There have been many financial scandals that have rocked the world throughout history. Some of the more recent scandals you might be familiar with, but ones that happened quite some time ago you might not have heard of. Read on to learn about some of the most interesting financial scandals throughout history.
The Enron Scandal
The Enron scandal is a story that begins in 2000 and came to a head in 2001. Enron was a Texas-based energy company that once had an estimated worth of 60 billion dollars. The scandal involves accountants lying about the numbers and making it look like the company had huge profits. In reality, Enron was losing money.
Accountants lied by basing the securities value on the market value of the company instead of the book values. This led to the bankruptcy of the company when the truth was discovered. At the time, this was the largest corporate bankruptcy in American history. It wouldn’t take long for another company to claim that spot, though.
The Worldcom Scandal
Worldcom was the second largest telecommunications company in the United States. However, there were many lies that made the company look like it was doing better than it really was. From 1999 to 2002, the company reported 3.8 billion dollars in fraudulent revenues. This led to the company filing for bankruptcy taking away 30,000 jobs and 180 billion dollars from investors.
The Lehman Brothers Scandal
In 2008, the financial crisis was in full swing. Lehman Brothers was an investment bank that had been around for 150 years before going bankrupt in 2008. This investment bank bet on the housing market and subprime mortgages which led to the bankruptcy of the company when the US housing market collapsed. The company tried to hide the losses at first by disguising subprime mortgage debt as cash.
The Bernie Madoff Scandal
The Bernie Madoff scandal is the most famous modern Ponzi scheme. Madoff tricked people into investing money in what they assumed was a legitimate business opportunity. The financial crisis of 2008 made it so money was no longer coming in, and it laid bare the truth that Madoff was selling people on lies. He committed 64 billion dollars worth of fraud and was sentenced to 150 years in prison for what he did.