THE BIGGEST BUSINESS FRAUDS OF ALL TIMES
‘Corporate fraud’ or ‘business fraud’ is defined as any unlawful, unethical, or misleading conduct taken by a firm or an individual acting in their role as a corporate employee. Corporate fraud strategies are frequently complex, making them difficult to detect. It might take months for a team of forensic accountants to thoroughly investigate a corporate fraud plan. When a multinational corporation’s senior executives commit corporate fraud, the amount of money involved is frequently billions of dollars. Consumers or clients, creditors, investors, rival businesses, and, finally, the corporation that is the source of the fraud and its personnel are the victims of corporate fraud. When the scam is exposed, the firm that perpetrated it is frequently left in ruins and forced to declare bankruptcy. Much of the money stolen unlawfully through corporate fraud is never retrieved once the criminals have spent it. When that unfortunately happens, professionals like Bob Bratt have your back.
Biggest Business Frauds
To successfully investigate and judge a fraud is one of the most complex things, but in the modern world, it is possible. So, here are 5 of the most known fraudulent activities uncovered:
Theranos
Elizabeth Holmes, the founder of Theranos, was convicted on three charges of wire fraud and one count of conspiracy to commit wire fraud against Theranos investors. On three counts of wire fraud and conspiracy to conduct wire fraud against Theranos patients, a jury in federal court in San Jose, California, found the company not guilty.
Theranos was advertised as a game-changing innovation created by a lady termed “the female Steve Jobs” and regarded as a genius. Theranos was one of Silicon Valley’s unicorn firms, valued at an estimated $9 billion, and Holmes was the world’s youngest female self-made billionaire. Then everything came crumbling down. The limitations and inconsistencies of Theranos’ technology were disclosed, as was Holmes’ part in concealing it up. There was nothing like a test. The FDA began examining Theranos in August 2015, and investigators from the federal organization that regulates laboratories discovered “significant errors” in the patient testing Theranos was performing. The corporation was forced to close its labs and testing locations, eventually shuttering operations altogether, when Holmes was fired as CEO and charged with “huge fraud.”
Holmes also admitted that she improperly included the logos of several pharmaceutical firms in Theranos’ papers. Investors previously stated that the papers provided some confidence since the logos led them to believe that big pharmaceutical firms have confirmed Theranos’ technology. Holmes said she put the logos to show that the work was done in collaboration with those firms, but she wished she had “done it differently” retrospectively.
On the testimony, Holmes admitted to concealing Theranos’ use of modified commercial equipment from investors. She said she did so because business counsel instructed her that the firm’s changes to the machines were trade secrets and needed to be preserved.
Prosecutors stated that Holmes “opted for fraud over commercial failure” in closing arguments, while the defense contended that she was “building a business, not a criminal enterprise.”
American International Group (AIG)
The American International Group (AIG) is a worldwide insurance company based in the United States with over 88 million clients in 130 countries. Hank Greenberg, the company’s CEO, was convicted of stock price manipulation in 2005. The SEC’s probe against Greenberg found a nearly $4 billion accounting fraud.
According to the investigation, the firm had counted loans as income in its accounts and compelled consumers to utilize insurers with whom it had pre-existing payback agreements. Stock traders were also urged to raise the company’s share price. The SEC ordered AIG to pay a $1.64 billion punishment. In addition, the corporation paid $115 million to a Louisiana pension fund and $725 million to three Ohio pension systems.
Satyam
Satyam was a Hyderabad-based Indian IT service and back-office accounting organization. It was found that the corporation exaggerated sales by $1.5 billion in 2009, marking one of the most significant accounting scandals.
Ramalinga Raju, the company’s founder, and chairman, fabricated revenues, margins, and cash balances, according to a probe by India’s Central Bureau of Investigation. Raju admitted the wrongdoing in a letter to the company’s board of directors during the inquiry. Even though Raju and his brother were accused of breach of trust, conspiracy, fraud, and fabrication of documents, the Central Bureau of Investigation failed to submit charges on time, and they were freed.
Wirecard
Wirecard is a German electronic payment corporation that has been gradually growing over the 20 years. But not everything at Wirecard was as it seemed, as auditors identified a $2 billion shortfall in the company’s records. It turned out that money did not exist, and Wirecard has likely been lying to stockholders about its financials for years. Markus Braun, the company’s CEO, was detained later. Two days later, the firm filed for bankruptcy.
Enron
From 1996 through 2001, Enron was crowned “America’s Most Innovative Firm” by Fortune Magazine every year. It rose to become the seventh-largest company in the United States — at least on paper. In actuality, the corporation employed mark-to-market accounting to seem more lucrative while concealing any losses in shell companies. Enron’s stock dropped from $90 per share to 65 cents in four months after the truth was revealed, eventually plummeting to a few pennies per share. On December 2, 2001, Enron declared bankruptcy. Several Enron executives were charged with a variety of financial offenses.
Fraud Prevention Techniques
Here are some of the fraud prevention techniques that are useful:
- Make fraud reporting a company-wide practice. Encourage consumers to call a safe, anonymous anti-fraud hotline to report red flags. For example, at Vulkan Vegas login, if the system notices suspicious activity, it immediately sends an email to the owner of the account to eliminate the hazards.
- Anti-fraud, anti-bribery, and anti-corruption measures should be detailed and thorough. Implementing the policy and enforcing the repercussions when an employee breaks the agreement will ensure that your policies have teeth.
- Regularly conduct surprise audits and inspections. Regular inspections can aid in detecting fraudulent activity and the rapid mitigation of the harm.
In short, in this fast-growing cyber world, we need to be more active in taking measures against fraud because there are constantly emerging new ways that prey on online users. Then if you need the support of a cybercrime lawyer then you can find one here that is very well respected in that area.