"Publicly held companies, whether they make
turbines or tiramisu, are programmed to maximize efficiency and increase sales
every quarter - no matter what. Inevitably this leads to cutting corners." -
"The current accounting standards give those
preparing financial statements great latitude and the tremendous use of
judgement in coming up with numbers. That latitude and judgement can be used
very handily to misrepresent the information provided to investors." - Lynn
Turner, former chief accountant Securities and Exchange
1974 to 1976
Albert John Dunlap engineers a
massive accounting fraud at Nitec, a paper-mill company in Niagara Falls, New
1996 "Chainsaw Al" Dunlap is hired to
"Chainsaw Al" arranges
a "massive financial fraud" eventually paying a $500,000 SEC fine and is
barred from serving as an officer or director of a public company.
Kenneth Lee Lay
replaces Richard Kinder as
head of Enron.
Kenneth Lee Lay
is convicted in May 2006 of conspiracy,
wire fraud and making false
July 30, 2002 Sarbanes-Oxley Act
The US Labor Department dismisses 841 cases out of 1,273 complaints
filed while ruling in favor of corporate whistleblowers only 17 times
Many of the were based "on the technicality that workers at
corporate subsidiaries aren't covered" by the Sarbanes-Oxley Act
2004 Martin Grass, CEO of Rite Aid is sentenced to 8 years in
prison for his role in a massive accounting fraud at the drugstore chain his
father co-founded. Five other executives are also found quilty.
2005 Adelphia CEO John J.
Rigas is convicted of bank, wire and
and is sentenced to 15 years in federal prison.
Timothy J. Rigas and
Michael J. Rigas, his sons, as well as Peter Venetis, his son-in-law, and
Michael Mulcahey are also charged.
They concealed $2.3 billion in
liabilities from corporate investors and the three Rigases had taken $3.1
billion in loans not recorded on the books.
Scott D. Sullivan, an
American Certified Public Accountant and the former CFO, Treasurer, and
Secretary of WorldCom, engineered WorldCom' $11-billion accounting fraud.
Scott Sullivan is sentenced to five years in prison and agrees to
testify against WorldCom Incorporated CEO Bernard J. Ebbers who received
25 years for his role in the $11-billion accounting fraud and subsequent $180
billion dollar loss to investors.
Kozlowski of Tyco
International Ltd. received a sentence of eight and one-third to 25
years in prison for misappropriation
of funds, grand larceny
for $150 million in unauthorized
bonuses and fraud against the company shareholders for an amount of more
than $400 million.
HealthSouth CEO Richard M.
Scrushy is formely charged with fraud,
making false statements in a $2.7
billion accounting fraud.
After 21 days of deliberation, he is
"I sat in that courtroom for six months, and I did
everything possible to advocate for his cause. Scrushy promised me a lot more
than what I got." - Audrey Lewis
Audrey Lewis received $10,000 from
Richard M. Scrushy through the Lewis Group,
a public relations
firm, and another $1,000 to help buy a computer.
2006 Enron Corporation CEO Jeffrey K. Skilling is
sentenced to 24 years and 4 months in prison for
making false statements to auditors
Sanjay Kumar Chairman and CEO of Computer Associates
International is sentenced to 12 years in prison and fined $8 million after
pleading quilty to leading a $2.2 billion
accounting fraud at the
2007 Richard M. Scrushy is
later found guilty of bribery,
mail fraud in a conspiracy
trial with co-defendent Alabama Govenor Don Siegelman in a different
Richard M. Scrushy settles other charges with the SEC over the
$2.7 billion accounting fraud and agrees to pay the SEC $81 million before
settling into his new trade as a television preacher in Birmingham,
Walter A. Forbes, CEO of CUC International which merged
with HFC Incorporated to form Cendant, is convicted of
securities fraud and making
Walter A. Forbes: sentenced to 12 years 7 months;
$3.275 billion in restitution.
Joseph Nacchio, CEO of Qwest
Communications International Inc., is sentenced to 6 years in prison for
insider trading based on
knowledge of improper accounting
The stock of Qwest Communications International
Inc. plunges from $60 per share to $2 per share when accounting
irregularities came to light.
Joseph Nacchio claims his conviction was
based on his company's refusal to coöperate with
NSA requests to spy on its customers. This seems likely.
of events matches reporting by USA Today in 2006, in which the paper noted that
Qwest was the lone holdout from the government's warrantless surveillance
operations and that defiance "might affect its ability to get future classified
work with the government."
