When 'CEO' Spells 'Crooked Excessive Overlord'

Before you go, we thought you'd like these...
business man with handcuffs
Getty Images
​As we've seen with the recent controversy over Los Angeles Clippers owner Donald Sterling, the worst company heads can be crude and shockingly unenlightened. It takes a special kind of poisonous talent, though, for a boss to engage in actions that wipe out the value of their company.

Luckily for the stock market and individual shareholders, the Clippers are not a publicly traded entity. Some other once-big-name firms, however, aren't so fortunate. Here's a look at several of the more egregious recent examples of destructive CEO behavior.

Kenneth Lay, Enron

Now a byword for corporate fraud on a massive scale, Enron was an energy conglomerate that posted impressive results throughout the 1990s, at one point reporting over $100 billion in revenues.

Such numbers sounded too good to be true, and they were. Lay and company did this through widespread and pervasive fraud using a variety of dirty accounting tricks. Lay was found guilty of 10 counts of securities fraud and related charges in 2006, but he died several months before he was scheduled to be sentenced.

While it was a stock market darling, Enron stock hit nearly $91 per share at one point. Barely a year and a half later, after the scandal broke, it could be had for a mere 12 cents.

Bernie Ebbers, WorldCom

With large-scale deregulation recently behind it and the rise of the Internet ahead, the telecom industry was exciting in the 1990s. And few companies were as thrilling to watch as hungry operator WorldCom.

The busy company grew huge through acquisitions, swallowing companies such as CompuServe and MCI Communications, and reaching an ultimately unconsummated deal to merge with Sprint (S).

But a general corporate pullback on telecom spending started to bite, the debts piled up, and the company's stock began to slide. In desperation, management started to cook the books in order to inflate net profit.

The company was forced to enter Chapter 11, and ultimately Ebbers was socked with a raft of charges, including fraud and conspiracy, for which he was sentenced to 25 years in jail in 2005.

Shareholders were left holding the phone. WorldCom stock was canceled outright, becoming completely worthless. In 2005, Verizon (VZ) bought its successor company for $7.65 billion.

L. Dennis Kozlowski, Tyco

When your company funds a lavish, $2 million party nicknamed "the Roman Orgy," claiming that it's a shareholder meeting, you know you're in trouble. This was only one of the many hallmarks of Dennis Kozlowski's tenure as CEO of sprawling conglomerate Tyco International (TYC).

%VIRTUAL-article-sponsoredlinks%That lavish soiree was indicative of his style as a boss: Kozlowski was a guy who liked to spend. Tyco under his reign was an insatiable acquirer, buying everything from pharmaceutical companies to sprinkler manufacturers.

The problem was he didn't seem to distinguish between acquiring assets for the company and adding to his personal stash. The law soon caught up with Kozlowski, and in 2005 he and Tyco's ex-CFO Mark Swartz were found guilty of 22 counts of conspiracy, grand larceny and securities fraud. The onetime CEO served time until earlier this year, when he was released on parole.

Tyco shares trade at around $40 a share these days, far from the onetime high of over $120.

John Rigas (and sons), Adelphia Communications

It's bad enough when a single individual wrecks his or her company through greed and mismanagement. It's much worse if their family joins in on the looting.

Cable powerhouse Adelphia Communications was led by CEO John Rigas, whose sons Timothy as chief financial officer and Michael as executive vice president of operations.

In 2002, Adelphia disclosed that the Rigases "co-borrowed" $2.3 billion with the company. Among other misdeeds, they were accused of tapping more than $250 million in corporate funds to meet margin calls on their personal investments,and spending nearly $13 million to build a golf course.

John received a 15-year sentence for fraud and conspiracy. Timothy was hit with a tougher stretch of 20 years. Michael walked away relatively unscathed with a 10-month home-confinement sentence.

