Ah, the spry little leprechaun. These tight-wearing sprites are bankers of the fairy world and self-appointed guardians of the proverbial pots of gold. But in order to keep their treasure safe from mortals they continually move their stash to secret places. While leprechauns may only be myth plenty of corporate leaders have brought the legends to life by taking on the same secretive habits with their own companies' wealth to build their own personal storehouse of treasure. Check out these six mischievous corporate leaders who secretly siphoned off money from their companies and profited at investors' expense. (Find out where it all began in The Pioneers Of Financial Fraud.)
In Pictures: Biggest Stock Scams
Richard Scrushy, HealthSouth – Schrushy was the founder and former Chairman and CEO of HealthSouth, a global healthcare business based in his home state of Alabama. He ran afoul of the SEC in 2004 and was indicted on 85 counts of fraud and money-laundering. Although he was acquitted of all charges, apparently the run-in with the law wasn't enough to temper Scrushy's mischievous spirit. Just four months after being found not guilty of the original charges, he was brought before a grand jury for 30 new charges including conspiracy, mail fraud and bribery. He was convicted in 2006, along with fellow sprite Alabama Governor Don Siegelman. The lad's luck didn't improve – in 2009 he was found guilty for actively participating in fraudulent activity while at HealthSouth and ordered to pay $2.87 billion in damages.
John Rigas, Adelphia Communications Corporation – Apparently creating corporate financial mayhem runs in the blood lines for the Rigas family. John Rigas was CEO of the multi-billion dollar cable company which at one point was one of the largest cable companies in the U.S. However, Rigas wanted to enjoy the high life on the company dime. He had Adelphia purchase more than 17 cars for himself and pay more than $26 million to buy 3,600 acres of land surrounding his home to preserve the view. He and his son Timothy were found guilty of all 15 counts of conspiracy, bank fraud and securities fraud brought against them in 2004. (Find out more, How did corporate ownership almost lead to the ruin of Adelphia?)
C. Steven Bolen, Financial News Network (FNN) – This CFO was caught in the middle of some trickery when he took advantage of his position to make handsome payments to himself. Like the spritely leprechaun, Bolen just couldn't resist the lure of gold. He siphoned off more than $17 million from FNN to secret overseas bank accounts in the British Virgin Islands. In addition he fraudulently helped inflate FNN stock and then benefited by selling 20,000 shares he personally held. Bolen's actions helped contribute to the firm's ultimate downfall. Ultimately FNN went bankrupt and CNBC eventually won the defunct firm in a high-stakes bidding duel with Group W Network and Dow Jones. The SEC put the scheming Bolen in jail.
Jonathan Dwayne Nelson, Patterson-UTI Energy – Everything is bigger in Texas, or so the saying goes. And that goes for cases of corporate fraud as well, apparently. Nelson was found guilty of embezzling an astonishing $77 million from Patterson-UTI, the firm he ran as CEO. He spent the proverbial pot of gold to treat himself to homes, cars, a ranch, airplane and airfield to match. The courts sentenced the greedy Nelson to 25 years in prison. Just goes to prove that you must follow the sage advice concerning leprechauns - never take your eye off him lest he vanish with the treasure.
Joseph Nacchio, Qwest Communications International – Just call him overly-optimistic. The truth is that this former Chairman of the Board and CEO of Qwest knew that his firm could not meet projected revenue targets but continued to tout the stock, helping drive its price up while he quietly sold his shares. His little dog and pony show allowed him to dump shares at a high and personally benefit to the tune of $52 million. When the gig was up, the stock plummeted from $38 per share in May 2001 to less than $2 just a year later. Nacchio's luck ran out and the feds sent him packing to federal prison for insider trading.
Dennis Kozlowski, Tyco – In 2005 Kozlowski became the face of corporate fraud. Footage of his lavish Tyco-funded $2 million personal birthday party made nightly news and newspapers showed pictures of the $6,000 shower curtain he purchased on the company dime. In 2005, he was convicted of fraud and grand larceny for draining the corporate coffers of more than $100 million. Today the nimble thief is older and perhaps wiser – he earns only dollars per day for menial labor at the Mid-State Correction Facility in upstate New York.
As legend goes the best way to catch a leprechaun is to lure him into a trap baited with a shiny piece of gold. The wee ones just can't resist the temptation… and apparently neither could our not-so-esteemed list of corporate felons! (Learn about more cases of fraud and the characters behind them in The Ghouls And Monsters On Wall Street and 4 History-Making Wall Street Crooks.)
Catch up on the financial events making news this week in Water Cooler Finance: We're Getting Richer And Spending More.