The Biggest Accounting Scandals Of All Time (PHOTOS)

Got a creative impulse? Accounting may be the profession for you!

As you'll see from the below collection of massive book-cooking frauds, there may be no better way to express your creative side than to work as an accountant for a huge company that's ready to deftly hide assets.

Almost 10 years after the passage of the Sarbanes-Oxley Act, the Post-Enron reform that was supposed to end those dubious off-balance sheet liabilities, it's unclear whether or not much has actually changed. To wit, Lehman Brother's recently unearthed $50 billion deception -- using, yes, those wonderful off-balance sheet tricks -- depended on the bank eschewing U.S. accounting rules and looking to lax regulations abroad.

Despite the constant barrage of scandals, it still boggles the mind how a Fortune 500 company can manipulate its balance sheet by many, many billions of dollars. We've included some of the biggest frauds below -- check them out and vote for the worst of all time.

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Madoff Scandal - Investors Left With $21.2 Billion In Cash Losses

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We all know that Bernie will spend the rest of his life in prison for orchestrating perhaps the biggest investment scam of all time, but his accountants and aides helped him do the dirty work. David Friehling, Madoff's accountant, plead guilty last year to a number of charges that he issued "rubber stamp" audits. Madoff's right-hand man, Frank DiPascali plead guilty to creating fake trade orders for Madoff and is facing up to 125 years in prison.

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We all know that Bernie will spend the rest of his life in prison for orchestrating perhaps the biggest investment scam of all time, but his accountants and aides helped him do the dirty work. David Friehling, Madoff's accountant, plead guilty last year to a number of charges that he issued "rubber stamp" audits. Madoff's right-hand man, Frank DiPascali plead guilty to creating fake trade orders for Madoff and is facing up to 125 years in prison.

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Merely Disgusting An Epic Criminal Act

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[chillwind]

07:10 PM on 03/19/2010

The so-called "Accounting Wars" of the past ended as a successful manipulation of the law to the benefit of fraud. The accounting profession was scapegoated and the resulting legislation failed to be clear and specific enough to accomplish what people thought it would. Sarbanes-Oxley left loopholes to drive a truck through.

Intresting, too, there is on the public record, a letter from coauthor Senator Oxley to then SEC chairman William Donaldson threatening to reduce funding to the SEC if the chairman failed to compromise to Oxley's pro-business demands.

Everything that's happened recently is kindred to Enron. The only way to prevent more of the same in the future is through specific and vigorously performed regulation. Sorry, free-marketeers. Free markets aren't free - you benefit from infrastructure, stability and rule of law financed by our tax dollars and we expect something in return.

[JohnBryansFontaine]

03:04 AM on 03/19/2010

Bernie Madoff is not a Socialist

[JohnBryansFontaine]

01:03 AM on 03/19/2010

How Our Entire Economy Became a Ponzi Scheme
We're only just discovering how widespread the rip-off schemes riddling our economy are.
Tomdispatch.com / By Andy Kroll

Every great American boom and bust makes and breaks its share of crooks. The past decade -- call it the Ponzi Era -- has been no different, except for the gargantuan scale of white-collar crime. A vast wave of financial fraud swelled in the first years of the new century. Then, in 2008, with the subprime mortgage collapse, it crashed on the shore as a full-scale global economic meltdown. As that wave receded, it left hundreds of Ponzi and pyramid schemes, as well as other get-rich-quick rackets that helped fuel our recent economic frenzy, flopping on the beach.

The high-water marks from that crime wave, those places where the corruption reached its zenith, are still visible today, like the 17th floor of 885 Third Avenue in midtown Manhattan, the nerve center of investment firm Bernard L. Madoff Investment Securities -- and, as it turned out, a $65 billion Ponzi scheme, the largest in history. Or Stanfordville, a sprawling compound on the Caribbean island of Antigua named for its wealthy owner, a garrulous Texan named Allen Stanford who built it with funds from his own $8 billion Ponzi scheme...

http://www.alternet.org/economy/146027/how_our_entire_economy_became_a_ponzi_scheme

[sonofsamphm1c]

04:11 PM on 03/18/2010

Anybody who thinks Lehman Brother's 105 repos rank with Enron - is a clueless dingdong.

Lol.

[Velvettazz]

08:45 AM on 03/18/2010

What makes Lehman Brothers any less of a thief? That's like being only a little bit pregnant.

[themodernleader]

12:30 AM on 03/18/2010

The place of blame resides with the CEO always. Bank presidents have a fiduciary responsibility to safeguard their investor and client money. The 500 million dollar CEOs encouraged massive fraud instead. And they have been rewarded by Bush and Obama, CEOs.

[PhilipTaylor]

10:53 PM on 03/17/2010

THIS IS A SIMPLE FRAUD:

It is time for the quarterly Statement by the auditors – So:

I give my “FAKE Junk Product” to get $50 Billion in cash on a short time loan.

I tell the auditors, who know better, that it is from the sale of product.

I get through the audit and TAKE MASSIVE BONUSES!

I return the $50 Billion in cash plus interest and get my JUNK back!

On Wall Street this is a SIMPLE SCAM - The multi-step scams are also simple but involve more simple steps.

Where are the indictments?

[PhilipTaylor]

10:53 PM on 03/17/2010

HOW CORRUPT IS WALL STREET - BY FAR LARGEST SCAM IN HISTORY: DERIVATIVES!

10 TIMES the World GDP!

G0LDMAN + JPM the Leaders!

Graph:
http://upload.wikimedia.org/wikipedia/en/e/e8/Total_world_wealth_vs_total_world_derivatives_1998-2007.gif

[sonofsamphm1c]

04:12 PM on 03/18/2010

What is the name of the junk product you think Lehman Brothers "sold"?

[CPAwADD]

10:44 PM on 03/17/2010

My least favorite scandal was World Com. It was so basic I don't understand how anyone was fooled by it. Let's say all our expenses are capital expenditures so we're building up assets. It lacked any panache.

[Y3rMawm]

10:22 PM on 03/17/2010

Biggest? Not even close. Tell me when you wake to the Multi-Trillion dollar ponzis run by the US Govt.

[themodernleader]

08:00 PM on 03/17/2010

The only individuals that can not recognize criminal conduct are the regulators, elected officers and President. Informed Americans are not so dumb.

[Jeffin90019]

06:21 PM on 03/17/2010

The ghosts of Arthur Anderson are smiling. Ernst & Young is going down!

[LeLoup]

05:44 PM on 03/17/2010

The most extraordinary feature of these accounting scandals (because we'll find others, no doubt about that) is the fact that no ONE will have to do the perp walk.

Can there be a better proof this Republic has morphed into a giant Banana?

[pjwrites]

03:21 PM on 03/17/2010

This raises a very good question. We've seen the media screaming at the banks, the hedge fund traders, the homeowners who bought too big, everyone in fact, but the accountants. When do we hear from them? Aren't they the ones ultimately responsible for this fiasco? Yes, yes they are.

Without them, none of these crimes could have been accomplished.

[CPAwADD]

10:29 PM on 03/17/2010

They are a disgrace!

[JPHR]

03:18 PM on 03/17/2010

The biggest fraud is missing from this list: the AAA rating of sub prime securitized debt by the rating agencies. That goes far beyond even Lehman.