Top Scams of Recent Times

Fraud Alert Banner from FTCCorporate scams have always been a part of the post-industrialization world and now with COVID, it is much worse.

With that said, we thought you’d like to know how the extent and scope of fraudulent activity had increased by the end of the 20th century. And although scams involving the coronavirus have not reached the level of those mentioned below, we think it may be only a matter of time before a COVID fraud materializes that equates to these monster scams below, unless law enforcement takes an active role in controlling it. 

All these financial and accounting scandals had one thing in common i.e. they were instigated by a handful of voracious insiders whose actions brought about grave consequences for hundreds and thousands of people and the companies in question. 

Here, we will delve into brief details of some of the biggest accounting and financial scams of recent times. We will discuss them in descending order using the category of the amount of money involved in these scandals. 

Enron’s Bankruptcy 

Enron Building Texas
Enron Complex. (Wikipedia Public Domain)

Enron Corporation was a hot favorite option for investors. At its peak, a single share of Enron soared over $90. This Texas-based energy and services company was doing fine when the news broke out (via a whistleblower) that they are keeping their debts off the balance sheet in collusion with their auditing firm and showing inflated revenues to maintain the stock market standing of the company. 

As we know, such information spreads like wildfire and the same happened in the case of Enron’s exposé. In the coming days, the shareholders would collectively lose $74 billion with stock price dipping unprecedentedly from $90 to under $1 within 12 months. Enron’s then CEO and his predecessor were accused of hiding the debts and misleading the investors.


The then CEO of the company, Jeff Skillings, was sentenced to 24 years in federal prison while the company claimed bankruptcy in the following days. They entirely ceased its operations six years after the scandal was unearthed. The auditing firm, Arthur Anderson, had to face severe fallout of the scandal because the entire company got indicted for fudging the accounts of Enron. However, the conviction was later turned over. By then, the company was already out of business.

Bernie Madoff Ponzi Scheme 

100 dollar bills
Photo Unsplash

A Wall Street Investment LLC, Bernier Madoff Investment Securities instigated probably the biggest Ponzi scheme of history by ripping off roughly $65 billion from the investors. The company’s CEO Bernie Madoff, a well-known stockbroker of his time, orchestrated this fraud along with his accountant and second-in-command. 

The scheme started to unearth just after the US had experienced its worst financial meltdown since the Great Depression. Madoff was playing a simple Ponzi scheme of scamming investors by returning their own money to each other. No actual profit was being made with these transactions, with the exception of the money that went into Madoff’s portfolio and the bank accounts of his accomplices. 

In 2005, the same Ponzi scheme was on the brink of getting unraveled because the investors requested a large sum of money in redemptions after hearing rumors that they were being ripped off. However, Madoff managed to handle the situation through the credit lines he had established with his 50 years of working in stock investments.


Since Bernie Madoff ran one of the biggest brokerage firms of Wall Street, its freeze of assets sent a ripple down the industry where many companies had to provisionally terminate their operations. His philanthropic works were also hit by the scam. Madoff pled guilty in March 2009 and was sentenced to 150 years in federal prison, with the restitution penalty of $170 billion. 

The collapse of Lehman Brothers 

Lehman Brothers were one of the largest investment firms in the United States. But the notorious financial crisis of 2008 also proved to be the end of this global financial services provider. During that time of economical catastrophe, when things had already gone south for financial institutions, it was discovered that the company was hiding the loans of over $50 billion in the disguise of toxic assets sold off to different banks in the Cayman Islands with the understanding that they would be bought back after a short time period. 


The news acted as the final nail in the coffin of Lehman Brothers, which was already struggling with the fast depletion of cash. Its stock price experienced a drastic dip of 45% with a 66% rise in the company’s debt. 

Finally, the company had to announce bankruptcy. No penalties or prison times were given due to lack of evidence. The downfall of Lehman Brothers was the leading headline of 2008’s financial crisis. 

Freddie Mac’s Misstatement of Earnings 

Freddie Mac was a big home mortgage corporation that had complete patronage of the federal government. In 2003, an investigation from the Securities and Exchange Commission (SEC) found out that the company was misstating and understating its earnings. The difference between instated and actual earnings was a staggering $5 billion. It was later understood that all the key players (CEO, COO, and CFO) were part of this false assertion. 

In its defense, the company stated that it had to do this manipulation of accounts to meet the steady growth objective of Wall Street. It was a shocker for Wall Street pundits who always considered Freddie Mac as a top and steady performer. 


All three top executives were fired and the company was fined for $120 million in civil penalties. The company was also obliged to overhaul its governance and accounting structure through a consent order from the SEC. 

AIG Scandal 

AIG Headquarters Building NY
AIG Headquarters Building NY Photo: Wikipedia Public Domain

American Insurance Group (AIG) is a US-based multinational insurance firm, having its operations covering over 100 countries and serving millions of customers. In 2005, through whistleblowing, an SEC investigation was started against the company. The company’s CEO was held responsible for accounting fraud for approximately $4 billion in the form of stock manipulations and rigging of bids. The company showed the loans as revenues and artificially inflated the stock prices in collusion with traders. 


The CEO was fired without being convicted of any criminal charges and the company had to pay several multi-million penalties in the coming years. The total amount of paid penalties exceeded $2.5 billion. However, the company recovered from this crisis. These days, the stock price of AIG revolves around $56 per share, as per the listings on the NYSE.


As you can see, almost all of the financial scandals that we have discussed involved a few individuals whose shenanigans have had their fall out on millions of people and an entire industry.  A wise man once said ‘How do you expect to continuously do something bad and not expect to get caught?”.  It will catch up with you! 

The COVID scams such as this one are still small in comparison, but who knows what will happen in the future?