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Impeach George Bush
The Enron Verdict
Guilty, no one could believe they didn't know what was going on. Now how about the rest of the companies that raped california in 2001?
Source: sfgate.com, 2006-05-26
Candidate: Enron
From comfy corner offices, they engaged in chicanery that fleeced shareholders and pensioners. When misconduct was exposed, their company unraveled with breathtaking speed. Now, Enron's Ken Lay and Jeffrey Skilling, found guilty of conspiracy and fraud, face hundreds of years in the hoosegow.
They're the last -- and many would say, worst -- of the gang of white-collar criminals who've danced through headlines in the past few years. While Enron is the most visible icon for corporate skulduggery, it was only one of a parade of notorious cases that came to represent to average citizens everything that was wrong with corporate America.
"Skilling and Lay will go down as symbols of the excesses of the 1990s and early 2000s," said Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.
From louche party-thrower Dennis Kozlowski of Tyco to the Rigas family at Adelphia, a rogue's gallery of other top executives also fed public disgust with that excess.
"Hubris very quickly can overtake a business leader," Hanson said. "If you've been on the cover of Business Week or Fortune, you get the idea you can do no wrong. You think if there's evidence to the contrary, it must be an error so you can correct it by falsifying the books."
Cooking the books in order to pocket millions -- or hundreds of millions -- in lucre to fund lavish lifestyles was a theme for a range of top executives who've faced trials in the past few years.
There was Tyco Chief Executive Officer Kozlowski with the infamous $2 million birthday bash for his wife on Sardinia, featuring an ice sculpture of Michelangelo's David that spewed vodka. There was Adelphia CEO John Rigas and his two sons who treated the company as their personal piggy bank to fund dozens of vacation homes, the Buffalo Sabres hockey team and their own golf course. (That family reportedly inspired the late, lamented TV show "Arrested Development," which portrayed the patriarch of a family business doing time for fraud.)
"I'm happy to see Kenny Lay and the Boys -- as Howard Dean used to call them -- get strung up," said David Krikorian of Cincinnati, who was inspired by the cavalcade of corporate crime to create a deck of playing cards called Wall Street's Most Wanted. "I hope they go to jail for a long time."
Lay was the deck's Ace of Spades -- "the worst of the worst," Krikorian said -- and Skilling was its King of Spades. To Krikorian's surprise, the deck struck a nerve, with securities lawyers, accountants and business professors snapping up copies as a fun way to broach the subject of corporate ethics.
Some high-profile cases were more modest in scope. Domestic doyenne Martha Stewart and star investment banker Frank Quattrone were tried for obstruction of justice rather than financial wrongdoing. Stewart has emerged after serving five months of prison time as successful as ever. Quattrone's guilty verdict was overturned in March and his lawyers are in negotiations to avert another trial.
Santa Clara University's Hanson said the corporate greed was the flip side of the success of the stock market's go-go days at the turn of the millennium.
"When the bubble burst, a certain percentage of corporate executives tried to hang on by their fingernails through cooking the books and outright fraud," he said. "The critical moment was really the third quarter of 2001, when the earnings of many high-flying companies dropped. When that occurred, you had some executives who said, 'I don't want my wealth to evaporate' and they began to manipulate things, although the Enron manipulations were much earlier."
Sadly, another series of abuses has recently come to light, he said, with revelations that at least a score of companies may have backdated stock options to give top executives instant paper riches.
But ultimately, the Enron fallout has yielded some positives, too, spurring the tough new Sarbanes-Oxley regulations that tighten controls on how companies and executives handle finances.
"I think the developments over the past four years are good for American capitalism," Hanson said. "Sarbanes-Oxley impresses upon every corporate board member and every corporate executive that they personally are accountable."
Ken Lay, 64 |
GUILTY
Former chairman and founder, Enron
-- The case: Energy giant Enron went from the country's seventh-most-valuable company to a colossal bankruptcy filing in late 2001. Prosecutors said Lay and other executives schemed to hide Enron's debt and inflate its profits, fooling investors about its house-of-cards frailty so they could reap millions from its inflated stock.
-- The verdict: Guilty on six counts including conspiracy, wire fraud and securities fraud. Guilty on four counts in separate bank-fraud trial.
-- Current status: Free until Sept. 11 sentencing. Faces maximum 165 years in prison.
Jeffrey Skilling, 52 | GUILTY
Former CEO, Enron
-- The case: Same as above
-- The verdict: Guilty on 18 counts of conspiracy and fraud and one (of 10) counts of insider trading.
-- Current status: Free until Sept. 11 sentencing. Faces maximum 185 years in prison.
Andrew Fastow, 44 | GULITY (plea bargain)
Former chief financial officer, Enron
-- The case: Same as above
-- The verdict: Pleaded guilty to two counts of conspiracy. Sentenced to maximum 10 years. Agreed to testify against Lay and Skilling.
