| align="center"> | | | | telecommunications industry. By 2002 the company |
| Introduction | | | | had filled the largest bankruptcy in U.S. history. What |
| Over the years Wall Street has had itâs | | | | happened is that over a six year period is the |
| share of criminals, who left behind despair and loss. | | | | company had made 63 acquisitions the largest one |
| To fully understand what these criminals did we must | | | | was MCI in 1997. This created several problems for |
| examine the individuals themselves, what they did | | | | the company in that it can be difficult to integrate |
| and what is the legacy that they leave behind as a | | | | the old company with the new. Second it threw |
| result of their misdeeds. While no two are alike the | | | | massive amounts of debt on the companyâs |
| lasting effects of their crimes can still be felt by Main | | | | balance sheet. To keep earnings growing the |
| Street to this very day. In the article below we will | | | | company would write millions of dollars in losses of |
| examine as well as gain a greater understanding of | | | | the company it acquired in the current quarter and |
| some of the largest Wall Street criminals to include: | | | | then have smaller losses going forward so that there |
| Ivan Boesky, Michael Milken, Bernard Ebbers and | | | | was the perception that the company was making |
| Richard Whitney. | | | | more money than it really was. This gave World Com |
| Criminals of Wall Street | | | | the ability to take smaller charges against its earnings |
| A criminal is someone who has committed a crime | | | | every year and spread the large losses over |
| and been found guilty in a court of law of committing | | | | decades. All of this worked great until the Justice |
| that crime or others. Since the beginning Wall Street | | | | Department denied the companyâs |
| has always had the criminals trying to hide | | | | acquisition of Sprint in 2000. When the company filed |
| themselves among the honest business people. The | | | | for bankruptcy they admitted that it inappropriately |
| crimes or scams that they have committed have | | | | booked these losses from previous acquisitions from |
| been everything from insider trading to fleecing the | | | | the period of 1999 to 2002. Ebbers also took |
| companies they run and investors of hundreds of | | | | personal loans from the company and resigned as |
| millions of dollars. Below are some of the most | | | | CEO in April 2002. He was convicted of fraud, |
| famous and unscrupulous Wall Street criminals. | | | | conspiracy and filling false documents with the SEC |
| Ivan Boesky: Ivan Boeskyâs career on Wall | | | | (Securities and Exchange Commission). He was |
| Street began in 1966 as a stock analyst. In 1975 he | | | | sentenced to 25 years in prison. Ebbers legacy |
| had started his own arbitrage firm. By the | | | | created tighter reporting standards with the creation |
| 1980âs his net worth was estimated to be in | | | | of the Sarbanes Oxley Act in 2002 as well as the |
| the hundreds of millions. Ivan looked for companies | | | | forbidding of personal loans to officers of the |
| that were the target of takeovers. He would then | | | | company and stiffer penalties for financial related |
| buy a stake in the company on speculation that | | | | crimes. |
| news of a takeover was going to be announced and | | | | Richard Whitney: Richard Whiteny was the President |
| then sell the shares after the announcement for a | | | | of the New York Stock Exchange from 1930 to 1935. |
| profit. Throughout the 1980âs corporate | | | | On October 24, 1929 he bought shares in many |
| mergers and takeovers were enormous. It 1986 | | | | companies and the market had dramatic turnaround. |
| there was almost 3,000 mergers worth $130 billion. | | | | This allowed him to be viewed as a hero to the |
| Before the deals were announced the price of the | | | | market but did little to prevent itâs inevitable |
| stocks were rising as a result of someone acting on | | | | crash five days later. By 1930 he was made the |
| inside information that a takeover or leveraged | | | | President of the New York Stock Exchange. |
| buyout was going to be announced. When something | | | | Whitney, was an unlucky gambler who played penny |
| like this happens it a sign insider trading (where you | | | | and blue chip stocks aggressively. To cover his losses |
| are acting on information that is not made available | | | | he would borrow money from friends and business |
| to the public) and is illegal. This was indeed the case | | | | acquaintances. This would allow him to buy even |
| with the Pacific Lumbar three days before the deal | | | | more stock in a market that was collapsing, which |
| was announced Boesky had purchase 10,000 shares. | | | | made his problems even worse. In spite of all of this |
| As result of these and other insider trading activities | | | | happening he continued to live a lavish lifestyle. When |
| Boesky was charged with stock manipulation from | | | | he could no longer borrow any more money he |
