Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Trends in Corporate Fraud Enforcement

By Joseph Savage and Christine Sgarlata Chung
October 03, 2005

For high-profile defendants, timing is everything. In 1989, former junk bond king Michael Milken was indicted on RICO violations, stock manipulation and insider trading. After Milken pleaded guilty to securities, mail and tax fraud and market manipulation, he was sentenced to 10 years in prison, with anticipated actual service of 40 months. Due to cooperation and good behavior, Milken emerged from prison after serving less than 2 years, with a personal fortune in place. He has remained a power broker in financial and charitable circles since his release.

In 2005, former WorldCom, Inc. CEO Bernard Ebbers was indicted for conspiracy, securities fraud and filing false statements with the Securities and Exchange Commission (SEC) after WorldCom announced that it had overstated earnings. After a New York jury found Ebbers guilty, Judge Barbara Jones sentenced 63-year-old- Ebbers — a first-time violator — to 25 years in prison, of which he must serve at least 21. Judge Jones commented that, while she recognized that this was “likely to be a life sentence for Mr. Ebbers,” anything else “would not reflect the seriousness of the crime.” Separately, Ebbers agreed to pay $5.5 million in cash and to hand over his home and other assets worth as much as $40 million to resolve claims filed by WorldCom shareholders — a settlement commentators estimate will chew up most of Ebbers' estate.

As the change in approach from the Milken case illustrates, today the enforcement environment for business crimes is harsh. Statistics, however, suggest that 2003 might have been the high-water mark. In addition, in the past 6 months, courts and juries have handed prosecutors a number of high-profile setbacks. Corporations and their employees may find that regulators' and prosecutors' zeal, while still intense, has moderated somewhat.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?