Al Capone, who was once known as public enemy No 1, is perhaps one of the most famous American criminals. John Dillinger, Lucky Luciano and John Gotti are no doubt notorious historical criminal icons.
But there’s another kind of crook that has drawn renewed attention over the past decade or so: the white-collar criminal. Bernie Ebbers, Dennis Kozlowski and Bernie Madoff may not be as well known as those aforementioned American gangsters, but they are infamous convicted criminals in their own right.
The latter group committed non-violent crimes including fraud, illegal financial transactions, bribery, insider trading, breach of trust and deception, which are typically committed by companies, businesspeople or government officials.
The term “white-collar crime” was first popularised by criminologist Edwin Sutherland in 1939. He theorised that crime is committed at all levels of society, often by persons operating through large and powerful organisations.
Bernie Ebbers was the co-founder and chief executive officer of Worldcom, which in 2002 was considered the second-largest accounting scandal in US history.
Worldcom capitalised normal operating expenses over years, and inflated revenues through bogus accounting entries, for a total of $11 billion in mis-statements.
This grossly inflated profits for a business that was increasingly unprofitable.
Ebbers also persuaded Worldcom’s board of directors to lend him more than US$400 million so he could cover personal margin calls. At the time, Ebbers was a high-profile member of the Easthaven Baptist Church and regularly taught at Sunday school.
In addition to the approximately 30,000 employees who lost their jobs, investors lost more than $100 billion as the stock plummeted to 20 cents a share from more than $60. Ebbers is serving a 25-year sentence for securities fraud and conspiracy.
Dennis Kozlowski was the chief executive officer of Tyco International. Kozlowski, and chief financial offficer Mark Swartz, are believed to have stolen $600 million from the company through loans and tainted sales of stock.
Kozlowski was well-known for his extravagant lifestyle, having the company pay for his $30 million apartment, which included a $6,000 shower curtain, and footing half the $2 million bill for the birthday party of his second wife. He was sentenced to eight to 25 years for tax fraud and felony charges.
Bernie Madoff is responsible for the largest financial fraud in history, resulting in close to $18 billion in investor losses. Madoff simply took investors’ money and deposited it in his own personal account.
He has admitted that he never made a legitimate investment with his clients’ money during the life of his Ponzi scheme, which investigators believe dates back to the 1970s.
When customers asked for withdrawals, he simply paid them from his Chase account. What is especially wrong here is that Madoff served as the chairman of the board of the National Association of Securities Dealers – a regulator.
He was sentenced to 150 years in prison.
The MF Global bankruptcy hit the headlines last month with the possibility of an estimated $600 million of missing client money. At the helm of the company is Jon Corzine, a former Goldman Sachs chief executive and former New Jersey state governor. The FBI is said to have opened an investigation into the bankruptcy.
Enron, Lehman Brothers, AIG, Waste Management, Jerome Kerviel, Nick Leeson – despite tougher regulation and reform, the cycle continues. Perhaps the “Occupy Wall Street” movement, which holds demonstrations protesting against economic inequality, corporate greed and corruption, is making valid points that deserve attention.
Anthony Galliano is chief executive of Cambodian Investment Management. [email protected]