Martha Stewart was found guilty Friday of obstructing justice and lying to the government about why she sold some stock back in 2001. The homemaking maven now faces up to 20 years in prison. Stunning as that verdict was, it wasn’t the only major development on the corporate legal front last week. Bernard Ebbers, the former CEO of WorldCom, was indicted Tuesday for allegedly helping pull off the biggest accounting fraud in U.S. history.
Back when the stock market bubble burst in 2000, billions of dollars of stock value vanished overnight, and the scope of the corporate accounting and securities fraud that occurred during that frenzy gradually became apparent, such a week could hardly have been imagined.
As the scandals unfolded, cynics said knowingly that the big guys and gals would never get theirs–that the Justice Department and federal regulators would never aggressively pursue alleged corporate crimes and other misdeeds that had cost so many so much. Even after Chicago-based Andersen was convicted of obstruction of justice in the summer of 2002, many Americans continued to be skeptical.
Much of that skepticism, it turns out, was off the mark. Congress, the stock exchanges, regulators and progressive corporate boards forced a broad cleanup. Granted, it took time for the wheels of justice to get cranking. The complex frauds that lay at the heart of many of the big-name scandals didn’t produce easy cases for prosecutors. These cases had to be built painstakingly. But U.S. Atty. Gen. John Ashcroft reports the government now has indicted more than 600 executives in the corporate scandals and convicted more than 200. The corner-office crowd is facing justice.
Once former Enron Chief Financial Officer Andrew Fastow pleaded guilty in January and agreed to cooperate, former CEO Jeffrey Skilling was indicted for alleged fraud. The Ebbers indictment came only after WorldCom’s former CFO Scott Sullivan pleaded guilty to fraud charges and agreed to cooperate.
The fraud case against former Tyco Chairman Dennis Kozlowski and former CFO Mark Swartz, which began last September, is expected to go to the jury late this week. Opening arguments began last week in the financial fraud case against Adelphia’s founding Rigas family. And guilty pleas from two more HealthSouth executives provided added grist for prosecutors in their case against former CEO Richard Scrushy, which is expected to go to court this summer.
In truth, the case against Martha Stewart was the easy one. No complex accounting fraud here. She attempted to hide what she had done and then compounded that by lying to investigators. The jury deliberated less than three days before finding her guilty on all four counts. Justice is being done.
