CEO Conrad Black Sentenced To Six Years In Prison
Corporate Fraud
December 13. 2007
CEO Conrad Black was sentenced to 6 years in prison for corporate fraud. He kept charging millions in expenses to the shareholders that he should have paid for on his own personal tab. How very Leona Helmsley of him.
Federal Judge Amy St. Eve said to Black at the sentencing, “I cannot understand how somebody of your stature could engage in the conduct you engaged in and put everything at risk.”
It’s amazing that people are surprised at corporate fraud when it happens all the time. Companies hiding their losses, some like Enron essentially trading nothing, then the horrible announcement comes that the company has not been honest with shareholders as to its true financial state and spending habits.
It’s not just Conrad Black. There are more culprits out there building a disaster. The federal government still has not done enough to clean up corporate fraud, as it abounds in certain business sectors.
This poses a severe danger to the stock market that could cause it to crash. If an adequate overhaul in corporate governance practices is not undertaken with the goal of properly regulating companies actively trading on the market, there will be problems, as the economy is in a bad way.
Some companies are looking to make up for lost revenues due to the weakened economy and see taking advantage of customers and shareholders as the solution. That is never the answer.
Some companies are trading products that are flat out useless or fraudulent. That’s not the answer either and often leads to bad accounting practices to cover losses, that turn into legal charges, but not before wiping out innocent people’s pensions and life savings. Get a real product and earn revenues the old fashioned way – working hard for it.
Once again, there are quite a few corporations not being honest with shareholders until it’s too late and their investments are totally devalued or wiped out. Then the CEO leaves the company with a golden parachute when they should leave with a golden indictment.
If you are an investor be careful, as these are financially precarious times:
1. Don’t risk too much of your money by placing all your funds/investments in one place. Sometimes when markets are financially unstable, the best investment can be a CD (a certificate of deposit not compact disc, people) or money market account that won’t fluctuate by dropping below your initial investment.
2. Invest in solid products and services. If it looks like a fluke it probably is. If it’s some stupidity like glasses for mosquitoes you may want to let that one go.
3. Check out all potential investments/companies thoroughly with the appropriate regulatory agencies before you invest.
Do online searches to see if there are disgruntled investors or customers of that company you want to invest in. Read their stories.
4. Do not pick risky investments that promise big returns above all other competitors. Many of them don’t pan out. Some are legit, but some are not.
5. Make sure the financial institution holding your cash is FDIC insured (remember the FDIC insures up to $100,000. If you have $150,000 in an account and the bank goes belly up, guess what that means).
6. Be careful of calls soliciting money/investment capital. In the internet age, even if you have an unlisted number, people can still get your number. Let’s face it, anyone can call you over the phone pretending to be anything from a broker to a bank.
7. Be careful of online brokerage houses. I had an account with a well known one that I closed 6 months ago. I bought stock, the stock went up by a few hundred dollars, then it went down suddenly, but the promises they made regarding the sell price and the software monitoring on the account was not totally accurate or helpful.
They sell the stock at around the price you request via their software, not the exact price you request. But they don’t tell you that until you try to sell the stock to make a profit. The rep told me over the phone, “We don’t sell it at the exact price…we sell it at around that price.” Hard to make a profit that way even when you pick a good stock, as I did. Furthermore, the software was far more complicated than it needed to be.
Ironically, the FBI just used that very online brokerage house in a hedge fund sting that resulted in the indictment and arrest of 10 people a couple days ago. The fake FBI account (with real money in it) at the brokerage house dropped from, $82,000 to $12,000. Hopefully they will dock that out of Robert Mueller’s salary.
ARTICLE:
“Lord Black and two co-defendants stole millions from the company through a scheme in which they disguised payments to themselves as “non-competition fees”…
She ordered Lord Black to surrender in 12 weeks and recommended that he serve his term in a low-security prison in Florida. Along with the other prisoners, the peer – who furnished his Park Avenue apartment in New York with marble elephants at a cost of $17,800 (£8,700) – will be assigned a job for which he will be paid less than $1 a day.” http://www.ft.com
Story found here
