartments and vacation homes and fill them with fine art and expensive baubles.
Charges: Breach of fiduciary duty to shareholders regarding the value of the company, misuse of shareholder and company funds. Kozlowski was convicted of looting Tyco of more than $600 million to fund yachts, mansions, parties and jewelry. He was found guilty on 22 counts of theft, 11 counts of fraud, and a laundry list of other crimes. He got 25 years in prison.
Vivendi: Charged with Breach of fiduciary duty to shareholders regarding the value of the company, as they issued news releases downplaying the companyʼs liquidity crunch and debt problems. President Jean Marie Messier gave up his meager $25 million severance pay package plus paid a $1 million fine. CFO Guilluame paid a $300 thousand penalty.
Estimated damages: $50 million
Status: The Company paid a $50 million fine. Messier said it was, “balanced and reasonable”. In January, 2011, he was sentenced to jail.