Order Code RL31866
CRS Report for Congress
Received through the CRS Web
Criminal Charges in Corporate Scandals
Updated December 5, 2003
Mark Jickling
Specialist in Public Finance
Government and Finance Division
Paul H. Janov
Information Research Specialist
Information Research Division
Congressional Research Service ˜ The Library of Congress

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Criminal Charges in Corporate Scandals
Summary
Since the collapse of Enron Corp. in late 2001, there has been a series of
scandals involving major U.S. corporations. Recurring elements in the scandals
include improper or fraudulent accounting, self-enrichment by corporate officers,
stock trading on inside information (“insider trading”), and the destruction or
falsification of business records. A number of cases have resulted in criminal
indictments, some followed by guilty pleas. This report tracks post-Enron criminal
charges. Companies are listed alphabetically, and individuals who have been
charged, indicted, or have pleaded guilty are identified. A longer list of companies
with recent accounting problems (not all of which have resulted in criminal
indictments) may be found in CRS Report RS21269, Accounting Problems Reported
in Major Companies Since Enron.
The 107th Congress responded to the series of corporate scandals that began with
Enron by passing the Sarbanes-Oxley Act of 2002. That law created a new oversight
body for corporate auditors, imposed new disclosure requirements on corporations,
including a mandate that CEOs personally certify the accuracy of their firms’ public
financial reports, and increased criminal penalties for a number of offenses related
to securities fraud. For a summary of the legislation, see CRS Report RL31554,
Corporate Accountability: Sarbanes-Oxley Act of 2002: (P.L. 107-204). This report
will be updated regularly.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
List of Tables
Table 1. List of Charges, Indictments, and Guilty Pleas in Corporate
Scandals Since Enron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

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Criminal Charges in Corporate Scandals
Introduction

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002, P.L. 107-204, which had its genesis early in 2002 after the declared bankruptcy
of the Enron corporation. The Act establishes a new regulator for corporate auditors,
the Public Company Accounting Oversight Board, which is to be supervised by the
Securities and Exchange Commission. The Act restricts accounting firms from
performing a number of other services for the companies they audit and requires new
disclosures for public companies and the officers and directors of those companies.
Other issues affected by the new legislation are securities fraud, criminal and civil
penalties for violating the securities laws and other laws, blackout periods for insider
trades of pension fund shares, and protections for corporate whistleblowers.
The ongoing criminal prosecutions are a complementary phase of the effort to
improve corporate accountability. Many observers maintain that prosecution of
individuals alleged to have abused the public trust, together with new legal and
regulatory standards for corporate behavior, is crucial to restoring investor confidence
in the fairness and transparency of the public securities markets. Table 1 identifies
firms and individuals associated with a number of high-profile cases against whom
criminal charges have been filed by federal prosecutors since the collapse of Enron
Corp. (although in some cases the alleged misconduct occurred before Enron’s fall).
In addition to newspaper sources, Department of Justice press releases have been
cited where available. See [http://www.usdoj.gov/03press/03_1_1.html].
A few of these cases, as noted in the table, have also resulted in civil
indictments. These post-Enron criminal charges are listed in CRS Report RL31961,
Civil Charges in Corporate Scandals.

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CRS-2
Table 1. List of Charges, Indictments, and Guilty Pleas in Corporate Scandals Since Enron
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Adelphia Communications
John J. Rigas (chief executive officer)
9/23/02 (C)
All charged with wire fraud, bank fraud, securities
New York Times, 9/24/02,
fraud, and conspiracy
sec. C, p. 1, col. 5
Michael Rigas (executive vice president)
9/23/02 (C)
Timothy Rigas (chief financial officer)
9/23/02 (C)
James R. Brown (vice president for finance)
9/23/02 (C)
New York Times, 9/24/02,
sec. C, p. 1, col. 5, and
9/14/02 (G)
11/15/02, sec. C, p. 7, col. 1
Michael C. Mulcahey (director of internal
9/23/02 (C)
New York Times, 9/24/02,
reporting)
sec. C, p. 1, col. 5
Timothy Werth (director of accounting)
01/10/03 (G)
Securities fraud, wire fraud, and bank fraud
New York Times, 1/11/03,
sec. C, p. 3, col. 1
Arthur Andersen
David Duncan (former partner)
4/10/02 (G)
Obstruction of justice (related to Enron audit)
New York Times, 4/11/02,
Arthur Andersen (the firm) was convicted on the
sec. A, p. 1, col. 2
same charge in June 2002
Charter Communications
Kent Kalkwarf (chief financial officer)
7/24/03 (I)
Conspiracy to commit wire fraud
New York Times, 7/25/03,
sec. C, p. 3, col. 1
David Barford (chief operating officer)
James Smith (senior vice president)
David McCall (executive)
7/25/03 (G)
Conspiracy to commit wire fraud
New York Times, 7/26/03,
sec. C, p. 2, col. 3

