Billions and billions of dollars have been stolen from huge companies in complex crimes over the years.
Each decade has seen the most appalling crimes committed where high-ranking staff members have enriched themselves in all kinds of illegal and morally appalling ways.
The 1980s was epitomized by the “Greed is Good” mentality in Wall Street, and saw a number of very high-profile crimes which led to long jail sentences.
Here are the 10 biggest frauds of the 1980s.
The savings and loan crisis (1980-)
This was a widespread crisis that led to financial disaster that involved fraudulent activities in hundreds of savings and loans companies across the U.S.
An S&L or “thrift” is a financial institution that accepts savings deposits.
They make mortgage, car and other personal loans to individual members.
The crimes lasted well into the 1990s and was estimated to have cost taxpayers $132 billion.
The failures also led to the collapse of a number of banks and the scandal is deemed to be one of the worst in American history.
Z Best Company (1987)
Barry Minkow started Z Best, a carpet cleaning company, as a teenager.
He later inflated profits and sales numbers to deceive investors and secure loans, which he used to live a lavish lifestyle.
The company collapsed when the fraud was discovered.
The full story can be found here.
Insider Trading Crimes (1980s)
The 1980s was marked by several high-profile insider trading cases.
Among the most famous were those involving Ivan Boesky and Michael Milken.
Boesky was a prominent arbitrageur (a type of investor who attempts to profit from market inefficiencies) who was charged with insider trading, while Milken was a high-yield bond trader at Drexel Burnham Lambert who was involved in several illegal activities.
E.F. Hutton & Co. Check Kiting Scandal (1985)
This major American stock brokerage firm pleaded guilty to 2,000 counts of mail and wire fraud in a massive check kiting fraud, which was effectively an interest-free loan made by drawing checks against uncollected deposits in a bank’s demand deposit accounts.
In 1980, branches began writing checks larger than the amounts of cash they had in the bank.
They then made a deposit in another bank equal to the check.
This is called “chaining” and is a form of what is known as “check-kiting.”
The practice gave Hutton the use of the money in both accounts before the checks cleaed.
This meant the bank was essentially giving itself interest free loans.
It turned out one practice was making an extra $30,000 a money by doing this.
Hutton was gaining the use of around $250 million a day without paying any interest.
The scheme went on for three years until it was discovered in New York.
The bank eventually admitted 2,000 counts of mail and wire fraud.
It was fined $2 million, made to pay $750,000 towards the investigation costs and also agreed to pay $8 million in restitution.
The bank’s lawyers managed to agree no executives would be prosecuted – even though it was found 25 senior officers masterminded the scam.
It was also allowed to stay in business.
Hutton agreed to a merger with Shearson Lehman/American Express which was completed in 1988.
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The Guinness Share-Trading Fraud (1986)
Executives of the British company Guinness paid illegal commissions and manipulated share prices to fund the takeover of Distillers Company.
The scandal led to the conviction of four senior executives, including the CEO, Ernest Saunders.
The executives jailed:
- Ernest Saunders – Former Guinness chief executive -Jailed for five years (later halved on appeal) for false accounting, conspiracy, and theft.
- Jack Lyons – Financier – Fined £4m for theft and false accounting. He was subsequently stripped of his knighthood.
- Anthony Parnes – City Trader – Jailed for 30 months, reduced on appeal to 21 months, for false accounting and theft.
- Gerald Ronson – Businessman – Jailed for a year, and fined £5m, for false accounting, conspiracy and theft.
Wedtech’s Crimes (1986)
Wedtech Corporation was a Bronx-based military contractor that was involved in a wide-ranging bribery scandal.
The scandal led to convictions of several public officials, including a U.S. Congressman and a U.S. Navy Secretary.
More than 20 state, local and federal government officials were convicted of crimes in connection to the scandal.
Some of the convictions were overturned in 1991 after it was found Anthony Guariglia – a star government witness – had committed perjury, and that the prosecutors had known he had committed the offence.
He had been convicted of lying about stopping his compulsive gambling, and an appeals court declared the jury would have discredited his testimony had they known of his perjury conviction.
Crazy Eddie’s Crimes (1987)
Electronics retailer Crazy Eddie, founded by Eddie Antar, was discovered to have inflated inventory and underreported income to evade taxes.
When the fraud was discovered, the company’s stock collapsed, and Antar fled the country, though he was later captured, extradited, and convicted.