Hammer Falls On White-Collar Crime
2005 Was A Punishing Year For Scandal-Tainted CEOs
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Play CBS Video Video WorldCom Chief Guilty Bernard Ebbers turned a small Mississippi phone company into a huge telecom. Now Ebbers has been found guilty of orchestrating the $11 billion WorldCom corporate fraud, Anthony Mason reports.
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Video Ex-Enron CEO On The Attack Ken Lay delivered a speech defending himself prior to his trial in connection with one of the worst corporate scandals in memory. Lee Cowan reports on his strategy of verbal attacks.
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Video Martha Stewart On Letterman Martha Stewart joined David Letterman on the Late Show and talked about the justice system and her first day in prison.
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Enron founder Kenneth Lay speaks at a Houston Forum luncheon Tuesday, Dec. 13, 2005. Lay, his CEO successor Jeffrey Skilling and the company's former top accountant, Richard Causey, are scheduled to go on trial Jan. 17, more than four years after the company crumbled. (AP Photo)
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Former Worldcom CEO Bernard Ebbers exits Manhattan federal court with his wife, Kristie, by his side following his sentencing Wednesday, July 13, 2005. Ebbers was sentenced to 25 years for orchestrating and accounting scandal which bankrupted the once giant telecommunications company. (AP)
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Martha Stewart poses for photographers as she arrives for a book signing of "The Martha Rules" at the Barnes & Noble book store in New York's Union Square on Tuesday, Oct. 11, 2005. (AP)
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Interactive WorldCom Scandal Get the 411 on key players and find out how this telecom titan got tangled up.
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Interactive Lights Out At Enron Follow the events leading to the bankruptcy of the former energy giant, read about key players and find out how its fall affected employees.
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In The Spotlight Enron Troubles Video Archive: A look back at Enron, the bankrupt energy company caught in sham sale of power.
He had just been sentenced to 25 years in prison for orchestrating the record $11 billion accounting fraud at the toppled telecom — essentially a life term for a man 63 years old and with a history of heart trouble.
It was a startling punishment, but far from extraordinary in 2005. In the cavalcade of recent corporate scandals, this was the year the hammer finally fell hard on top executives.
And the trend toward harsher sentences for corporate crooks comes just as the curtain goes up on what's expected to be the most complex of the white-collar cases to date, the fraud trial of Enron founder Kenneth Lay and two other former officials.
Set to get start Jan. 17, the Enron trial brings the corporate crime era full-circle. Enron's crash into bankruptcy in 2001 predates scandals at WorldCom, Adelphia Communications Corp. and Tyco International Ltd.
It also promises to be intriguing. Lay has already mounted a public defense that rivaled Martha Stewart's, including a blitz of television appearances and interviews. He says he trusted the wrong people and valiantly tried to save the energy giant.
For Lay, former CEO Jeffrey Skilling and former top Enron accountant Richard Causey, the consequences of conviction are dire. Consider the fates met by convicted corporate executives in 2005 alone.
Ebbers' sentence, which followed a trial in which he took the witness stand and flatly denied any knowledge of the massive book-cooking at WorldCom, was the toughest to date in the business scandals.
John Rigas, the white-haired founder of cable giant Adelphia, got 15 years in prison for looting his company. His son, Timothy, the former chief financial officer, got 20.
L. Dennis Kozlowski, the former Tyco chief whose $6,000 shower curtain and lavish parties made him almost a caricature of the boom-time CEO, finishes the year in a maximum-security prison that will allow him three showers a week.
He and his own former finance chief, Mark Swartz, will serve at least 8 1/3 years, and perhaps as many as 25, after they were convicted of stealing $600 million from Tyco.
And former Cendant Corp. Vice Chairman E. Kirk Shelton was slapped with 10 years in prison for his role in an accounting scandal that cost investors and the company more than $3 billion.
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