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CRS-3
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Credit Suisse First Boston
Frank P. Quattrone (banker)
5/12/03 (I)
Obstruction of justice and destroying evidence
New York Times, 5/13/03,

sec. C, p. 1, col. 2;
10/24/03
A federal judge declared a mistrial in the
10/25/03, sec. A, p. 1, col. 1;
obstruction of justice trial of Frank P. Quattrone
12/2/03
A federal judge set a March 22, 2004, date for the
12/2/03, sec. C, p. 5, col. 1
second trial of Frank P. Quattrone.
Dynegy Inc.
Gene S. Foster (vice president)
8/5/03 (G)
Conspiracy to commit securities fraud
New York Times, 8/6/03,
sec. C, p. 4, col. 1
Helen C. Sharkey (accounting manager)
8/5/03 (G)
New York Times, 8/6/03,
sec. C, p. 4, col. 1
Enron Corp.
Michael Kopper (finance executive)
8/21/02 (G)
Conspiracy to commit wire fraud and money
New York Times, 8/22/02,
laundering
sec. A, p. 1, col. 6
Andrew Fastow (chief financial officer)
10/2/02 (C)
Charged with securities fraud, wire fraud, mail
Department of Justice, 10/2/02,
fraud, money laundering, and conspiracy
press release #568a;
10/31/02 (I)
Indicted by a grand jury on 78 counts of fraud,
10/31/02, press release #627;
money laundering, and conspiracy
5/1/03 (I)
Charged with insider trading and tax fraud
5/1/03, press release #268
Timothy N. Belden (senior trader)
10/17/02 (G)
Pleaded guilty to engaging in a conspiracy that
New York Times, 10/18/02,
illegally manipulated the California power market
sec. C, p. 1, col. 5

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CRS-4
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Lawrence M. Lawyer (finance executive)
11/26/02 (G)
Pleaded guilty to filing a false income tax return
Department of Justice,
and failing to report taxable income
11/26/02, press release #696
Jeffrey Ricter (senior trader)
2/4/03 (G)
Pleaded guilty to manipulating the California
New York Times, 2/5/03,
power market
sec. C, p. 2, col. 4
Kevin Howard (Enron Broadband Services
3/12/03 (I)
Charged with securities fraud, wire fraud,
Department of Justice,
[EBS] vice president of finance)
5/1/03 (I)
conspiracy, and making false statements to FBI
3/12/03, press release #153
agents
Department of Justice,
Michael Krautz (EBS senior director of
3/12/03 (I)
5/1/03, press release #268
accounting)
5/1/03 (I)
Ben Gilsan (treasurer)
5/1/03 (I)
Securities fraud, insider trading, and tax fraud
Department of Justice,
5/1/03, press release #268
9/10/03 (G)
Pleaded guilty to conspiracy to commit wire and
securities fraud and was sent to prison to serve a
Department of Justice,
five-year sentence.
9/10/03, press release #492
Dan Boyle (finance executive)
5/1/03 (I)
Securities fraud, insider trading, and tax fraud
Department of Justice,
5/1/03, press release #268
Kenneth Rice (EBS chairman)
5/1/03 (I)
Securities fraud, wire fraud, and money laundering
Department of Justice,
5/1/03, press release #268
Joseph Hirko (EBS president)
Kevin Hannon (EBS chief operating officer)
Scott Yeager (EBS senior vice president)
Rex Shelby (EBS senior vice president)
Lea Fastow (assistant treasurer)
5/1/03 (I)
Conspiracy to commit wire fraud , money
Department of Justice,
laundering conspiracy, and filing false tax returns
5/1/03, press release #268
John M. Forney (trader)
6/3/03 (C)
Charged with manipulating the California power
New York Times, 6/4/03,
market
sec. C, p. 6, col. 3

