Decade In Review: Corporate Scoundrels And Scandals The business world has been rocked by one scandal after another in the past decade. From Martha Stewart to Bernie Ebbers and Bernie Madoff, it's been a confusing and angry time for investors. The era also saw a 777-point one-day plunge in the Dow and some 7 million job losses.
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Decade In Review: Corporate Scoundrels And Scandals

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Decade In Review: Corporate Scoundrels And Scandals

Decade In Review: Corporate Scoundrels And Scandals

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Here's the most astonishing thing about this next report. Everything you are about to hear really did happen in a single decade. NPR's Tamara Keith reports on 10 years of financial scandal.

TAMARA KEITH: It's like we've been living a horror movie.

(Soundbite of movie, "The Blob")

Mr. STEVE MCQUEEN (Actor): (as Steve Andrews) It's kind of like a mass that keeps getting bigger and bigger.

(Soundbite of music)

KEITH: Bear Sterns, Lehman Brothers, WaMu, Fannie, Freddie, AIG, 600 point drops in a single day, seven million lost jobs.

(Soundbite of movie, "The Blob")

(Soundbite of music)

KEITH: It almost makes the big business scandals from earlier in the decade seem quaint. Enron brought the first shock of the decade. The energy trading firm was a virtual cash machine, until its accounting fraud was revealed.

The company filed for bankruptcy in December 2001, laying off thousands of employees. Employees who had invested their retirement funds in Enron stock were wiped out. Congress quickly responded with a series of hearings, featuring executives like former chairman and CEO Ken Lay.

Mr. KEN LAY (Former Chairman and CEO, Enron): Mr. Chairman, I come here today with a profound sadness about what has happened to Enron, its current and former employees, retirees, shareholders and other stakeholders.

KEITH: In 2006, Lay was convicted of fraud for lying about Enron's financial state in the months before the company's collapse.

Mr. LAY: I firmly believe I'm innocent of the charges against me. But despite what happened today, I am still a very blessed man.

KEITH: Lay died of a heart attack before sentencing.

The scandal also led to the demise of the accounting firm Arthur Andersen.

But the accounting scandals didn't stop there. In 2004, former WorldCom CEO Bernard Ebbers was indicted on charges of fraud, conspiracy and filing false documents with regulators.

Then-Attorney General John Ashcroft announced the charges.

Mr. JOHN ASHCROFT (Former Attorney General): The message to CEOs is that integrity is very important, and that the falsification of the condition of any documentation that relates to your company is a serious matter.

KEITH: For years, WorldCom executives had used creative accounting to make the company seem more profitable than it really was. In July 2002, it filed for bankruptcy. The fraud was estimated at $11 billion. Ebbers was sentenced to 25 years in prison.

At about the same time, another scandal was unfolding: Tyco. Prosecutors accused company executives of using Tyco's treasury as a personal piggy bank. There were lavish homes and bonuses and, perhaps most notably, a $2 million birthday party for CEO Dennis Kozlowski's wife.

Unidentified Group: (Singing) Happy birthday dear Karen´┐Ż

KEITH: The party featured an ice sculpture in the form of Michelangelo's David, a laser show and a performance by Jimmy Buffett.

Stephen Cutler at the Securities and Exchange Commission described the charges against top Tyco execs who he said...

Mr. STEPHEN CUTLER (Securities and Exchange Commission): ...treated Tyco as if it were theirs alone, taking out millions of dollars without ever telling investors.

KEITH: Kozlowski and his CFO, Mark Swartz, were sentenced by a New York State court to terms of eight to 25 years.

In 2003, scandal struck Martha Stewart when was indicted by a grand jury on charges related to insider trading. The following year, a jury found her guilty of conspiracy, obstruction of justice and making false statements.

Although Stewart maintained her innocence, that September, she announced she would begin serving her prison sentence immediately.

Ms. MARTHA STEWART (CEO, Martha Stewart Living Omnimedia): I suppose the best word to use for this very harsh and difficult decision is finality, and my intense desire and need to put this nightmare behind me, both personally and professionally.

KEITH: Five months later, Stewart walked out of prison wearing jeans and a poncho, promptly setting off a minor fashion sensation.

But none of these scandals can compare to the epic fraud committed by Bernard Madoff, who last December admitted to his sons that his successful asset management business was one big lie.

The Ponzi scheme took tens of billions of dollars and left victims like Sharon Lissauer.

Ms. SHARON LISSAUER: I put all my savings in, stupidly, and - because I trusted him so much.

KEITH: Madoff is serving his 150-year sentence at a federal prison in North Carolina.

Tamara Keith, NPR News, Washington.

INSKEEP: The decade in capitalism.

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