-- Current status: Due to start sentence in July. His wife, Lea Fastow, pled guilty to misdemeanor tax charges and completed a one-year sentence in July.
Bernard Ebbers, 64 | GUILTY
Former chairman & CEO, WorldCom
-- The case: In the biggest corporate fraud in history, WorldCom imploded in 2002. The bankruptcy wiped out stock in a company worth $115 billion at its peak. Prosecutors said Ebbers cooked the books to the tune of $11 billion in fake earnings.
-- The verdict: Guilty on all nine counts of conspiracy, securities fraud and filing false reports with regulators. Sentenced to 25 years.
-- Current status: Free pending appeal.
Dennis Kozlowski, 59 | GUILTY
Former CEO, Tyco International
-- The case: Prosecutors said Kozlowski, along with former Tyco CFO Mark Swartz, looted some $600 million from the manufacturing conglomerate to fund their lavish lifestyles. Testimony about opulent parties and $6,000 shower curtains enlivened the trial.
-- The verdict: Guilty on 22 counts of grand larceny, conspiracy, securities fraud and falsifying business records. Sentenced to eight years, three months to 25 years in prison. Swartz also guilty.
-- Current status: Incarcerated in Mid-State Correctional Facility, Marcy, N.J. With good behavior, eligible for parole six years, 11 months from September 2005 start of sentence.
Frank Quattrone, 50 | CONVICTION OVERTURNED
Investment banker, Credit Suisse First Boston
-- The case: Prosecutors said Quattrone obstructed justice when he encouraged his employees to clean up files while the firm was being investigated for allegedly dispensing shares in IPOs to important clients.
-- The verdict: Guilty of obstruction of justice; sentenced to 18 months in prison in second trial after first ended in hung jury. Conviction overturned in March by appeals court, which said judge gave erroneous jury instructions.
-- Current status: Has remained free during appeals process. Case assigned to new judge for retrial. His lawyers filed papers this month asking for a delay while they negotiate with prosecutors to avert a third trial.
John Rigas, 80 | GUILTY
Former chairman and CEO, Adelphia
-- The case: Prosecutors said Rigas and sons Timothy and Michael looted $100 million from the TV cable company and hid $2.3 billion of debt. Adelphia ran so low on cash that it declared bankruptcy.
-- The verdict: Guilty of 18 counts of conspiracy and securities and bank fraud. Sentenced to 15 years in prison.
-- Current status: Free, pending appeal. Timothy, sentenced to 20 years, is also free pending appeal. Michael pleaded guilty to making false financial entry; sentenced to 10 months home confinement.
Richard Scrushy, 53 | NOT GUILTY
Former chairman and CEO, HealthSouth
-- The case: Chain of rehabilitation and medical services centers overstated earnings by $2.7 billion over seven years starting in 1996. Scrushy blamed 15 former HealthSouth execs who pleaded guilty.
-- The verdict: Acquitted on all counts of conspiracy, false reporting, fraud and money laundering. Former HealthSouth CFO Bill Owens was sentenced to five years in December.
-- Current status: On trial for allegedly paying $500,000 bribe to former Alabama governor in exchange for seat on state board. Remains one of HealthSouth's largest shareholders.
Martha Stewart, 64 | GUILTY
Founder Martha Stewart Living Omnimedia
-- The case: Stewart sold stock in biotech company ImClone just before it nose-dived. Prosecutors said she was tipped off by her buddy, ImClone CEO Sam Waksal and then lied about it.
-- The verdict: Guilty of conspiracy, obstruction of justice and making false statements.
-- Current status: Released March 2005 after five months in Alderson Federal Prison Camp in West Virginia. Served five months and three weeks of home confinement.
Sources: AP, Chronicle research
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User Originated Comments:
From: Robbie
2006-07-15 00:00:00
a fascinating early death for
kenny-boy-lay.
must-a-been
funsta-talk.
From: grizzly14621
2006-07-12 00:00:00
get the f--k over it. the energy crisis was caused
bc u cant sell energy for a lower price than you
buy it. thats capitlism morons.
its the
supply stupid!!!!!!!!!!!!!!
From: creepy uncle
2006-06-29 00:00:00
just keep thinking that cr-p! you nutty people
cannot believe that bush won, even this many years
later...just stay in your apartment and pet your
cats. it will get better once you can find your
medication!
From: real americans
2006-05-27 00:00:00
the kenny-boy, skilling guilty verdict is indeed
good. now, will their bought-off buddy, our
illegal so-called "president" pardon them. i'll
bet he will, as his term comes to an end. now, it
is high time to go after the real criminals behind
all the corruption, our illegal "un-elected"
administration. bush, cheney, rumsfeld, condi, and
all of the rest of the bush "crime family". kenny
boy is just the tip of the iceberg.
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