Top CEOs SENT TO PRISON: I WONDER WHO WILL BE NEXT? LOVE YOU CHASE, SO MUCH

Top CEOs Sent to Prison

Earlier this week, Rebekah Brooks, former CEO of the now-defunct British tabloid News of the World, was arrested on conspiracy to pervert the court of justice. The case against Brooks and the phone hacking scandal is an exception to the usual story of CEOs that end up in prison. Most of their corporate wrongdoings generally involve corruption, insider trading and fraud. Given the difference, 24/7 Wall St. identified the top CEOs that went to prison.

The kinds of crimes these executives commit generally fall into one of two categories. In the first case, CEOs mean to profit directly from their actions, including offenses such as insider trading and embezzlement. Examples of this include Tyco’s CEO Dennis Kozlowski and Adelphia’s CEO Jonathan Rigas, who each stole millions of dollars from their companies.

The irony is that while these corporate leaders were trying to make their companies look better, they usually succeeded only in putting them through a period of severe financial hardship, as was the case with Rite Aid. In several cases, such as Adelphia and Enron, the financial revelations were so severe, causing total bankruptcy. In a few cases, Tyco for example, the company continued to perform well, despite the crimes.

24/7 Wall St. examined the CEOs who have been arrested while heading Fortune 500 corporations.

(AP Photo/Sang Tan)


    

5. Bernard “Bernie” Ebbers

Company: WorldCom
Current status of the company: Bankrupt and acquired

The fall of Bernard “Bernie” Ebbers, former CEO of WorldCom, began once the telecommunication company’s proposed merger with Sprint (NYSE: S) fell through in June 2000 due to antitrust laws. WorldCom’s stock subsequently plummeted and Ebbers and his executive team continued to rearrange the books to the tune of $11 billion in a desperate attempt to cover up losses. In 2002, the fraud was discovered by internal auditors and Ebbers ousted. In March 2005, Ebbers was convicted of conspiracy, securities fraud and seven counts of filing false reports with regulators. He’s currently serving a 25-year sentence in a Louisiana jail.

4. Richard Scrushy

Company: HealthSouth
Current status of the company: Still active

Richard Scrushy, former CEO of HealthSouth (NYSE: HLS), has 20 years of illicit practices to his credit. Scrushy authorized the firing of whistle blowers, bribed and threatened HealthSouth execs and was complicit in illegal accounting practices. In November, 2003, Scrushy was indicted on charges of conspiracy, securities fraud, money laundering and mail fraud. However, the slippery Scrushy was acquitted on all charges in June, 2005. Less than four months later, he was indicted once again, this time on 30 counts of extortion, obstruction of justice, money laundering, racketeering and bribery. In June, 2007, Scrushy was finally sentenced to six years and 10 months in prison.

3. Walter Forbes

Company: Cendant
Current status of the company: Split up

In 1998, Hospitality Franchise Systems, a platform used to purchase hotel chains, merged with direct marketing company Comp-U-Card International to form Cendant. The new corporation soon discovered, however, that Walter Forbes, CUC’s former CEO and the CEO of the newly formed Cendant, had grossly misrepresented the financial status of CUC. He reported at least $500 million in nonexistent profits. Forbes, who insisted he knew nothing about the situation, was forced out. By 2002, the ex-CEO was indicted under fraud charges, and in 2007, after years of appeals, he was sentenced to 12 years in prison and $3.28 billion in damages. In 2005, Cendant split up and spun off into several different companies.

2. Joseph Nacchio

Company: Qwest
Current status of the company: Acquired

In March, 2005, telecommunication company Qwest’s CEO Joseph Nacchio and several executives were indicted by the SEC. The charges included inflating revenue estimates, lying about nonexistent forthcoming government contracts, and illegally profiting from the run-up in the stock price. In 2007, Nacchio was sentenced to six years in prison. He was also ordered to pay a $19 million fine and forfeit an additional $52 million he had made through illegal trading. Nacchio appealed several times, losing his final appeal in the U.S. Court of Appeals for the Tenth Circuit. He began serving his term in February, 2009, but even now his legal team is petitioning to be heard in the Supreme Court.

1. Martin L. Grass

Company: Rite-Aid
Current status of the company: Still active

In 1999, Rite-Aid (NYSE: RAD) CEO Martin L. Grass, the son of company founder Alex Grass, was forced to resign from the post he had held for just four years. Grass was formally indicted in 2002, along with several other high-ranking executives at the drugstore chain, for conspiracy to defraud, making false statements, as well as accounting fraud. In 2004, Grass pleaded guilty and reached a plea agreement to serve at least eight years in prison and pay a $500,000 fine, as well as waive $3 million in owed salary. In 2009, Grass moved into a halfway house and was subsequently released in 2010.

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NPR "Is JPMorgan Chase Too Big To Manage?" My answer...YES.

 You ever hear that saying, Pigs get fat, but Hogs Get Slaughtered? Have we had enough of this nonsense yet?? I wanted to share this NPR story with you...this all just makes me shake my head...meanwhile, NO WORD...just the run around...the saga continues.

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Is JPMorgan Chase Too Big To Manage?

 

May 15, 2012

JP Morgan Chase has long had the reputation of being one of the better managed big banks in the country. So how did it make a $2 billion blunder? To find out, David Greene talks to David Wessel, economics editor of The Wall Street Journal.

