How did the top leadership at Enron undermine the foundational values of the Enron Code of Ethics? Key players among the top leadership were Andrew Fastow, Jeff Skilling, and Ken Lay. Each of these individuals contributed to undermining Enron’s foundational values. Enron numerous executives such as former CEO, former chief financial officer and treasurer who forced company to the bankruptcy were found guilty after the bankruptcy. They were engaged in money laundering, fraud and conspiracy.
Case No. 1: Countrywide Loan Officer convicted of Mortgage Fraud charges Summary Between January 2005 and December 2007, Paige Kinney, aka Jamie Lee Lawler, a mortgage loan officer for Countrywide Home Loans, played a major role in a mortgage fraud scheme that amounted to $40 million in fraudulent loans and targeted both the company she worked for and other several lenders. The way the scheme would process consisted of gathering straw buyers to purchase the intended properties, in which they did not have any intention to live in or be responsible for the loan payment. Kinney would then obtain mortgage financing for the buyers and properties, by forging and modifying their documents, for which the lenders would attribute loans that exceeded the sales prices of the homes. That excess between sales price and loan amount, called “cash-back” would then be redirected to Kinney’s bank account, and would be used for personal expenses, make mortgage payments, and compensate the “buyers,” among other things.
The R.T.C ( Resolution Trust Corporation) began to investigate the whitewater case and found that once again Mcdougal was found using large amounts of money he should not have and the Clintons were caught in the crossfire. A report down by the R.T.C, the Pillsbury report, provided evidence that suggested the Clintons knew nothing about the Mcdougal's misdoings and that they were simply innocent bystanders. Regardless of the report, the media still bombarded the Clinton’s with questions about the case until the attorney general at the time appointed an investigator, Robert Fiske, to get to the bottom of the whole scandal. Robert Fiske later on was replaced by Kenneth Starr, another investigator, who found incriminating evidence of sexual misconduct down by president Clinton. The infamous “Starr report” soon came out which accused president Clinton of having an affair with another colleague of his in the White house.
A lengthy investigation and several hearings pressed JPM leaders on their trading practices. One hearing in particular, conducted by the Permanent Subcommittee on Investigations accused the banking giant of misleading investors and regulators about the risks taken during trading. In his testimony, JPM’s chief financial officer, Douglas Braunstein, “said his statements were based on what he knew at the time, conceding that in hindsight the credit portfolio ‘did not act as a hedge, it changed dramatically and we misunderstood the risks’” (www.4-traders.com, 2013). Later in his testimony, Braunstein mentioned that his 2012 pay was cut in half to approximately $5 million, because of the trading debacle. Other bank officials made similar statements in an attempt to dispel public opinion that they, and everyone in the banking industry, were overpaid and over-privileged.
The article revealed that KKD booked the purchase cost as an intangible asset and failed to properly account for amortization expenses. Typically, the accounting treatment for reacquired franchise rights is to amortize the value of the acquisition over its legal life. The aggressive accounting practices of the company triggered the U.S. Securities and Exchange Commission (SEC) to investigate KDD in January of 2005. KKD’s Board of Directors decided to restate the financial statement to correct previous errors. However, the failure to provide the new financial statement on time damaged the reputation of the company even further.
The day after her sale, the stock value fell dramatically (U.S. Securities and Exchange Commission). She was convicted of 4 felony counts; of those were obstructing justice and lying to investigators and she served her time of 5 months behind bars from October of 2004 to March of 2005 at Federal Prison Camp, Alderson (Federal Bureau of Prisons, 2004). Alderson happens to be the first federal prison for women, built in the 1920s in West Virginia (Foster, 2006). Alderson Federal Prison is located in two West Virginia counties, near the town of Alderson. The facility itself is a minimum security prison and not for high risk or violent offenders.
The former chief financial officer, Eric Sieracki, is named as a defendant in the lawsuit. Mozilo agreed to repay $45 million that illegitimately earned and also he agreed to repay $22.5 million in civil penalties. In 2010, the firm had to repay $108 million in federal charges that the firm overcharged customers that were struggling to pay their mortgages as a result of the housing decline and the economic crisis. In the early 1970’s, there were activist groups that stated that the organization was biased in lending minorities money to purchase homes in decent neighborhoods. In the mid 2000s, banks including Countrywide financial were lending consumers money to buy homes that they knew they could not afford to pay their monthly mortgage payments.
According to the author’s viewpoint, many scandals have happened because of the following illegal behaviors. It can be clearly seen from the case that the most obvious scandal is that Tyco’s money has been used for personal expenses. CEO Kozlowski was accused of using corporate funds to illegally purchase precious artworks, residences, and properties. More importantly, Kozlowski used Tyco’s $1.5 million to pay for his second wife’s birthday week (Stanwick & Stanwick, 2009). Another unethical action that suffers complaining from many critics is that Kozlowski, together with some other members of Tyco’s management, have received unreasonably high compensation levels, which contributed to the fall of Tyco’s stock (Stanwick & Stanwick, 2009).
And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted. Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal.
In the case of Janet leaving BUGusa, Inc. to work for WIRETIME, INC. the company has committed tortious interference. Tortious interference is when a party persuades and induces another to breach their contract. WIRETIME, Inc. used an 10% increase in wages and a $5,000 signing bonus as leverage to lure Janet away from BUGusa, Inc. to work for them. Scenario: WIRETIME, Inc. (Steve and Walter) Discuss any liability BUGusa, Inc., may have for Walter’s actions. Since Walter took Steven into a soundproof room for six hours and threatened to hurt him if he did not divulge information, Walter committed false imprisonment.