ipl-logo

Waste Management Fraud Case

947 Words4 Pages

Waste Management Inc. Waste Management is a U.S-based waste management company that became publicly enlisted in the stock market in 1971 as a comprehensive waste management company. The company was also involved in the provision of renewable energy from gas produced in the company’s landfills (Waste Management Inc.). From 1992 to 1997, the commitment of Waste Management to its shareholders and stakeholders was put in jeopardy due to fraudulent activities by the company’s senior officers. One of the questionable activities the officers were involved in was inflation of salvaged value by avoiding “depreciation of expenses and extension of useful life their assets” (Rezaee 278). The company also failed to record expenses for any depreciating …show more content…

These included the “CEO (Dean Buntrock), former president (Phillip Rooney), CAO (Thomas Hau), CFO (James Koenig), General Counsel (Herbert Getz), and the vice president of finance (Bruce Tobecksen)” (Waste Management Inc.). There was also an input from an external auditing firm called Arthur Anderson. The auditing company failed to identify the questionable practices. Some senior officers also colluded with senior staffs of Waste Management in the fraudulent activities. The main goal of the fraudulent activities at Waste Management Inc. was misleading of the SEC and the public to believe that the company was making a profit while it was experiencing financial constraints. This was done through the application of retrospective adjustments instead of recording a change prospectively as stipulated by GAAP. The questionable activities involved complex financial structured transactions as they were aimed at elevating the levels of the market, credit operations, and reputational risk of the company through deceptive accounting (Coval et al …show more content…

scandal were charged. Some of the charges include securities fraud, falsifying records, and filing fraudulent financial statements. As a penalty, the SEC required the Waste Management Inc. to pay $ 457 million to shareholders as a settlement. Additionally, all the five senior officers involved were required to pay a penalty which was much more than they had obtained from their ill-gotten gains. Their penalties also included disgorgement, prejudgment interest, and civil penalties. Although the audit firm did not accept or reject its involvement in the scandal, some of its staffs were required to pay penalties. The staff included Robert E. Allgyer, Edward G. Maier, and Walter

Show More
Related

  • Barry Minkow: Identify The Affected Party In The Case

    867 Words  | 4 Pages

    Accounting and auditing firm The scandal's consequences would primarily be a professional embarrassment for auditing and accounting firms. The American Institute of Certified Public Accountants quickly altered the auditing standards of the accounting profession in the United States, prompting auditors to become more proactive in combating fraud. The shareholders

    Read More

  • Jerry Sandusky Second Mile Scandal

    1179 Words  | 5 Pages

    The officials were also found guilty of conspiracy; therefore, charges were later dropped against Curley, Spanier, and Schultz (Carpenter, 2011). All three of the officials were sentenced to jail time, fines, and probation as a result of the scandal. Spanier received a sentence of 4 to 12 months in prison, 7,500 dollars in fines, and two years of probation (CNN, 2013). There were emails, and notes from meetings included as evidence of the accounts being reported and discussed with officials

    Read More

  • Sarbanes-Stanley Case

    950 Words  | 4 Pages

    From what this case turns out to be, as determined by the facts surrounding it, if our organization was set up such that our supervisors have the power to fire employees under their supervision, the company could have potentially found its entangled in a Sarbanes-Oxley lawsuit. There is no doubt that had this morally upright secretary been fired for standing her ground in the face of our rogue supervisor 's demand for her to cook the books the company could have been in violation not only for attempting to file a fraudulent expense account but for taking retaliatory action against her for refusing to do such. On the other hand had the secretary connived with her boss, the supervisor and prepared the false expense report, the company 's reputation could have again been in violation of the Sarbanes-Oxley Act. A federal law that prohibits publicly traded companies such as ours, in engaging in fraudulence accounting and financial practices. Such a scenario could have ruined the corporation 's reputation and expose it to an enormous fine from the Federal Trade Commission.

    Read More

  • Asset Misappropriation Fraud Case Study

    821 Words  | 4 Pages

    I. Background The Sandhogs Union was responsible for representing 1,000 Local 147 workers employed in New York City who worked in construction-related capacities. The organization established plans to provide Local 147 employees with such benefits as retirement benefits, workers’ compensation, and unemployment benefits, for example. The Sandhogs Union also created Local 147 specific benefits including the Local 147 Construction Workers Retirement Fund as well as the Local 147 Construction Workers Annuity Fund. From 2002 to 2008, Melissa King acted as the Local 147 Fund’s employee benefits fund administrator and tasked with providing administrative assistance to the Local 147 Fund through her company, King Care LLC.

    Read More

  • The Sarbanes-Oxley Act

    296 Words  | 2 Pages

    During the late 90’s and early 2000’s, several key companies in the United States were exposed for fraudulent reporting profits

    Read More

  • Sally Q. Yates Case Summary

    895 Words  | 4 Pages

    Ms. Yates has argued that punishing individuals is one of the most effective ways of actually causing a corporation to rethink their actions, but this is also difficult to do. When a corporation is investigated, the Justice Department requires them to hand over any documents related to the case and the individuals who were involved in specific crimes. Obviously, the individuals involved are less inclined for this to happen and are often in management roles at the company. In the average case, the corporation and the individuals at fault admit to wrongdoing—as Credit Suisse and five other global banks did in May of 2014--, but they do not disclose the names of the individual people responsible. At this point in the game, the Justice Department faces a dilemma.