Copyright © 2012 National Public Radio®. For personal, noncommercial use only.

STEVE INSKEEP, HOST:

It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.
DAVID GREENE, HOST:

And I'm David Greene.

JP Morgan Chase has long had the reputation of being one of the better managed big banks in the country. So how did it make a $2 billion blunder and what does it tell us about banking today, nearly five years after the onset of the financial crisis? When such questions are looming, we often turn to David Wessel, economics editor of The Wall Street Journal.
And, David, welcome back to the program.
DAVID WESSEL: Good morning.
GREENE: Well, let's start with what I suppose is seemingly a basic question. What exactly was JP Morgan trying to do with this financial maneuver that went wrong?
WESSEL: Well, that's something that the bank's chief executive Jamie Dimon has been trying to explain. He did it on "Meet the Press" on Sunday and he surely will try again today when they have the company's annual shareholder meeting in Tampa, Florida.
As he tells it, JP Morgan Chase is in the business of making loans and investing in securities, buying corporate bonds. To reduce their risks, it hedges. And hedges means you kind of take out insurance in case your borrowers don't pay back their loans. And in this case they took out insurance. They thought they took out too much insurance, so they tried to offset that by selling some insurance. That's what they were trying to do.
Now, why would a bank do this? Well, Mr. Dimon and other bankers say that in order to manage the risk of their portfolio, in order to make their business less risky, they do this hedging and that allows them to make more loans - more care loans, more credit card loans, more job-creating business loans and stuff like that. Unfortunately, it didn't work out as they'd planned.
GREENE: I mean, this seems pretty astounding. You keep using terms like hedge and reduce risk. And they're basically arguing that an effort to reduce risk loses $2 billion. I mean, is everyone buying this explanation?
WESSEL: No, and especially from the outside, it's incredibly hard to tell the difference between a hedge where you're offsetting some risks you take in your business and simply going to the casino and making bet in the hopes of making a profit.
And there are a lot of people outside JP Morgan who said, look, that's what they were doing. In fact, some people who used to work at JP Morgan have been saying that's what they were doing. Yes, they were running a little insurance business to protect their banking business, but on the side they were trying to make what they call icing, some profits on the side.
And the critics of current banking practices say, look, if people want to hedge, if they want to go and speculate in the market, that's fine. But the people who do that shouldn't be in the business of running a bank that has government guaranteed deposits. You shouldn't mess up these two businesses.
GREENE: Even bringing up the word casino as a comparison for a bank is probably something no one ever wants to hear.
WESSEL: Right, especially Jamie Dimon.
GREENE: Well, can you just give us a window into a sophisticated bank like this? I mean, you have this image of a place with very smart experts and all these, you know, safety precautions in place. How could this happen?
WESSEL: Well, that's what's so scary here. So as you said at the beginning, JP Morgan Chase was supposed to be one of the best managed banks. They got through the financial crisis largely unharmed. And they managed to make a deal that was so complicated that its own senior management couldn't really understand it.
Now, Mr. Dimon says we're still going to earn a lot of money this quarter. So it isn't like the bank is jeopardized. And that, as far as we know, is true. But it did take 10 percent off its stock price. And it is raising the question about whether this bank and its peers are simply too big to manage. After all, if Jamie Dimon can't figure out what his London investment office is doing, who can?
We worried a lot about banks during the crisis that we called too big to fail. That is the government couldn't let them go under and had to bail them out. But the result has been that banks are even bigger than they were before the crisis. And this too big to manage theme is really, really front and center now.
GREENE: And, David Wessel, really briefly - I mean, people who don't own, you know, stock in JP Morgan, I mean, you know, Americans out there, should they be worried about this, you know, becoming a larger problem?
WESSEL: Yes. One, it's a big mistake and taxpayers pay if it gets to be a bigger mistake. So the question is, is this is a warning sign that banks are back to their old shenanigans. And secondly, what happens at one bank usually doesn't happen only at one bank. All bank stocks are down on this. And the question is whether banks are doing things that will go kablooey(ph) and put he economy at risk the way it was four or five years ago.
GREENE: All right. David, thanks so much.
WESSEL: You're welcome.
GREENE: David Wessel is economics editor of the Wall Street Journal.

Copyright © 2012 National Public Radio®. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to National Public Radio. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

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God, I Know You Are Watching, I Sure Hope You Are Taking Notes.

Tuesday:  This is all I have for today.

SO MUCH INFORMATION OVER STEAKS :) LOVE the Denver Chop House!

 Financial Advise over a Fine Meal, and A lot of laughs!!

Had a wonderful evening with friends at the Denver Chop House, there was a ballgame going on downtown, it was a lovely spring night...a buzz of excitement in the air.

I was meeting with a financial adviser to ask a million questions, and they just so happened to work with a bank.(so knowledgeable!!)  So, the question still remains.

  "How can a Bank just make you disappear?"

 "How can the bank refuse to talk with you if they have all of your information?"

This is quite possibly the "million dollar question,"

Question is...not the how, but the why? Then again, I'm coming at this from a very simple minded point of view, surely they would want or need to talk with me...right? So why aren't they? Perhaps there is something bigger happening here...and I'm just collateral damage? Gosh, the mind wonders.....

My million dollar question...WHY DO I CARE?

Oh, yeah...that's right, I don't want my house pulled out from underneath me...duh

If I do in fact exist  :)