Biggest Accounting Scandals That Impacted The World Economy

May 20, 2022


Most companies worldwide experience a 5% loss in their annual revenue due to fraud accounting. Unfortunately, most of these scandals happen due to the extreme greed of some company officials.

Some of the biggest frauds in history occurred in the last 2 decades. Also, these financial catastrophes caused losses of billions of dollars and destroyed many lives.

Let’s discuss some of those biggest accounting scandals causing financial disasters for millions of people as well as the economy.

8 Biggest Accounting Scandals In The History Of the Global Economy

Accounting frauds refer to theft, abuse, or other criminal offenses related to a company’s accounting practices and forensic accountant cost. These frauds are majorly done by accountants or other company officials that affect the assets and revenue.

In most cases, the companies involved in such frauds were brought down or had to pay hefty amounts of fines.

Tyco Scandal (2002)

Tyco International was a US-based company providing blue-chip security, located in Princeton, New Jersey. In 2002, news of a massive scam by the company’s CFO Mark Swartz and CEO Dennis Kozlowski broke out.

It was reported that they stole more than $150 million from the company using Fraudulent Loan Schemes. This phenomenon inflated the company’s revenue by more than $500 million.

Manhattan’s District Attorney and SEC carried out a thorough investigation of the company’s questionable accounting practices. They learned about the scam and sentenced both the culprits to 8 to 25 years of imprisonment. They were also charged $2.92 billion by a class-action lawsuit to pay the investors.

Enron Scandal (2001)

It was the early 2000’s when Enron, a public limited company, got engaged in multiple crooked accounting activities. The company has its headquarters in Houston, Texas, and is involved in an array of energy-related enterprises.

The company’s officers misguided the shareholders and corporate funds by misrepresenting the financial report of the company revenue.

It was reported that Jeffrey Skilling, the former CEO received long imprisonment till 2018. However, the other company officials, such as Andrew Fastow (CFO), earned a release in 2011 from federal prison.

WorldCom Scam (2002)

WorldCom was an Ashburn, Virginia-based telecommunication company that was reported for a scam one year after the Enron scam. The company’s assets were inflated by over $11 billion. It is known to be one of the biggest accounting scandals after the Bhp 100 billion dollars stock fraud.

The scandal was first discovered when the company’s internal audit department found fraudulent accounts with nearly $3.8 billion. It resulted in more than 30,000 job losses and caused $180 billion to the investors.

The CEO, Bernie Ebbers, received 25 years of imprisonment for false documentation, fraud, and conspiracy.

The Fall Of Lehman Brothers (2008)

Lehman Brothers was an international financial service firm and USA’s largest investment bank located in New York City. The company hid loans worth over $50 billion in disguised sales by accounting loopholes.

The company sold several short-term crooked assets to banks located in the Cayman Islands. It was discovered during the 2008 financial crisis and led the company to go bankrupt.

Freddie Mac Scam (2003)

Freddie Mac was a financial giant for mortgages, supported by the federation of the US was located in Virginia. In 2003, Freddie Mac was discovered to give misleading statements about his earnings of over $5 billion.

Vaughn Clarke (former CFO), Leland Brendsel (CEO), David Glenn (COO), and former Senior Vice Presidents deliberately overstated the company’s revenue in the records. The scandal was discovered by an SEC investigation of Freddie Mac’s shady accounting practices.

Scam Of Waste Management (1998)

The public limited US-based waste management company was caught in a scam in 1998. The new CEO and his management team found more than $1.7 billion in fake earnings in the company’s report.

The SEC or Securities and Exchange Commission discovered the former CEO and owner Dean L Buntrock is guilty. Alongside, many top executives were engaged in this scam, like the company’s auditor Arthur Andersen.

Eventually, Waste Management settled a class-action lawsuit by a shareholder for $457 million.

American International Group (2005)

American International Group is a US-based multinational insurance firm having almost 88 million customers in over 130 countries. However, the company’s CEO, Hank Greenberg, was discovered to engage in an accounting scandal in 2005.

An investigation conducted by the SEC into Greenberg unraveled a massive fraud of nearly $4 billion. It was discovered that the company showed loans as its revenue. They also insisted clients use the company’s insurers wth existing payrolls.

SEC finally forced the company to pay a fine of $1.64 billion. In addition, the company had to pay $115 million for pension funds in Louisiana and $725 million in Ohio.

Bernie Madoff Scandal (2008)

The former American stockbroker, Bernie Madoff, organized history’s biggest Ponzi scheme. During the financial crisis of 2008, it was found out that he misled the investors for more than $64.8 billion.

Madoff, along with his officials, were convicted of fraudulent accounting charges against them. They received 150 years of imprisonment along with a $170 billion fine payment.


So these were some of the worst accounting fraud cases in the history of the global economy. These cases did not only lead the company towards some disastrous consequences. They also caused massive unemployment, losses of investors, and a downfall in the economy.

You can also read about the Bhp 100 billion dollars class-action lawsuit, the biggest accounting scandal in the current situation.



Charles Simon
Charles Simon is a vibrant, professional blogger and writer. He graduated from the University of California, Berkeley, in business management. He is a business owner by profession, but by heart, he is a passionate writer. Now Charles is the owner and co-founder of SB News Room, Emblem Wealth, Tech Net Deals, Online Health Media, and WP Blogger Tips.

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