The Biggest Cases of Fraud in US History

Fraud has a devastating impact on businesses and institutions. In the worst case scenarios, fraud can even cause a business or institution to collapse. Below is a collection of the biggest cases of fraud in recent US history.

The Enron Scandal

2001 saw one of largest corporate scandals ever seen in the US. Enron, then one of the largest energy and commodities service providers employing 20,000 people was guilty of a mammoth accounting fraud that destroyed $78 billion of its stock market value. The collapse of Enron also led to the collapse of Arthur Andersen, then one of the biggest holding companies, and the passage of the Sarbanes-Oxley Act of 2002. Former President, Jeffrey Skilling, is currently serving 14 years of a 24 year and four month sentence

The Bernard Mandoff Ponzi Scheme

The not-so illustrious honour of being convicted of the largest fraud ever by a single individual goes to Bernard Madoff. The New York-based investment financier was exposed in 2008 having swindled $65 billion from his clients. Pleading guilty to eleven federal felonies and admitted to turning his wealth management firm into a giant Ponzi scheme. Such was the magnitude of the case that the SEC (Securities and Exchange Commission) has since placed considerable emphasis on focusing on detecting investment advisor fraud and Ponzi schemes.

The Collapse of Lehman Brothers

The most historic recent case of financial malpractice goes to the investment bank Lehman Brothers. The global financial services firm filed for Chapter 11 bankruptcy on September 15th 2008 and resulted in a mass exodus of its clients, drastic losses in stock valuation, and devaluation of its assets by credit rating agencies. Sparking a worldwide financial frenzy of dismay, it’s argued that the collapse of Lehman Brothers did the greatest damage to the worldwide economy. Former Chief Executive Officer and Chairman, Richard Fuld (the longest-serving CEO on Wall Street at the time of the firms demise) has been named as one of the ten culprits of the recession and as the worst American CEO of all time.

The Cedant Catastrophe

1997 saw the merger of CUC International and HFS. The newly formed company became known as Cedant. Illusions of a new American corporate powerhouse where quickly eviscerated when a Complex, decade-long accounting fraud was discovered at the heart of CUC. The fraud was estimated to have cost investors at least $19 billion – the largest fraud prosecuted by the SEC until that point. Class action lawsuits were later filed to the tune of exceeding $3 billion. Former chairman Walter Forbes (no relation to the famed Forbes publishing family) is currently serving a 12 year prison sentence.

 The MF Global Bankruptcy

MF Global once boasted $41 billion in assets. Under the tenure of former Goldman Sachs Chairman and Senator of New Jersey Jon Corine, MF Global experienced a spectacular meltdown of its financial meltdown. One trader even attempted to trade for his own profit when the firm’s management software was turned off.  The trade imploded sensationally, causing a loss of $141 million. At one time Jon Corzine was estimated to have $41 billion in assets. The firm failed in October 2011 making it one of the most spectacular bankruptcies in US history.

Fraud can have devastating effects on the security and solvency of small businesses and corporations. These five examples demonstrate that no corporation or institution is immune from the threat of fraud. Appropriate measures should be taken to ensure long term security of businesses.

Focus Training offers a selection of fraud awareness, investigation and countering courses that are imperative for businesses to protect their interests and assets. Get in contact with us today to find out more.





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