Business crimes: Modern High-Tech Frauds - Business in United States of America
Business crimes: Historical Frauds
The 1970’s witnessed thedawnof computer fraud, with extensive news coverage of the use of computers to defraud shareholders at Equity Funding Corporation of America, a Los Angeles-based financial firm that sold life insurance and mutual funds to individuals. At Equity Funding, top management created nonexistent insurance policies on the computer, deceiving investors and regulators. At that time, auditors were not familiar with computers and failed to uncover the fraud. Two former employees revealed the company’s misdeeds.
During the 1980’s, hundreds of financial institutions, primarily savings and loan associations, failed because of insider fraud, leading to a congressional investigation headed by Michigan congressman John Dingell. The oddest part about the cases of the 1980’s was that so many companies were involved, and most of them were in the same industry.
In the twenty-first century, HealthSouth, Global Crossing, Tyco International, Enron, and World-Com were all involved in scandals that were reminiscent of the nineteenth century railroad cases and the Kreuger debacle. In every case, the corporate governance system broke down or did not exist, and greedy individuals either took corporate assets for their personal use or manipulated stock prices to defraud stockholders. The seemingly endless string of financial frauds in public corporations has cast doubt on the credibility of even untarnished corporations. Such trust, once lost, is slow to return. The result of these highly publicized white-collar crimes was doldrums in the financial markets during the 1870’s, 1930’s, the 1960’s, the 1980’s, and the early years of the twenty-first century.