
Top 10 Corporate Scandals in America
Scandals in top level corporations are always shocking. Most corporate scandals involve insider trading, investment schemes, or accounting scandals. Most also involve high level executives and even the CEO.
The following list of corporate scandals are among the most famous in America:
10. The Hewlett-Packard Spying Scandal

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HP’s former CEO, Patricia Dunn, launched a spy campaign of all other board members and employees to determine who was leaking information to the press. She hired a large team of security experts to look at phone records of employees and board members, had surveillance conducted of board members and journalists, and condoned spyware for looking at email correspondence to journalists in an effort to find out who in the company was leaking confidential information. This was a case where the ends did not justify the means.
9. Martha Stewart Insider Trading Scandal

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Martha Stewart, a media homemaker sensation, owned 4,000 shares of ImClone in the stock market. ImClone was a biotech company that created a drug called Erbitux, which was used to treat colorectal cancer. However, a day before the FDA’s announcement that it would not accept Erbitux, Stewart sold her shares in the company. Doing so saved her roughly $45,000 in losses. Stewart’s stock broker warned Stewart about the ImClone CEO selling a large portion of his stock in the company, which led to her sale. This is what led to her charge of conspiracy, obstruction of agency proceeding, and making false statements.
8. Lance Armstrong Doping Scandal and SRAM Corporation

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Lance Armstrong’s doping scandal led to the stripping of his seven Tour de France titles and the bronze medal he won in the 2000 Olympic Games. Prior to his return to cycling in 2009 he invested in SRAM, a bicycle component manufacturing company. He used all of their components during his years in the Tour de France after that. In October of 2012, SRAM broke ties with Armstrong because of his doping affiliation. SRAM would no longer sponsor Armstrong and Armstrong had to sell all of his shares in the company.
7. Baptist Foundation of Arizona Real Estate Scam

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The Baptist Foundation of Arizona was created in 1948 to help raise funds for church-related charities. However, Bill Crotts, the Baptist minister’s son took over leadership in 1982, turning it into a large Ponzi scheme leaving over 13,000 investors without their money. The BFA created fake for-profit companies that would use the investments for real-estate deals. The investments were actually going to Crotts and his cohorts. The BFA was created to help build new churches and help the poor members of the congregation get back on their feet. However, this scandal lead to the BFA’s having an actual debt of more than $550 million dollars.
6. Tyco International

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Tyco International is a manufacturing company of electronic components and security systems. Former CEO L. Dennis Kozlowski and CFO Mark Swartz created an enterprise system that allowed the two of them to use corporate money for personal expenses – buying homes, jewelry and even hosting extravagant parties. They sold more than 7.5 million shares of stock, fraudulently, for the company for around $450 million. Those funds were then secretly given two both men in bonuses and benefits. In the end, they were found out and both men were sentenced to 25 years in prison.
5. Cendant Corporation Securities Fraud

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Cendant was formed in 1997 after CUC International and HFC Inc. merged. After the merger, accountants found that CUC had been overstating the amount of annual income they were bringing in each year equaling a total amount of $500 million. The President, Kirk Shelton, and CEO, Walter Forbes, inflated the income in order to boost their stock prices so that more mergers and acquisitions would take place. This caused investors to lose a whopping $19 billion. Both men have been sentence to prison and have to pay restitution.
4. Bernard L. Madoff Securities LLC

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Bernard Madoff was the founder of Bernard L. Madoff Securities LLC and a chairman of NASDAQ Stock Market, Inc. Bernard Madoff’s scheme was exposed in late 2008 when his sons straight up told the federal authorities their father was involved in an elaborate Ponzi scheme (quite the snitches ehh?). Madoff Securities was able to con thousands of investors for roughly $65 billion. He always reported some gains to his investors and always returned money if an investor wanted to pull out. However, like a typical Ponzi scheme, he paid investors modestly using their own money.
3. Fannie Mae and Freddie Mac

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Freddie Mac fraudulently reported earning more than $5 billion dollars during the 2000 – 2002 time frame. Executives did this to cover up unsteady earnings. Known for being one of the best in buying and guarantying home mortgages, executives wanted to ensure its reputation. Then in 2004 it came to light that Fannie Mae, the finance side of the company, had been reporting excessive earnings allowing executives to collect extra bonuses. In a settlement with the SEC in 2006, Fannie Mae incurred $400 million in penalties.
2. WorldCom

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WorldCom, a telecommunications company, covered up its financial crisis by fraudulently projecting financial health. Expenses were not reported and they used false accounting entries to increase revenue. After an audit in 2002, it was determined that WorldCom inflated its revenue by roughly $11 billion causing $180 billion in investor losses.
1. Enron

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Enron, the merger of two pipeline companies, first began its scandal by applying for and being awarded government deregulation. This gave executives the right to maintain their earnings reports; thereby, giving them the opportunity to alter losses. They were also able to conceal some losses and use accounting loopholes to keep millions of dollars off the company accounting records and encourage more investors. It wasn’t until Sherron Watkins, an Accountant at Enron, came forward that the company began to crumble.
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