    Read More

  • Phar Mor Fraud

    656 Words  | 3 Pages

    ACCT 4327.01 (Group #3) Anakaren Rios Abel Martinez Madelein Torres Phar-Mor Originated in Youngstown, Ohio, Phar-Mor was a discount drugstore chain founded on 1982 by Michael Monus. Due to its success, David Shapira jumped on board and became the CEO. The company grew from 15 stores to 310 in less than 10 years, but mostly due to the greed of its chief operating officer, Michaels Monus.

    Read More

  • Wells Fargo Fraud

    496 Words  | 2 Pages

    This is a cautionary tale of how corporate crime can cause severe harm. The shareholders were prevented by those perpetuating the fraud from selling while the stock was falling, while at the same time they moved their money out of the company. The final outcome was that the perpetrators being Jeff Schilling CEO, Ken Lay, and chief financial officer Andrew Fastow each received hefty sentences. According to CNN, Skilling was originally sentenced to 24 years, the longest sentence of any Enron perpetrator, and has been incarcerated in the federal prison system since his 2006 conviction. He had been facing a release date of Feb. 21, 2028,” (Smith).

    Read More

  • Summary Of The Sarbane-Oxley Act Of 2002

    302 Words  | 2 Pages

    Before the Sarbane-Oxley Act of 2002 came into effect in the American economy, most investors and shareholders were left in the dark – most often at the mercy of big corporations whose accounting practices were largely unregulated. The act was a response to the infamous scandal of Enron, WorldCom, Tyco, and Adelphia – all of whom had unethical business practices that caused their shareholders to lose the astronomical amount of investment when their scandals made headlines. The Sarbane-Oxley Act (SOX) requires a business to implement a code of ethics for its employees, especially senior financial officers; it also requires a business rotate its financial auditors on a regular basis. (Orin, 2008) The implementation of a code of ethics aims to

    Read More

  • Income Smoothing Case Study

    1491 Words  | 6 Pages

    This proves that throughout the case, Cendant Corporation wasn’t acting fully ethical nor with the desired fiduciary actions to their investors and the auditing team in this case being Ernst&Young. Aside from the trust being broken apart between both, there was never a sign of an internal control inside Cedant. Therefore, there shows that the corporate governance for Cendant Corporation didn’t have signs of existence as well. Most frauds that were occurring before the implementation of the SOX-2002, had top management such as in Cendant that didn’t have care for the ethical performances as much as in today’s corporate world with more regulations in hand by the government. At the end, Cendant had filings against them concerning their corporate governance

    Read More

  • Fraud Case Of Wykesha Reid

    506 Words  | 3 Pages

    A sad day for the family of a young woman named Wykesha Reid, evidence conducted from an ongoing investigation lead to her death from butt-injections. The suspect being charged with the Homicide of Mykesha are Jimmy Clarke and Denise Rochelle. The two suspect operate a business which provide eyelash extensions to the public. Nevertheless, up until the death of Wykesh Reid it seems their business have been performing butt-injections on the Black Market. Upon questioning Jimmy Clarke a transgender woman told detectives that.

    Read More

  • The Pros And Cons Of The Enron Scandal

    976 Words  | 4 Pages

    Several financial reporting practices identified by Mr. Lee that violated Lehman Brothers’ code of ethics. There are six allegations included of his letter but one important of his allegations regarding agreements of repurchasing Lehman Brothers were executing was verbally mentioned when he was interviewed. He confirmed for the end of the quarter, and about a week later that roughly $50 billion was removing by Lehman account from the balance sheets, and come again the inventory back to the balance sheets (Repo 105). Mr. Lee’s interview about his allegations on Repo 105 was not informed to the audit director of Lehman’s nor never mentioned to the audit committee (D Searcy & Albrecht W S, 2003). To the ethical director, if Mr. Lee’s findings were brought up, of the Sarbanes-Oxley Act it is outlined in Section 301, then action of corrective would have penalized the people accountable for the behavior of unethical that occurred, prior to bankruptcy of Lehman’s.

    Read More

  • Lehman Brothers: Financial Fraud In 2008

    2178 Words  | 9 Pages

    Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.

    Read More

  • The Worldcom Fraud Case

    2107 Words  | 9 Pages

    This three element fraud is often referred as a fraud triangle by the researchers (Cohen, Ding, Lesage & Stolowy, 2010, p. 276). On the other hand the theory of planned behavior focuses on the intentions behind the planned behavior. Ajzen (1991, p. 188) explains this as “attitude toward the behavior… refers to the degree to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question”. Cohen, Ding, Lesage & Stolowy (2010) have combined the fraud triangle and theory of planned behavior to understand that how the two theories can be collectively studied to find out the reasons behind the unethical activities that results in corporate frauds. Cohen, Ding, Lesage & Stolowy (2010) in their work studied various organizations including WorldCom and identified following: • WorldCom’s management had an excessive interest in maintaining the entity’s stock price and earning trends (p. 287).

    Read More

  • Enron Ethics Analysis

    701 Words  | 3 Pages

    They managed to steal more than $430 million by means of fraudulent sales of Tyco stock and hiding this information from the shareholders. The two executives were charged with numerous counts of misconduct, including business corruption and falsification of business records. Even though the investigation did not identify additional fraud issues, the company still restated its financial records by hundreds of millions of dollars. Furthermore, it took additional measures to restore shareholders’ confidence by implementing safeguards to guarantee greater objectivity on the part of the board of directors. Finally, Tyco managed to survive the scandal by making sure such misconduct is not going to occur in the

    Read More

More about Waste Management Fraud Case

Open Document