June 16, 2024

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Famous Cases of Embezzlement and The Negative Effects of It

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You would be surprised to find out who makes the cut on the list of the most famous cases of embezzlement. Millions of dollars have been lost to the intentional misappropriation of funds and assets in history. The most interesting aspect of embezzlement is that the person who is the wrongdoer has permission to handle the property of the victim. This is a significant distinguishing element from larceny or fraud. The act of embezzlement can occur in different and sometimes familiar situations. For instance, you could easily take inventory or office supplies for personal use or ‘borrow’ money from the cash register with the intention of not getting caught.

However, in the famous cases of embezzlement, the money and assets are greater than petty cash and even greater consequences for those that are involved. For example, your trustee could sell your property without your consent or knowledge. Leaving your beneficiaries facing a quadrennial quagmire. The worst-case scenario is getting caught and needing the services of bail bond companies. This is why we have compiled this list of the most famous cases of embezzlement to help you protect your assets and finances better. This list is in descending order of the biggest case to the least. Keep on reading to find out more.

1. The Enron Scandal

This case disrupted the whole corporate world when one of the largest auditing and accounting companies globally was involved in serious crime related to business accounting fraud and corruption. The executives of the company embezzled retirement funds misrepresented earnings reports, and created fake energy crises among other crimes. This resulted in the most massive amount of bankruptcy filings by a single corporation in American history.

As one of the famous cases of embezzlement in history, the Enron scandal generated a much-needed debate about accounting practices and the standards that accountants should follow in the profession. The legislation was drafted and enacted to improve the nature of the accounting industry and to create long-term repercussions for those involved in this fraudulent activity. Moreover, this scandal forced the need to address political implications in the corporate world. Most of the executives had direct ties with the White House that caused government oversight in its dealings.

2. Stanford Financial Group of Companies

17 February 2009 marked the most important date in the history of the famous cases of embezzlement in America. This is after FBI agents shut down the operations of one of the biggest financial groups worldwide. The executives of this group were reportedly running massive and ongoing fraud that was spanning over a couple of years unnoticed. The Securities and Exchange Commission had missed early warning signs of this scandal in subsequent years. This is because a regional enforcement official was doing legal work for the firm. This resulted in the agency’s investigations getting hampered.

Allen Stanford changed the rules of the Ponzi scheme. If it weren’t for Bernie Madoff, he would be the most infamous founder of the biggest Ponzi scheme in American history and that the world has ever witnessed. The 20-year-old embezzlement and Ponzi scheme was started by Allen, the chairman of the financial group. For the longest time, U.S. securities laws did not suspect any foul play as he was embezzling money in an offshore bank in Antigua. Part of his scheme was selling certificates of deposits and he used the proceeds for his personal investments such as real estate and golf tournaments. When he was finally apprehended, the chairman tried to pin the whole fiasco on an ex-chief financial officer. He could not testify in his defense due to the lack of funds. But the undeniable evidence against him made it easier for the jury to rule on his conviction.

Having typified the culture of investor gullibility and leverage, Allen Stanford is still reportedly in jail serving his sentence. However, his victims have still not been able to recover any of their losses in a decade.

3. Bernie Madoff Scandal

A list of famous cases of embezzlement would not be complete if the squandering of thousands of investments by Bernie Madoff did not make the cut. This is probably the largest Ponzi scheme in world history as small-scale and large-scale investors were defrauded by Madoff. His claim to fame was his high and steady returns with split strike conversions in all the markets. However, all that he was doing was siphoning all the funds into an account that he would use to pay out the clients whose investments had ‘matured’.

This made him attractive to many enthusiastic investors and this helped him to maintain the Ponzi scheme. But when the financial markets toppled in 2008, Madoff ran into some trouble with his Ponzi scheme. He then confessed to his sons who turned him in to the authorities. In 2009, Madoff pleaded guilty to several charges in what was called the biggest fraud case of the decade. Critics even opined that his scheme pervaded the financial crisis in Wall Street in that period. Amongst his charges, there were guilty pleas for perjury fraud, security fraud, and money laundering. Upon his sentencing, he was ordered to forfeit approximately $170 billion in asset value. But there weren’t any prominent Wall Street executives who faced any legal ramifications.

4. Peregrine Financial

The thing that makes this one of the most famous cases of embezzlement is how CEO Russel Wasendorf managed to get away with making false statements to the Commodity Futures Trading Commission. This ongoing fraud went on for a period of two decades without being noticed because Russel was regarded as a noble figure due to his involvement in health care in various institutions. Copies of a note that he wrote confessing to the fraud were discovered after he attempted suicide.

In his confession, Wasendorf detailed how he took assets from approximately 24000 people that he embezzled. Most of the investors used commodities to invest in Peregrine Financial. When he pleaded guilty, he was convicted of mail fraud amongst other crimes. He also provided proof of how he created a fake post box to intercept any mail that could have been sent to the U.S. bank.