Nacchio is barred from using any evidence of
potential retaliation in his defense, given that the material was considered
classified, and his judge refused requests to allow the evidence in trial.
Reports from the Washington Post on evidence
that has been made public on his case since that time seem consistent with the
New Department of Labor Rule Gives Whistleblowing Employees
Greater Protections Against Retaliation (do not believe
opened his eyes slowly, and stared stupidly in the face of the speaker, but did
not offer to get up.
"Wake up, you
young vagabond!" said the man
"I suppose you'd lay there all day, if I hadn't called
Going out into the fresh air
Dick felt the pangs of
The small boy stepping incautiously to the edge of the boat
fell over into the foaming water.
"My child!" a man exclaimed,"who will
save my child? A thousand - ten thousand dollars to any who will save
Now Dick, an expert swimmer, immediately dove in.
"Not many boys would have
risked their lives for a stranger," said the gentleman.
It was the
suit of new clothes he wore which made him feel a little more aristocratic.
accordingly went to a restaurant for a substantial supper.
He was no
longer Ragged Dick now, but Mr. Richard Hunter, junior partner in the large
firm of Rockwell & Hunter.
Mr. Greyson felt that even in
a worldly way Dick was a good match for his daughter; but he knew and
valued still more his good heart and conscientious fidelity to duty, and
excellent principles, and cheerfully gave his consent.
Last week I read
Dick's marriage in the papers, and rejoiced in his new hopes of happiness.
So Dick has achieved
Fortune, the fame of an honorable and enterprising man of business, and a
fortune which promises to be very large.
I am glad to say Dick has not
been spoiled by prosperity.
He never forgets his
humble beginnings, and tries to
show his sense of goodness by extending a helping hand to the poor and
needy boys, whose trials and privations he understands well from his own
past experience." - Horatio Alger Jr.
Merck agrees to pay $2.3
billion to the IRS.
The tax dispute stemmed from income attributed to a
partnership set up in Bermuda in 1993 to avoid taxes.
Medico and gave two patents, for Zocor® and Mevacor®, to it's Bermuda
Merck then pays it's subsidiary
royalties on the two
drugs - in effect deducting income it had paid itself.
2008 Merck agrees to pay a penalty of $671 million for
overcharging the government for
four popular Medicaid
drugs and for bribing doctors to prescribe
Zocor®, Mevacor® and Pepcid®.
Investigation triggered in 2000 by
a former Merck salesman with an
itchy conscience who
blew the whistle.
Joseph Roth*, account manager for
Israel based United
Mizrahi Bank, and rabbi Moshe Zigelman*, admit
a tax evasion scheme
through bogus tax-exempt donations to organizations related to Spinka,
an Orthodox Jewish
rabbi Moshe Zigelman admitted to soliciting donations by
promising to refund 80% to 95% of the sum.
Joseph Roth admitted he
established secret overseas bank accounts and bogus loans to facilitate the
transfer of funds and charged fees to repatriate the money.
"Many national healthcare plans provide universal
insurance at a lower per-capita cost than the American system with better
results." - JD Hunley
"A jury might think $45 million is fair and just
compensation to the family of the woman who died while hospital personnel
ignored her cries of pain. 1980s Under the
Reagan administration International Medical Centers run by George
Recarey expand rapidly due to a special exemption granted through the office of
The judge will automatically reduce any
possible verdict to $250,000 - the most in non-economic damages anyone can
recover for any injury or death caused by a healthcare provider.
cap was passed at the behest of the insurance industry and medical
establishment more than three decades ago.
It has never been changed or
adjusted - even for inflation.
We may be reaching a point at which
letting patients die is more cost-effective than treating them." - Linda
1987 A federal court jury finds Jorge
Recarey, Mariano Villa Del Rey and Antonio Fernandez Sr. guilty of labor
HMO Official Charged with Bribery
July 1994 National Medical
Enterprises agreed to pay $379 million in criminal fines, civil damages,
and penalties for kickbacks
and fraud at National Medical Enterprises
substance abuse hospitals in more than 30 states.
settlement, National Medical
Enterprises renames itself "Tenet".
1996 First American Health Care of Georgia, Inc, later
Integrated Health Services, Inc, agrees to reimburse
government $255 million for overbilling and making fraudulent Medicare
First American billed Medicare for costs unrelated to
the care of patients in their homes, including the personal expenses of senior
management, as well as marketing and lobbying expenses.
files for bankruptcy and
never pays the settlement.
