Order Code RL31866
CRS Report for Congress
Received through the CRS Web
Criminal Charges in Corporate Scandals
Updated July 16, 2004
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),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Adelphia Communications
John J. Rigas (chief executive officer)
9/23/02 (C)
All charged with wire fraud, bank fraud, securities fraud,
New York Times, 9/24/02,
7/8/04 (G)
and conspiracy
sec. C, p. 1, col. 5
John Rigas and Timothy Rigas were found guilty of one
Timothy Rigas (chief financial officer)
9/23/02 (C)
count of conspiracy, 15 counts of securities fraud, and two
7/9/04, sec. A, p. 1, col. 1
7/8/04 (G)
counts of bank fraud.
Michael Rigas was acquitted of conspiracy and wire
7/10/04, sec. C, p.1, col. 5
Michael Rigas (executive vice president)
9/23/02 (C)
fraud, but the jurors said they were still undecided on the
securities fraud and bank fraud charges against him. The
judge said he planned to give the jurors additional
instructions to try to break the deadlock, but a mistrial
James R. Brown (vice president for finance)
9/23/02 (C)
New York Times, 9/24/02,
was declared after the deadlock continued. It is not clear
sec. C, p. 1, col. 5, and
whether the government will schedule a new trial.
9/14/02 (G)
11/15/02, sec. C, p. 7, col. 1
Michael C. Mulcahey (director of internal
9/23/02 (C)
Michael C. Mulcahey was acquitted on all counts.
New York Times, 9/24/02,
reporting)
7/8/04 (A)
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

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CRS-3
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Arthur Andersen
David Duncan (former partner)
4/10/02 (G)
Obstruction of justice (related to Enron audit) Arthur
New York Times, 4/11/02,
Andersen (the firm) was convicted on the same charge in
sec. A, p. 1, col. 2
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
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 obstruction of
10/25/03, sec. A, p. 1, col.
justice trial of Frank P. Quattrone.
1;
12/2/03
A federal judge set a March 22, 2004, date for the second
12/2/03, sec. C, p. 5, col. 1
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)

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CRS-4
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Jamie Olis (director for tax planning)
8/5/03 (I)
Conspiracy to commit securities fraud
New York Times, 8/6/03,
sec. C, p. 4, col. 1
3/25/04 (G)
A federal judge sentenced Jamie Olis to more than 24
New York Times, 3/26/04,
years in prison for his role in a secretive project to
sec. C, p. 2, col. 1
disguise Dynegy’s financial difficulties. He had been
found guilty in November, 2003.
Enron Corp.
Michael Kopper (finance executive)
8/21/02 (G)
Conspiracy to commit wire fraud and money laundering
New York Times, 8/22/02,
sec. A, p. 1, col. 6
Andrew Fastow (chief financial officer)
10/2/02 (C)
Charged with securities fraud, wire fraud, mail fraud,
Department of Justice,
money laundering, and conspiracy
10/2/02, press release #568a;
10/31/02 (I)
Indicted by a grand jury on 78 counts of fraud, money
10/31/02, press release
laundering, and conspiracy
#627;
5/1/03 (I)
Charged with insider trading and tax fraud
5/1/03, press release #268
1/14/04 (G)
Under the terms of a plea agreement, Fastow will
cooperate fully with the government’s investigation, serve
1/14/04, press release #19
a 10-year prison sentence on the two counts to which he’s
pleading guilty, and forfeit more than $29 million. The
remaining 96 criminal charges against Fastow from a May
2003 indictment are pending and will be dismissed if the
government determines that Fastow has cooperated fully
and truthfully.

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CRS-5
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Timothy N. Belden (senior trader)
10/17/02 (G)
Pleaded guilty to engaging in a conspiracy that illegally
New York Times, 10/18/02,
manipulated the California power market
sec. C, p. 1, col. 5
Lawrence M. Lawyer (finance executive)
11/26/02 (G)
Pleaded guilty to filing a false income tax return and
Department of Justice,
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 power
New York Times, 2/5/03,
market
sec. C, p. 2, col. 4
Kevin Howard (Enron Broadband Services
3/12/03 (I)
Charged with securities fraud, wire fraud, conspiracy, and
Department of Justice,
[EBS] vice president of finance)
5/1/03 (I)
making false statements to FBI agents
3/12/03, press release #153
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 five-year
Department of Justice,
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,
Joseph Hirko (EBS president)
5/1/03, press release #268
Kevin Hannon (EBS chief operating officer)
Scott Yeager (EBS senior vice president)
Rex Shelby (EBS senior vice president)