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CRS-5
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
HealthSouth
Weston Smith (chief financial officer)
3/19/03 (G)
Securities fraud and wire fraud
Department of Justice,
3/19/03, press release #165
William T. Owens (chief of financial
3/26/03 (G)
Conspiracy to commit wire fraud and securities
Department of Justice,
operations)
fraud
3/26/03, press release #180
Emery Harris (vice president of finance)
3/31/03 (G)
Conspiracy to commit wire fraud and securities
Department of Justice,
fraud
3/31/03, press release #198
Kenneth Livesay (chief information officer)
4/3/03 (G)
Conspiracy to commit wire fraud and securities
Department of Justice,
fraud and to falsify financial information
4/3/03, press release #205
Angela C. Ayers (vice president)
4/3/03 (G)
All charged with wire fraud and conspiracy to
Department of Justice,
commit wire fraud and securities fraud
4/3/03, press release #205
Cathy C. Edwards (vice president)
4/3/03 (G)
Rebecca Kay Morgan (group vice president)
4/3/03 (G)
Virginia B. Valentine (assistant vice president)
4/3/03 (G)
Michael Martin (chief financial officer)
4/8/03 (C)
Conspiracy to commit wire fraud and securities
Department of Justice,
fraud
4/8/03, press release #212
Malcolm McVay (treasurer)
4/21/03 (G)
Conspiracy to commit wire fraud and securities
Department of Justice,
fraud
4/21/03, press release #245
Aaron Beam (chief financial officer)
4/24/03 (G)
Bank fraud
Department of Justice,
4/24/03, press release #255
Jason Brown (vice president of finance)
7/8/03 (G)
Conspiracy to commit securities fraud, falsifying
Department of Justice,
books and records, and wire fraud
7/8/03, press release #401

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CRS-6
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Richard Botts (senior vice president)
7/31/03 (G)
Conspiracy to commit securities fraud, falsifying
Department of Justice,
books, and mail fraud
7/31/03, press release #436
Will Hicks (vice president)
7/31/03 (G)
Conspiracy to make false statements to auditors
and maintain false books and records
Catherine Fowler (vice president)
11/24/03 (G)
Conspiring to mislead the auditors and to maintain
New York Times, 11/25/03,
false books and records
sec. C, p. 3, col. 1
ImClone Systems
Samuel Waksal (chief executive)a
8/7/02 (I)
Trading on inside information
New York Times, 8/8/02,
sec. A, p. 1, col. 1;
10/15/02 (G)
6/11/03, sec. C, p. 1, col. 5; and
Sentenced to 87 months in prison and ordered to
10/16/02, sec. C, p. 1, col. 2
pay a $3 million fine
Just for Feet, Inc.
Adam Gilburne (executive)
5/12/03 (G)
Conspiracy to commit wire fraud and securities
Department of Justice,
fraud
5/12/03, press release #283
Kmart
Joseph A. Hofmeister (vice president)
2/26/02 (I)
Fraud, conspiracy, and making false statements
New York Times, 2/27/03,
sec. C, p. 1, col. 5
Enio A. Montini Jr. (senior vice president)
2/26/02 (I)
Martha Stewart Living Omnimedia
Martha Stewart (chairman and ceo)a
6/4/03 (I)
Conspiracy, obstruction of justice, and securities
New York Times, 6/5/03,
fraud
sec. A, p. 1, col. 2

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CRS-7
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Merrill Lynch
Douglas Faneuil (stockbroker)
10/2/02 (G)
Faneuil pleaded guilty to obstruction of justice
New York Times, 10/3/02,
related to insider trading of ImClone Systems
sec. C, p. 1, col. 2
Daniel Bayly (head of Global Investment
9/17/03 (I)
Conspiracy to commit wire fraud and falsify books
Department of Justice,
Banking division)
and records
9/17/03, press release #510
James A. Brown (head of Merrill Lynch’s
Strategic Asset Lease and Finance group
Robert S. Furst (Enron relationship manager
for Merrill Lynch)
NatWest Bank
Giles R. Darby (banker)
6/27/02 (C)
All three are British bankers charged with wire
New York Times, 6/28/02,
fraud in connection with Enron’s off-the-books
sec. C, p. 1, col. 2
David J. Bermingham (banker)
6/27/02 (C)
partnerships
Department of Justice, 6/27/02,
press release #377
Gary S. Mulgrew (banker)
6/27/02 (C)
NewCom Inc.
Sultan W. Khan (president and chief executive)
9/5/02 (I)
Fraud, money laundering, filing false statements,
New York Times, 9/6/02,
and conspiracy
sec. C, p. 4, col. 3
Asif M. Khan (executive vice president)
9/5/02 (I)
Steven C. Veen (chief financial officer)
9/5/02 (I)
Quaker Alloy
Thomas W. Lambach (chief financial officer)
4/3/02 (G)
Wire fraud and conspiracy
Harrisburg (PA) Patriot-News,
4/4/02, p. B12
Joseph Stewart (human resource manager)
4/3/02 (G)

