financial fraud cases USA has shaken the United States several times in history. There were several cases of financial fraud in the country with chilling recoveries. Each case involved large losses, criminal charges, and major changes in money. It changed the way the common masses think and use money. Continue reading to learn more about the top 10 biggest financial fraud cases in U.S. history.
Top 10 Biggest Financial Fraud Cases
There are the top 10 biggest financial fraud cases ever recorded in U.S. history. Continue reading to know more about the same.
1. FTX and Sam Bankman-Fried (Crypto Exchange Collapse)
financial fraud cases USA was a cryptocurrency trading platform located in the Bahamas. He, along with his top executives, was accused of moving customer funds. These were relocated to Alameda Research. Moreover, they were accused of using them for their personal ventures, real estate, and political donations. However, both FTX and Alameda collapsed in 2022. Then, he was arrested on fraud charges and sentenced to 25 years in prison. Their bankruptcy plan in 2024 estimated up to $16.5 billion. Also, about 98% of customers were promised at least 118% of their claims.
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2. Theranos and Elizabeth Holmes (Blood Testing Fraud)
Theranos aimed to revolutionize blood testing. However, it proved to be unworkable. Also, Elizabeth Holmes founded the company in 2004. Then, Sunny Balwani joined with a large loan. Instead, regulators and experts exposed the device as unreliable in 2015. This led to fraud charges. Then, the company was dissolved in 2018. At the same time, Holmes and Balwani were found guilty in 2022. They were sentenced to 11 and 12 years, respectively. They paid $452 million as restitution fee. Meanwhile, Holmes began serving a sentence in 2023.
3. WorldCom and Bernie Ebbers (Accounting Fraud)
This was seen as a massive telecommunications company. It inflated profits by hiding costs. Also, it overstated assets by about $11 billion. CEO Bernie Ebbers was considered the prime culprit. He received a 25-year prison sentence. Also, the company filed for Chapter 11 bankruptcy. Verizon bought some of its assets in 2006. At the same time, the scandal helped aid the Sarbanes-Oxley Act of 2002. It expanded whistleblower protections. Alongside, it raised penalties for fraud. This increased corporate accountability for the years to come.
4. Waste Management and Accounting Fraud
It was a Houston-based trash and energy company. It faced severe accounting fraud charges. Also, the SEC mentioned that the company reported about $1.7 billion in false earnings in 2002. It mis wrote depreciation figures and defrauded investors. The total fraud was about $6 billion. At the same time, a 2001 class-action settlement was $457 million. This was related to an earlier merger. Thus, senior executives were implicated. The SEC stated that it would remove profits from fraud. Their goal was to keep fraudsters from running public companies. The accounting firm was later penalized for the scandal.
5. Enron and Executives (Energy Trading Fraud)
This was once recognized as “America’s Most Innovative Company”. Then, it grew spontaneously in energy trading and ran a digital trading platform. Moreover, it admitted overstating profits of around $600 million. Soon enough, it filed for bankruptcy. This caused thousands of job losses and eroded pensions. Their former CEO and CFO faced jail time. Also, their collapse led to wide regulatory reform and changes in corporate governance. It also led to changes in accounting practices. There was awareness of risk management and the dangers of aggressive energy trading.
6. Ivan Boesky and Insider Trading Scandals
Ivan was a well-known 1980s investor. He was recognized for insider trading. The SEC charged him and he pleaded guilty in 1986. This was after recording conversations with other market players. However, he was sentenced to three and a half years in prison. Along with this, he faced a $100 million fine and a lifetime ban from the securities industry. His actions allowed the idea of corporate greed to flourish. It influenced the portrayal of Gekko in the film Wall Street. The case brought stronger enforcement against insider trading.
7. Bernie Madoff and the Largest Ponzi Scheme
Bernie ran a massive Ponzi scheme from his investment firm. He paid old returns to investors for years. This was done through new funds while secretly stealing money. The wave of redemptions overwhelmed his firm. He was arrested and pleaded guilty to 11 counts of fraud and other charges. Moreover, he was sentenced to 150 years in prison. He died in prison in 2021. It showed how a trusted mentor and hedge fund manager could conceal a profound fraud from his company.
8. HealthSouth and Corporate Fraud
This was a Birmingham-based health services company. It faced charges of inflating earnings. This was about $2.7 billion from 1996 to 2002. Also, the CEO was accused of leading the scheme. This aimed to boost stock prices and executive bonuses. Several executives pleaded guilty to fraud. However, the CEO was acquitted of some charges. Later, he faced bribery charges. This case showed how inflated earnings misled investors and harmed employees. Also, it shows how independent audits are required in the health sector with strong financial reporting.
9. Lehman Brothers Fraud
This was a major investment bank that also collapsed during the 2008 crisis. The firm held risky mortgage-backed securities. Also, the company’s losses grew when the housing market crashed. It filed for the largest bankruptcy in U.S. history in September 2008. The loss was around $639 billion. The collapse caused a credit freeze. It worsened the global financial crisis as well.
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10. Fannie Mae and Freddie Mac
These two were government-sponsored mortgage giants. They became heavily involved with subprime mortgages before the 2008 crisis. They would provide loans to risky borrowers. Moreover, they engaged in aggressive accounting to hide the true risk. The U.S. government took them over in a $214.2 billion bailout in 2008. The taxpayers bore the cost but no executives faced criminal charges.