5. Fry’s Electronics

If you talk about the most famous cases of embezzlement that shook Silicon Valley, you cannot leave out this one. The company that had magnificent long years running suddenly closed its doors overnight. In a statement on its website, the company reiterated that it was closing its doors due to the effects that the Covid-19 pandemic had on its consumers. What initially started as an electronics retail store that was meant to be a one-stop shopping experience for high-tech professionals ended up being embroiled in the most fascinating criminal activity in the history of Silicon Valley.

The Vice President of Merchandising and Operations, Omino Siddiqui was convicted in 2008 for embezzling an estimated $65 million from Fry’s Electronics. According to reports, he had a huge gambling addiction that was attributed to him pocketing large sums of commission from vendors of the company. These commissions were used to pay off his gambling debt. Unfortunately, the cycle was neverending as he eventually got caught. The IRS arrested him in 2008 after an employee reported irregularities with his accounting paperwork.

6. Tenens Corp. dba Essex Street Associates

The heirs of industrialist Frederick Ayers were victims of one of the most famous cases of embezzlement. John Doorly was entrusted as a Chief Operating Officer to manage the various trust accounts of the heirs. Little did they know that about $20 million of their money would be spent on Doorly’s escapades with his friends and family. His purchases include real estate and airplanes among other auto body companies. As a mastermind behind defrauding the heirs and other investors, it was imperative for Doorly to dock the audit reports and to be careful in selecting the funds that he would siphon money from. He evaded rousing any suspicions throughout his tenure in 30 years.

He was later charged with serious counts of money laundering and mail fraud.

7. NYC Laborers Sandhogs Union Local 147

Melissa King made the history of the most famous cases of embezzlement as a female financial administrator who pilfered $42 million from the union accounts of Sandhogs. What was meant to be a prominent role of administering the tunnel workers’ piggy banks ended up being her piggy bank? She ripped off millions in her quest to live the life of the ultra-rich. Many workers were faced with the challenges of postponing their retirement plans due to the lack of funds in their investment accounts. They believed that she did not deserve to receive bail or a bail bondsman to secure her bail.

The consequences of her crimes were egregious, to say the least. She spent millions of money on atrocious expenses such as jumping horses and a fleet of luxury cars. Her crimes were surreptitious and brazen as she acted alone to conduct her affairs. Most of the workers who were victims of her crimes could not recoup the money that was lost to King’s greedy ways.

8. Koss Inc.

Sujata Sachdeva cuts the list of the famous cases of embezzlement in history. As a Vice President of finance, principal accounting officer, and secretary, ‘Sue’ had access to Koss Inc.’s financial copies and books that would allow her to steal almost half of the company’s earnings pretax. This small company that is known as an influential designer and marketer in the global telephone headphone industry was not aware of the large wire transfers.

Fortunately, American Express was able to pick up the discrepancies in her credit card balances. As a result, they were able to notify the relevant authorities who were able to get to the bottom of her spending. While she received a maximum penalty of 120 years in prison, she was handed a lighter sentence because she was able to cooperate with authorities throughout the investigation. However, she was handed a restitution sentence for the payment of $34 million to Koss Inc. Perhaps, the claims of bipolar disorder and alcoholism helped to mitigate her sentence. Unfortunately, her husband filed for divorce immediately after the sentencing hearing. The company’s reputation has been adversely affected by her actions of falsifying financial statements, expenses, and overstating assets in addition to her theft.

9. First Security Bank of Malta

In 2012 the District of Montana made headlines after the arrest of Rhonda Lee Devries. She made news of famous cases of embezzlement when she was convicted of embezzlement that had been ongoing for over ten years. Her charges amounted to a series of fraudulent credit card transactions that would see her stealing an estimated $4 million. She managed to evade the business security system at the bank in Malta as she found innovative ways to transfer funds to new credit cards.

By the time that her embezzlement was discovered, she had managed to swindle large sums of money from the bank. When Fidelity National Information Systems finally reported the activity to the FSB, she had managed to open four different credit card accounts. The First Security Bank was left in turmoil as more clients lacked confidence in the bank to manage their financial affairs after this scandal rocked their shores.

The Bottom Line

The most famous cases of embezzlement make for an interesting series of events in world history books. While the nature of these cases will have you believe that they are a lucrative business model that benefits bail bond agencies, the crimes are often considered the worst about the consequences for the victims that suffer.

Bail bondsman services are important for anyone who commits a crime, but in most cases, those accused of embezzlement end up not being able to afford legal resources due to accounts being frozen.

While the cases are seemingly different due to the amounts that were embezzled, the effects remain for the victims long after the sentence has been issued. Moreover, the companies that are involved are left with a tarnished reputation that makes it difficult to overcome.