Top 7 Convicted CEO's and the Harsh Penalties They Face

In many United States Corporations, the CEO has an enormous influence over the company's success or failure. With that influence comes an often unchecked and unfettered access to knowledge and bank accounts. When a CEO undermines the profitability of a company he /she often destroys thousands of families life savings. Following is a list of the top 7 corporate CEO fraud cases and the harsh punishment that followed.

1. Bernard Ebbers, WorldCom

Bernard Ebbers was the CEO of WordCom and elevated the company to an enormously profitable US Corporation during its prime as America's long distance giant. Ebbers was ultimately found to be the mastermind behind an $11 billion accounting fraud and was then sentenced in July 2005 to 25 years in federal prison. Ebbers was instrumental in pushing his company into the largest bankruptcy at the time in U.S. history and was ordered by the court to forfeit his Mississippi mansion and an additional $45 million in assets.

The sentence received by Ebber's is believed to be the longest ever handed down to a CEO for committing corporate crimes while guiding a Fortune 500 Company. WorldCom filed for bankruptcy in 2002 and is now known as MCI.

Ebbers was 63 at the time of his sentencing and will most likely spend the rest of his life in a federal prison. His convictions include nine felonies that carried a masximum prison term of 85 years. Ebber's lost his appeal in July of 2006 and began serving his sentence in September of 2006.

2. Jeffrey Skilling, Enron

On February 12, 2001, Jeffrey Skilling was named CEO of Enron, receiving $132 million in a single year from the Nation's largest energy giant. However, just five years later, on October 23, 2006, Jeffrey Skilling was sentenced to 24 years and 4 months in federal prison, and fined in excess $45 million for securities violations and corporate fraud violations leading to the largest bankruptcy in US history and the loss of 20,000 jobs. Skilling's case is currently under appeal. In December of 2006, Skilling's request to remain free during the lengthy appeal was denied. Skilling began serving his sentence on December 13, 2006 in Waseca, Minnesota at a low security prison. The Federal Bureau of Prisons, lists Skilling's release date as February 2008.

3. Dennis Kozlowski, Tyco

Dennis Kozlowski is the former CEO of Tyco who led Tyco to enormous profitability and then ultimately was sentenced in September 2005 to a maximum of 25 years in state prison for his role in looting hundreds of millions of dollars from Tyco. Kozlowski was also ordered to pay back to Tyco $134 million in stolen money and was fined an additional $70 million. Therefore with restitution and penalties, Kozlowski owes $204 million.

Kozlowski narrowly escaped conviction in his first trial which was thrown out by the judge, when reports surfaced that a juror was holding out for acquittal because the juror had received a threatening lawyer and had flashed "OK" signs to Kozlowski and his lawyers during the trial.

The second trial was a different story however and Kozlowski was found guilty on 22 of 23 counts of conspiracy, grand larceny, falsifying business records and violating business law. The convicted CEO is oft best remembered for the opulent birthday party he threw his wife on Sardinia that cost approximately $2 million dollars of Tyco's stolen money.

4. John Riggas, Adelphia Communications

John Rigas was the CEO and founder of the cable behemouth Adelphia Communications. Rigas was ultimately sentenced to 15 years in prison in 2005 for his part in the multi-billion dollar fraud scheme that bankrupted the nation’s fifth-largest cable company.

Riggas, who was 80 years old at the time of the sentencing, had run the company for over 50 years. Riggas' son Timothy, Adelphia’s former chief financial officer, was additionally convicted in the corporate looting of Adelphia and, at age 49, received an even harsher sentence: 20 years. Father and son's sentences are to what prosecutors had requested: 215 years for each individual. Both were convicted on 18 felony counts of conspiracy and fraud.

As a result of the Riggas' actions, Adelphia collapsed in 2002 and investors lost billions. Shortly thereafter, Time Warner and Comcast purchased Adelphia for $16.9 billion.

5. Sam Waksal, ImClone

Sam Waksal is the founder and former CEO of the biotech ImClone. Waksal was the pioneer behind ImClone's multi million dollar success however is now currently serving a seven-year, three-month sentence for his role in an insider trading scandal that involved his good friend Martha Stewart.

Waksal pleaded guilty to sharing with relatives in 2001, that ImClone’s bid to win regulatory approval for its cancer drug, Erbitux, was not going to succeed. This information was not yet known to the public. Waksal and Stewart shared the same stockbroker, Peter Bacanovic. Bacanovic then tipped off Stewart and she then sold nearly 4,000 ImClone shares.

Waksal began serving his sentence in 2003 and agreed to his sentence to pay a $4.3 million fine. The drug Erbitux has since been approved by the FDA.

6. Joe Nacchio

Joe Nacchio is the former Chief Executive of Qwest Communications, a media powerhouse throughout the United States. Nacchio was sentenced to six years in prison in July of 2007for making $52 million in illegal stock sales while a multi-billion dollar accounting scandal within Qwest brought the telecommunications giant to near bankruptcy.

7. Martha Stewart, Martha Stewart Living Omnimedia

Martha Stewart is the founder of Martha Stewart Living Omnimedia who served a relative to this list light sentence of five months in prison followed by six months of house arrest for lying during an insider trading probe of ImClone in 2001.

Stewart was convicted in 2004 on charges of obstruction of justice, conspiracy and making false statements about her sale of 4,000 shares of ImClone Systems stock. Her legal issues forced her to step down as CEO of her company.

Stewart, in 2006 agreed to pay $195,000 in fines and accepted five year ban on directing a public company. Bouncing back quickly, Stewart was named as one of Fortune magazines 50 most powerful women in the world in 2006.

Honorable Mention

Kobi Alexander, Comverse - ON THE LAM

Jacob “Kobi” Alexander is the former CEO of Comverse Technology who is wanted in the U.S. on charges of criminal fraud and bribery. Alexander evaded arrest and fled to Namibia.

U.S. prosecutors have since added the new charges of obstruction of justice, bribery and witness tampering to Alexander’s roster of accused crimes. Alexander allegedly proposed a $5 million payment to someone to take the fall for his fraud charges. Kobi's earlier fraud charges stem from the manipulation of stock options, and he also been charged with conspiracy and money laundering.

Alexander is an Israeli citizen and a permanent U.S. resident. He was arrested in Namibia, but was ultimately released on bail. U.S. prosecutors are seeking to have him extradited.

In Summary

Great leaders are often overcome with greed. Watch your CEO's closely and insure that there are proper checks and balances in place to prevent corporate abuse.

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