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Fraudulent financial accounting
Fraudulent Financial Reporting May Be Accomplished Through The Manipulation Of
Fraudulent financial accounting
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The ethical dilemma faced by Adelphia is fraud. Adelphia scandal involves both fraudulent financial reporting and misappropriation of assets. Adelphia founded by John Rigas family in 1952 in Pennsylvania. John Rigas family remained entirely Adelphia’s shares until 1986, when the company went public. In other words, Adelphia began with the family type corporation. John Rigas and his three high educated sons, Michael, Timothy, and James occupied the top executive position in the Adelphia. This is a big sign for fraud beginning.
The first ethical dilemma faced by Adelphia scandal is massive financial statements. In order to meet the Wall Street expectations, John’s family hided $2.3 billion in debt, which could pretend Adelphia looks like the
John Rigas started Adelphia Communcations in 1952 with the help of two partners, but soon bought it out. The company was taken public in 1986 and as a result would have to abide by the regulations of the SEC. By the early 2000s, Adelphia was one of the top cable companies in the United States. This was the peak of a corporation that would begin a downward spiral over the first half of 2002 as a result of fraudulent use of the company’s assets at its’ shareholders expense. Members of the Rigas family drove the company to bankruptcy through rampant spending of company funds on personal expenditures (Barlaup, 2009). These expenditures included the likes of gross misuse of the company’s aircraft for personal trips by members of the Rigas family and the construction of a personal golf course on the family’s private land (Markon, 2002). This was accomplished after careful manipulation of the company’s reported numbers and fabrication of transactions within the company. Co-borrowing and self-dealing were commonplace in this time period that resulted in over 2 billion dollars’ worth of debt. All this was done under the nose of shareholders and culminated in an insurmountable debt that would lead the company to bankruptcy and to the imprisonment of multiple members of the Rigas family (Barlaup, 2009).
Tracing back the history of accounting scandals, major corporate scandals not only hurt the economy but also crush investor confidence on investing in company. Majority of corporate scandal are create by greedy CEOs “cooking the books” to meet the number that they expected. In this case, Richard Scrushy is one of the greedy CEOs. This is a case of a falling American dream. Richard Scrushy, was a self-made son of the new South, a former teenage parent who hauled himself up from a menial job to become an emperor of the new economy.
The dilemma shows that although there are leading people in all corporations most leaders cannot be trusted with big responsibilities. Choosing this real life scandal educates me in what is happening in my major of business and it also opens my eyes to what essentially can happen in big corporations like Enron. Pondering on this dilemma allows me to bring up a different approach. Asking why those leaders weren’t caught in the beginning? In a small business like a sporting store or grocery store thefts are caught at hand and penalized for their wrong doings. This turns into a leadership dilemma we are faced with the questions of, what those leaders of Enron believed to be right and wrong or in their heads what was right and right.
Enron was the model for rapid growth in the 1990’s but part of the culture and ethics of Enron was disturbing. Falsified documents, cutthroat competitiveness among employees and accounting schemes that hid the truth of the company’s indebtedness were just a few examples of the lack of business ethics within the organization. Perhaps a more virtuous management team could have saved Enron from collapse.
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sexuality he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
Mackay, Tim. "The Ethics Of The Wolf Of Wall Street." Charter 85.2 (2014): 67.Web. 23 Mar. 2014.
middle of paper ... ... They had complete disregard for ethical standards that they should have looked towards when making their decisions. They allowed greed, and notoriety, to take over their basic perceptions of what is right, and what is wrong. So in conclusion, I have provided my analysis of ethical behavior that surrounded the financial events of Bernie Madoff, and the events that surrounded Enron.
John Rigas and his family are the centerpiece of the Adelphia scandal, which is regarded as one of the most elaborate and extensive accounting frauds in history. In 1952, the founder John Rigas purchased a cable company for three hundred dollars. Twenty years later, he created Adelphia Communications corporations and the company went public. With the help of his family, it eventually grew to be the nation’s 6th largest cable company.
As the turn of the 21st Century evolved, it appeared as if Adelphia Communications Corporation was on a direct path of success; unbeknownst to their investors and the public, they were in reality on a direct path of destruction instead. Unfortunately, Adelphia is not the first major company in the history of the United States’ business world to lose the trust of the American public, but it is certainly one of the most notable ones to do so. As the events surrounding the Adelphia scandal unfolded in full view of the public eye, a multitude of media outlets were there to broadcast the destruction and distrust to the masses leaving many wondering if the term “business ethics” was actually nothing more than just an oxymoron. Throughout this paper, we will discuss the events surrounding the rise and fall of the Adelphia Communications Corporation and identify two of the ethical problems associated with the scandal while applying them to the deontological framework and Immanuel Kant’s Categorical Imperative.
In this paper I will identify and analyze the Wells Fargo scandal as it pertains to the breakdown of leadership and ethics. I will first identify and analyze the event and discuss the challenges and conflicts the scandal presented. Then I will evaluate the issue by explaining why the issue has interest and concern to stakeholders followed by discussing the challenges presented to individuals and/or organizations around this case. Lastly, I will recommend action steps that should be taken to those involved as well as discuss what I have learned from exploring this topic.
Due to such lack of monitoring, management continued to be unaware of such transactions that continued to impact the company negatively. This provided the Rigas family many opportunities to override controls since the lack of corporate governance enabled the decisions to be made by Rigas family without oversight. For example, the article “Adelphia Officials are Arrested, Charged with ‘Massive’ Fraud” discuses how Timothy Rigas had to limit himself to $1 million a month of compensation that was withdrawn from the company for personal use. All decisions were continuously made by such members of the family, in which case for Adelphia, was the team of management. With the lack of controls creating opportunity, they were free to do what they wished- which is something they took incredible advantage
The main ethical issue with the Enron scandal is that Enron allowed legal loopholes to supersede ethical principles (Bowen & Heath, 2005). Enron used legal principles to justify what they were doing instead of acknowledging that the accounting processes they were using were unethical. Another one of the ethical issues is that Enron faced was that
The Enron case is very intriguing case of corporate corruption and greed. As we review some of the company’s facts and history along with other areas of the corporation, we can see that this case is filled with great examples of business ethics put to the
The Tyco accounting scandal is an ideal illustration of how individuals who hold key positions in an organization are able to manipulate accounting practices and financial reports for personal gain. The few key individuals involved in the Tyco Scandal (CEO Kozlowski and CFO Swartz), used a number of clever and unique tactics in order to accomplish what they did; including spring loading, manipulating their ‘key-employee loan’ program, and multiple ‘hush money’ payouts.
Everyone in this world has experienced an ethical dilemma in different situations and this may arise between one or more individuals. Ethical dilemma is a situation where people have to make complex decisions and are influenced based on personal interest, social environment or norms, and religious beliefs (“Strategic Leadership”, n.d.). The leaders and managers in the company should set guidelines to ensure employees are aware and have a better chance to solve and make ethical decisions. Employees are also responsible in understanding their ethical obligations in order to maintain a positive work environment. The purpose of this case study is to identify the dilemma and analyze different decisions to find ways on how a person should act