In 2006, Comcast (CMCSA) and Time Warner Cable (TWC) carved up the useful assets of the firm, acquiring them for a combined $17.6 billion. Adelphia technically still exists today, but it's essentially a paper entity and a hollow shell of the big company it once was.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. Nor does The Motley Fool.

10 PHOTOS
Top 10 Tax Cheaters of the Past Decade
See Gallery
When 'CEO' Spells 'Crooked Excessive Overlord'
As if his $65 billion Ponzi scheme and serving a 150-year federal prison sentence for it wasn't enough, prosecutors in January 2014 revealed an IRS analysis showing Madoff didn't report $242.9 million in federal taxes from 1993 through 2007. Some of his former employees are also accused of having unreported income, one as high as $3.5 million.
The billionaire creator of Beanie Babies was sentenced in January 2014 to two years of probation for tax evasion on $25 million in income that he kept in Swiss bank accounts. Prosecutors say Warner earned $3.1 million in gross income in 2002 through a secret offshore account starting in 1996. He has agreed to pay $53.5 million, half of the amount he had in a secret UBS account. The federal government has pushed for high-profile prosecutions of Americans concealing income overseas, often in Switzerland.
Wilson, the self-proclaimed "First Lady" of tax fraud, was sentenced in July 2013 to 21 years in prison, according to an IRS list of top cases it prosecuted focused on identity theft. Wilson, then 27, of Tampa Bay, Fla., was also ordered to pay $2.2 million. Larry was sentenced to 14.5 years in prison and ordered to forfeit $2.2 million. From at least April 2009 through their arrests in September 2012, the pair fraudulently obtained tax refunds by receiving U.S. Treasury checks and pre-paid debit cards loaded with proceeds from false tax returns they filed in the names of other people without those persons' permission or knowledge, according to the IRS. Wilson boasted on Facebook that she was untouchable and spent lavishly, including $90,000 on an Audi A8 and $30,000 on her son's first birthday party.
In May 2012 the leaders of a multimillion dollar fraud ring were sentenced to 334 months (Dale) and 310 months (Grant) in prison and ordered to pay more than $2.8 million in restitution to the IRS. From 2009 through 2010 they filed false tax returns using stolen identities. Dale admitted to filing more than 500 fraudulent returns that sought at least $3.7 million in tax refunds, using the names of Medicaid beneficiaries that Dale obtained while working for a company that serviced Medicaid programs.
While not the biggest tax fraud case with a $2.1 million refund through a fraudulent 2011 tax return, she may have been the most creatively stupid. She falsely claimed $3 million in income using TurboTax, which issued her a prepaid Visa debit card with $2.1 million on it after her home state of Oregon approved her claim. She went on a $200,000 spending spree and was only caught after she reported the card lost. That's right: She was caught after reporting a $2.1 million debit card lost that she only got because she filed a fake tax return.
In February 2014, Hilton, 68, was among 13 people indicted in Los Angeles and Riverside counties in California for using stolen identifies to file fraudulent tax returns. Hilton's tax scheme sought nearly $2.9 million in fraudulent tax refunds for the 2008 tax year. Hilton owns two tax preparation businesses
The doomsday prophet from Cincinnati was convicted in June 2012 of five counts of tax evasion for not paying more than $300,000 in taxes between 2005 and 2010. He funneled money into a foreign bank account, lied on his tax forms and wrote off personal expenses as church expenses, a grand jury found. Weinland has wrongly predicted the world would end a few times.
The former chief administrator of the small California city of Bell, Rizzo was sentenced in April 2014 to 33 months in federal prison for tax evasion. He also faces 10 to 12 years in prison on 69 corruption counts. He was ordered to pay nearly $256,000 in restitution to the IRS after pleading guilty in January to federal counts of conspiracy and filing a false federal tax return. Rizzo paid himself as much as $1.1 million as Bell's top administrator before he was fired in 2010. Federal prosecutors say that from 2005 to 2010 he claimed more than $770,000 in phantom losses on his tax returns. 
of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION
Read Full Story

People are Reading