Laboratory Corporation of America Holdings (LabCorp), agrees to pay $182
million to resolve charges that it submitted false claims for medically
unnecessary laboratory tests to federal and state
health care programs.
The fraud involved bundled lab tests that were billed to Medicare as
free-standing tests, resulting in an eight-fold increase in charges to
March 1997 SmithKline Beecham
Clinical Laboratories Inc. (SBCL), now GlaxoSmith Kline, is ordered to pay
$325 million for filing false
claims involving adding on laboratory tests not requested by doctors and
not medically necessary, billing for lab tests that were not actually
performed, giving kickbacks to doctors in
order to get business, and billing Medicare for dialysis testing already
paid for by kidney dialysis centers.
Blue Cross Blue Shield of Illinois (also known as Health Care Service
Corporation) pleeds guilty to eight felony counts and agrees to pay $144
The nature of the fraud is that Blue Cross Blue Shield
Illinois manipulated work samples and falsified reports to the Health
Care Finance Administration in order
to conceal evidence of
its poor performance as a
federally contracted processor of Medicare claims.
January 2000 Fresenius Medical
Care of North America, the world's largest provider of kidney dialysis
products and services, agreed to pay a fine of $486 million for a scam
involving National Medical Care, Inc. (NMC), a
subsidiary owned by Fresenius which included fraudulent and fictitious
blood testing claims by LifeChem, Inc. and fraudulent claims submitted
to Medicare for intradialytic parenteral nutrition (IDPN), a nutritional
therapy provided to patients during dialysis treatments.
February 2000 Beverly Enterprises Inc., the nation's
largest assisted living facility chain, agreed to pay $175 million to resolve
civil and criminal charges that it defrauded Medicare by fabricating Medicare
December 2000 HCA The
Healthcare Company (formerly known as Columbia HCA),
the largest for-profit hospital chain in the
US, pleeds guilty to criminal conduct and agrees to pay more than $840
million in criminal fines, civil
penalties and damages for unlawful billing practices.
included: billing for lab tests not medically necessary and not ordered by
physicians, "upcoding" medical problems in order to get higher reimbursements
for more serious medical issues, billing the government for advertising under
the guise of "community education," and billing the government for
non-reimbursable costs incurred in the purchase of health agencies around the
This agreement does not resolve allegations that HCA
unlawfully charged for
the costs of running its hospitals, and that it
paid kickbacks to physicians to get
Medicare and Medicaid patients referred to its facilities.
March 2001 Vencor Inc., one of the nation's largest
assisted living facility chains, and Ventas Inc., a related real estate
investment trust, agreed to pay the US $104.5 million to resolve claims for
failure to provide the promised quality of care to assisted living facility
patients due to inadequate staffing,
improper care of bedsores, and failure to meet resident's basic dietary
October 2001 Taketa-Abbott
Pharmaceutical Products Inc. agreed to pay $875 million to resolve criminal
charges and civil liabilities in connection with fraudulent drug pricing and
marketing of Lupron®, a drug sold for $500 per dose for the treatment of
prostate cancer under
2002 Pfizer paid $49 million to settle state and
federal Medicaid fraud charges involving Lipitor®.
April 2003 Bayer paid $257,200,000 to
settle Medicaid fraud charges involving a "lick and stick" scheme in which
Bayer sold re-labeled
products to an HMO at deeply discounted prices and then concealed this discount
in order to avoid rebating the government .
2003 AstraZeneca agreed to pay
$355,000,000 for providing free drug samples to doctors and telling them to
bill Medicare and Medicaid hundreds of dollars per sample.
agreed to pay $631 million in
civil penalties and
damages arising from false claims,
including cost report fraud and the
payment of kickbacks to
physicians, submitted to Medicare and other federal health
July 2003 CG Nutritionals, Inc.
pled guilty to obstructing a criminal investigation and defrauding the Medicare
and Medicaid programs and agreed to pay $400 million to resolve civil claims.
The subsidiary of Abbott Labs, CG Nutritionals, Inc.,
agreed to a criminal fine of $200 million in relation to the sale of products
which pump special foods into the stomachs and digestive systems of patients
who are not able to ingest meals in a normal manner.
2003 GlaxoSmithKline signs
a corporate integrity
agreement and pays $88 million in a fine for overcharging
Medicaid for the
and nasal allergy
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