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CRS-6
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Lea Fastow (assistant treasurer)
5/1/03 (I)
Conspiracy to commit wire fraud , money laundering
Department of Justice,
conspiracy, and filing false tax returns
5/1/03, press release #268
5/6/04 (G)
Lea Fastow was sentenced to one year in jail and a one-
Department of Justice,
year period of supervised release to follow her term of
5/6/04, press release #306
incarceration after pleading guilty to one count of filing a
false federal income tax return. Mrs. Fastow also
relinquished any claim to almost $30 million in forfeited
funds seized by the Enron Task Force in May 2003 for the
benefit of victims of fraud at Enron.
John M. Forney (trader)
6/3/03 (C)
Charged with manipulating the California power market
New York Times, 6/4/03,
sec. C, p. 6, col. 3
David Delainey (CEO of Enron North America
10/30/03 (G)
Pleaded guilty to a one-count indictment charging him
Department of Justice
and Enron Energy Services)
with insider trading
10/30/03 press release #594
Richard Causey (chief accounting officer)
1/22/04 (C)
Charged with five counts of securities fraud and one count
Department of Justice,
of conspiracy to commit securities fraud
1/22/04, press release #36
2/19/04 (C)
Charged in a superseding indictment with conspiracy to
Department of Justice,
commit securities fraud, 20 counts of securities fraud,
2/19/04, press release #99
eight counts of wire fraud, and two counts of insider
trading
Jeffrey K. Skilling (CEO)
2/19/04 (C)
Charged with conspiracy to commit securities fraud, 20
Department of Justice,
counts of securities fraud, four counts of wire fraud, and
2/19/04, press release #99
10 counts of insider trading

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CRS-7
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Kenneth L. Lay (chairman and CEO)
7/8/04 (C)
Lay was charged with conspiracy to commit securities
Department of Justice,
fraud, four counts of securities fraud and two counts of
7/8/04, press release #470
wire fraud, one count of bank fraud, and three counts of
making false statements to a bank.
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 fraud
Department of Justice,
operations)
3/26/03, press release #180
Emery Harris (vice president of finance)
3/31/03 (G)
Conspiracy to commit wire fraud and securities fraud.
Department of Justice,
Sentenced to a term of five months in prison on each
3/31/03, press release #198
count to run concurrently, three years of supervised
release with five months of unsupervised home detention,
Department of Justice,
and payment of a $3,000 fine
12/10/03, press release #678
Kenneth Livesay (chief information officer)
4/3/03 (G)
Conspiracy to commit wire fraud and securities fraud and
Department of Justice,
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 commit
Department of Justice,
wire fraud and securities fraud. All sentenced to four
4/3/03, press release #205
Cathy C. Edwards (vice president)
4/3/03 (G)
years of probation with six months unsupervised home
confinement and payment of a $2,000 fine.
Department of Justice,
Rebecca Kay Morgan (group vice president)
4/3/03 (G)
12/10/03, press release #678
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 fraud
Department of Justice,
4/8/03, press release #212

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CRS-8
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Malcolm McVay (treasurer)
4/21/03 (G)
Conspiracy to commit wire fraud and securities fraud
Department of Justice,
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 books
Department of Justice,
and records, and wire fraud
7/8/03, press release #401
Richard Botts (senior vice president)
7/31/03 (G)
Conspiracy to commit securities fraud, falsifying books,
Department of Justice,
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
Richard M. Scrushy (CEO and chairman of the
11/4/03 (C)
Charged in an 85-count indictment stemming from a
Department of Justice,
board)
wide-ranging scheme to defraud investors, the public, and
11/4/03, press release #603
the U.S. government about HealthSouth’s financial
condition
Catherine Fowler (vice president)
11/24/03 (G)
Conspiring to mislead the auditors and to maintain false
New York Times, 11/25/03,
books and records
sec. C, p. 3, col. 1
Vincent Nico (vice president)
3/2/04 (G)
Wire fraud related to contracts with a hospital in Saudi
Department of Justice
Arabia
3/2/04, press release #131
Thomas Carman (executive vice president)
3/2/04 (G)
Making a false statement to the FBI
Department of Justice
3/2/04, press release #131

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CRS-9
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
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;
6/11/03, sec. C, p. 1, col. 5;
10/15/02 (G)
Sentenced to 87 months in prison and ordered to pay a $3
and
million fine
10/16/02, sec. C, p. 1, col. 2
Just for Feet, Inc.
Adam Gilburne (executive)
5/12/03 (G)
Conspiracy to commit wire fraud and securities fraud
Department of Justice,
5/12/03, press release #283
Don-Allen Ruttenberg (executive vice
2/25/04 (G)
Conspiracy to commit securities fraud, wire fraud, and
Department of Justice,
president)
submitting false statements to the auditors of JFF
2/25/04, press release #110
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