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CRS-8
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Qwest Communications
Grant Graham (chief financial officer)
2/25/03 (I)
Corporate accounting fraud
Department of Justice, 2/25/03,
press release #112
Thomas Hall (senior vice president)
2/25/03 (I)
John Walker (vice president)
2/25/03 (I)
Bryan Treadway (assistant controller)
2/25/03 (I)
Rite Aid
Martin L. Grass (chairman and chief executive)
6/23/02 (G)
Various counts of securities fraud
New York Times, 6/22/02,
sec. A, p. 1, col. 1;
Franklin Brown (chief counsel and vice
6/23/02 (G)
6/6/03, sec. C, p. 3, col. 3: and
chairman)
6/18/03, sec. C, p. 12, col. 3
6/26/03, sec. C, p. 6, col. 3
Franklyn Bergonzi (chief financial officer)
6/23/02 (G)
10/18/03, sec. C, p. 2, col. 1
Erik S. Sorkin (executive vice president)
6/23/02 (G)
Lying to the grand jury
Timothy J. Noonan (president and chief
7/10/02 (G)
Withholding information from the company’s
Lancaster (PA) Intelligencer
operations officer)
internal investigators
Journal, 7/11/02, sec. Business,
p. B-7
Philip Markovitz (senior vice president)
7/11/2003 (G)
Conspiracy to obstruct justice
New York Times, 7/11/03,
sec. C, p. 12, col. 1
Tyco International
L. Dennis Kozlowski (chairman and chief
9/12/02 (I)
Grand larceny, enterprise corruption, falsifying
New York Times, 9/13/02,
executive)
records. Kozlowski was also indicted 6/4/02 for
sec. A, p. 1, col. 3;
sales tax evasion, as was Swartz on 2/19/03.
6/5/02, sec. C, p. 1, col. 2; and
Mark H. Swartz (chief financial officer)
9/12/02 (I)
2/20/03, sec. C, p. 6, col. 3

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CRS-9
Charged (C),
Company/Individual
Indicted (I),
Charges
Sources
or Guilty Plea (G)
Mark Belnick (general counsel)
9/12/02 (I)
Falsifying records
New York Times, 9/13/02,
sec. A, p. 1. col. 3; and
2/3/03 (I)
Indicted on three additional charges
2/4/03, sec. C, p. 1., col. 2
Westar Energy, Inc.
David C. Wittig (CEO)
12/4/03 (I)
Conspiracy to defraud, circumventing internal
Department of Justice, 12/4/03,
accounting controls, falsifying books and records,
press release #663
wire fraud, submitting false statements, and
Douglas T. Lake (executive vice president)
engaging in monetary transactions derived from an
unlawful activity
WorldCom
Scott Sullivan (chief financial officer)
8/27/02 (I)
Numerous counts of securities fraud and
Department of Justice, 8/27/02,
conspiracy
press release #494
Buford Yates, Jr. (director of general
8/27/02 (I)
Securities fraud
Department of Justice, 8/27/02,
accounting)

press release #494; New York
10/7/02 (G)
Times, 10/8/02, sec. C, p. 9,
col. 1
David Myers (former controller)
9/26/02 (G)
Securities fraud
New York Times, 9/27/02,
sec. C, p. 2, col. 3
Betty Vinson (an executive in the General
10/10/02 (G)
Securities fraud and conspiracy
New York Times,10/11/02,
Accounting Department)
sec. C, p. 10, col. 1
Troy Normand (an executive in the General
10/10/02 (G)
Accounting Department)
Note:
a. A few of these cases have also resulted in civil indictments.

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