| inside information on November 14, 1986. He agreed | | | | began to embezzle money from the from his |
| to pay $100 million fine along with being banned from | | | | customers as well as an organization to help widows |
| trading stock professionally for life and serve time in | | | | and orphans. As time went on his fraud continued to |
| a federal prison . He cooperated with the SEC, taping | | | | become more perverse when he looted the New |
| his conversations with Junk Bond Firms and others. | | | | York Stock Exchangeâs Gratuity Fund of up |
| This led to both Drexel Burnham and Michael Milken | | | | to $1 million. This was fund was suppose to pay |
| being charged with securities fraud. The legacy that | | | | $20,000 to each members estate upon death, as |
| he leaves is one where greed at any cost does not | | | | treasurer he decided that it was proper for him to |
| work. If you break the law eventually you will be | | | | steal from it. After an audit discovered the |
| caught. As result of these actions of Boesky and | | | | embezzlement he was charged with two counts of |
| others, Congress passed the Insider Trading Act of | | | | embezzlement and sentenced to 5 to 10 years in |
| 1988. The act increases penalties for insider trading, | | | | prison. The newly formed Securities and Exchange |
| provides cash rewards to whistle blowers, and allows | | | | Commission required more frequent audits, it set |
| individuals to sue for damages because of insider | | | | caps on how much debt firms can have and |
| trading violations. | | | | customer accounts are now separate from the |
| Michael Milken: In the 1980âs Michael Milken | | | | property of brokerage firms. This is the legacy that |
| was known as the junk bond king. A junk bond is | | | | Richard Whitney left to Main Street. |
| nothing more than those corporations who have a | | | | Conclusion |
| high probability of not paying the money back. If you | | | | Since Wall Streetâs earliest days there have |
| wanted to raise money through high yield or junk | | | | been criminals who will try to disguise themselves as |
| bonds Milken was the person to call. He used these | | | | honest business people. Many of these crooks rose |
| bond to finance merger and acquisitions as well as | | | | quickly to power only to have a hard crash landing in |
| leveraged buyouts (LBOâs) for corporate | | | | the end. This was exactly the case with Ivan |
| raiders. What he was doing was nothing more than a | | | | Boesky, Michael Milken, Bernard Ebbers and Richard |
| complex pyramid scheme. When one company would | | | | Whitney. While nothing will ever excuse what they |
| default he would then refinance some more debt. In | | | | did it, in Milkenâs case he has tried to do |
| turn both Milken and the Drexel Burnham would | | | | some good by having a foundation for the benefit of |
| continue to make their fees as a result of this action. | | | | cancer patients, economics and education. What their |
| Drexel Burnham had made at least half of | | | | examples show us is that in spite of all the |
| itâs profits from the work of Milken. Later | | | | regulations people will still try to find loop holes |
| on Milken also started purchasing stock in companies | | | | around them or simply disregard the law for one |
| that he knew would become potential takeover | | | | purpose greed at all costs. When these criminals have |
| targets. When Ivan Boesky was charged with insider | | | | been exposed the government will then enact laws |
| trading in 1986 he helped implicate both the firm and | | | | to protect the public from this happening again. This |
| Milken in several insider trading scandals. This led to | | | | is the legacy that the criminals of Wall Street have |
| criminal charges against the firm and over 70 charges | | | | on Main Street. |
| against Milken. He plead guilty and was sentenced 10 | | | | Report this article |
| years in prison and paid $1 billion in fines. It is argued | | | | This article is free for republishing |
| that the Savings and Loan crisis in the late | | | | Source: |
| 1980âs and early 1990âs resulted | | | | Republish this article |
| because so many of the institutions held large of | | | | |
| amounts of Milken junk bonds. This resulted in a huge | | | | Ask a Question About this Article |
| government bailout. After he was released from | | | | >> Which band is featured in a poster on the |
| prison he focused his attention on his foundation | | | | wall in Orianthi's According to You video? |
| which supports cancer research, an economic think | | | | >> What happens if ain individual who does not |
| tank and education. | | | | have legal status in America is arrested for shoplifting |
| Bernard Ebbers: Bernard âBernieâ | | | | items valued at $1000? |
| Ebbers was the CEO of a small long distance | | | | >> Is In Re: Robert Dennis Frye Habius Corpus |
| company called World Com. With in 17 years he had | | | | case on docket at Los Angeles Superior Court? |
| taken the company to a position of dominance in the | | | | |