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CRS-10
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Martha Stewart (chairman and CEO)a
6/4/03 (I)
Conspiracy, obstruction of justice, and securities fraud
New York Times, 6/5/03,
sec. A, p. 1, col. 2
3/5/04 (G)
Found guilty of four counts of conspiracy, obstruction,
and lying to federal investigators
New York Times, 3/6/04,
sec. A, p. 1, col. 6
7/16/04 (G)
Sentenced to five months in prison plus five months of
home confinement
New York Times, 7/17/04,
sec. A, p. 1, col. 2
Peter Bacanovic (securities broker)
6/4/03 (I)
Criminal charges, including perjury
New York Times, 6/5/03,
sec. A, p. 1, col. 2
3/5/04 (G)
Criminal charges, including perjury
New York Times, 3/6/04,
sec. A, p. 1, col. 6
Merrill Lynch
Douglas Faneuil (stockbroker)
10/2/02 (G)
Faneuil pleaded guilty to obstruction of justice related to
New York Times, 10/3/02,
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 and
Department of Justice,
Banking division)
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)

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CRS-11
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Mutuals.com
Richard A. Sapio (CEO)
3/15/04 (C)
Charged with a scheme to defraud mutual fund
Wall Street Journal,
shareholders in connection with market timing, a practice
3/16/04, sec. D, p. 9
Eric McDonald (president)
involving the short-term trading of mutual funds
Michele Leftwich (compliance officer)
NatWest Bank
Giles R. Darby (banker)
6/27/02 (C)
All three are British bankers charged with wire fraud in
New York Times, 6/28/02,
connection with Enron’s off-the-books partnerships
sec. C, p. 1, col. 2
David J. Bermingham (banker)
6/27/02 (C)
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
9/5/02 (I)
Fraud, money laundering, filing false statements, and
New York Times, 9/6/02,
executive)
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-12
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
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)
4/16/04
A federal jury acquitted John Walker and Bryan
New York Times, 4/17/04,
Treadway of accounting fraud, found Grant Graham not
sec. C, p. 2, col. 5
guilty on three counts and was deadlocked on the eight
John Walker (vice president)
other counts facing him, and was completely deadlocked
on all counts against Tom Hall. Judge Robert Blackburn
Bryan Treadway (assistant controller)
declared a mistrial on all deadlocked counts and
scheduled a status conference for April 26.
Rite Aid
Martin L. Grass (chairman and chief
6/23/02 (G)
Various counts of securities fraud
New York Times, 6/22/02,
executive)
sec. A, p. 1, col. 1;
6/6/03, sec. C, p. 3, col. 3:
Franklin Brown (chief counsel and vice
6/23/02 (G)
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 internal
Lancaster (PA) Intelligencer
operations officer)
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

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CRS-13
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
Tyco International
L. Dennis Kozlowski (chairman and chief
9/12/02 (I)
Grand larceny, enterprise corruption, falsifying records.
New York Times, 9/13/02,
executive)
Kozlowski was also indicted 6/4/02 for sales tax evasion,
sec. A, p. 1, col. 3;
as was Swartz on 2/19/03.
6/5/02, sec. C, p. 1, col. 2;
Mark H. Swartz (chief financial officer)
9/12/02 (I)
and
2/20/03, sec. C, p. 6, col. 3
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
7/16/04 (A)
A jury acquitted Belnick of charges that he stole millions
New York Times, 9/16/04,
of dollars from Tyco in the form of unauthorized bonuses
sec. C, p. 1, col. 2
and loans. He still faces charges brought forth by the
SEC.
Westar Energy, Inc.
David C. Wittig (CEO)
12/4/03 (I)
Conspiracy to defraud, circumventing internal accounting
Department of Justice,
controls, falsifying books and records, wire fraud,
12/4/03,
submitting false statements, and engaging in monetary
press release #663
Douglas T. Lake (executive vice president)
transactions derived from an unlawful activity

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CRS-14
Charged (C),
Indicted (I),
Company/Individual
Charges
Sources
Guilty Plea (G),
Acquitted (A)
WorldCom
Scott Sullivan (chief financial officer)
8/27/02 (I)
Numerous counts of securities fraud and conspiracy
Department of Justice,
8/27/02, press release #494
Pleaded guilty
3/2/04 (G)
New York Times, 3/3/04,
sec. A, p. 1, col. 5
Buford Yates, Jr. (director of general
8/27/02 (I)
Securities fraud
Department of Justice,
accounting)

8/27/02, press release #494;
10/7/02 (G)
New York 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)
Bernard J. Ebbers (chief executive)
3/2/04 (I)
Accounting fraud
New YorK Times, 3/3/04,
sec. A, p. 1, col. 5
Note: A few of these cases have also resulted in civil indictments.

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