Kenneth Lay former CEO was indicted on 11 criminal counts of fraud and making misleading statements. Jeff Skilling was indicted on 35 counts of wire fraud, securities fraud, conspiracy, making false statement on financial reports, and insider trading. Hence both were responsible for collapse of Enron. There are a several reasons that led to Enron’s collapse namely; a corrupt leadership at the top, violation of laws that were not impose by the company’s CEO, and Lack of regulation Enron had one of the best ethics code in the industry. First, not work out with written ethics and compliance codes clearly describe how was the company collapse, moreover corruption from leaders at the top and middle level of organizations is a recipe for disaster.
Moreover he stated that because this company was operating on a small sector a larger fine would have made the company insolvent and it could ultimately lead to the redundancy of the four people presently working in the company. Nevertheless he further stated that it’s unfortunate but unavoidable if a company goes in to liquidation because of the fine
People thought these very companies were worth a fortune but because they were completely made up, they didn't have any value! He definitely abused capitalism and how the market runs. Ken Lay got obsessed with this fraud/ponzi scheme even when Enron was out of money and bankrupt. Ken Lay thought that this would in turns help them get back on their feet but he kept making the company go deeper and deeper into the hole where there was no chance of coming back up. Some of the head people in charge saw what was going on and took a couple of millions and bailed out just in time.
Final Paper Candice Blair University of Maryland University College PRPA 601 Turnitin score: There are few betrayals worse than mishandling money that someone has entrusted to you. Imagine the damage control needed when institutions whose purpose is to manage others’ money, mishandles the finances of millions of people. In 2012, the financial world was shattered with the implosion of one of the world’s banking giants, JP Morgan Chase & Co. (JPM). Due to a complex trading portfolio that was dubbed the “London whale”, which amounted to over $6 billion in losses, JPM was accused of misleading its investors in order to boost profits, but asserted that they (JPM) were acting on the best information that they had at the time. A lengthy investigation and several hearings pressed JPM leaders on their trading practices.
Case 1: Bernard Madoff’s Ponzi scheme 1. Introduction and brief of the case Bernard Madoff’s Ponzi scheme that occured in the end of 2008 is one of the largest financial fraud in history. Bernard Madoff operated a major Ponzi scheme through this wealth management company. He pleaded guilty to 11 counts of financial fraud and theft in March 2009 and three month later was sentenced to 150 years in prison. This fraud was thought to have cost clients more than $10 billion.
Benston (2002) also states “Enron’s bankruptcy is of particular interest to accountants, because its longtime auditor, Arthur Andersen, LLP (Andersen), is (or was) one of the five largest CPA firms in the world. It has been charged with gross dereliction of duty and even fraud by the press and members of the US Congress.” When this fraudulent misinformation ultimately came to light, it led to one of the largest corporate bankruptcies of all time. A Warning of Things to Come? When examining data taken from one of Enron’s financial statements, we notice two values that are used to determine what is known as the Ratio of Liabilities to Owner’s Equity. We see that Enron’s total liabilities (listed in millions) totaled $54,033, and that their total owner’s
Accounting Fraud at WorldCom WorldCom Group, a telecommunications company, caused one of the largest fraud and bankruptcy scandals in American and global corporate history. In total, more than $11 billion worth of fraudulent accounting entries and misstatements were detected. On July 21, 2002, the company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Bernie Ebbers, Former CEO, was sentenced to 25 years in prison on July 13, 2005. Major Factors Contributed to Fraud The following were several major factors that contributed to the fraud at WorldCom: Company Culture According to the facts given in the case, Bernard Ebbers and Scott Sullivan, the CEO and CFO of the company at that time, had created a company culture, in which leaders and managers were not to be questioned.
Ethicality of Accounting Activities Ethicality of Accounting Activities The case involving WorldCom, a telecommunications company, was one of the biggest accounting scandals to happen in the US. The company filed for bankruptcy in 2002 after an internal auditor, Cynthia Cooper, discovered discrepancies in the accounting data. After a complete audit with a team, Cynthia found that the discrepancies were fraudulent and unethical. More than one department in the company played a role in covering up the accounting activities that were not ethical or legal. Accounting Activities in Detail The key accounting activity in the case dealt with incorrect journal entries for capital expenditures.
What a Tangled Web: The Case of Olympus Angel PinaHardin ACCU 620 November 8, 2013 Brandman University What a Tangled Web: The Case of Olympus Introduction Organizations are rocked by scandals almost every day. From Enron to WorldCom, in the past 20 years, financial and accounting scandals have become the “norm”. Unfortunately, for Olympus, the story is no different. Rocked by an accounting scandal the public and investment community has lost trust in Olympus. Additionally, Olympus lost major shares in the market and was almost delisted from the Japanese and New York Stock Exchanges.
In January 2000 Lucent shocked investors by announcing that first quarter revenues would be 20% less than in 1999. This led to an investigation by the Securities Exchange Commission (SEC) of Lucent’s accounting practices. Lucent announced that its year 2000 fourth quarter revenues showed an accounting irregularity of $125 million. Lucent also announced that it would have to make a $679 million adjustment of revenues for the quarter. The SEC charged Lucent for misrepresentation of accounts and misguiding investors.