In the wake of the Andersen guilty verdict, the government is gearing up to go after top executives, and possibly corporations, on charges involving everything from insider trading to perjury. All of the targets deny wrongdoing, and winning convictions won't be easy.
Some companies and executives already face criminal prosecution...
Obstruction of justice
After the June 15 conviction of the partnership, the spotlight moves to potential cases against individuals. Company counsel Nancy Temple, whose memo was the basis for the verdict, has been identified by Justice Dept. as a "target," and others may follow.
The probe into Tyco International has expanded dramatically since former CEO Kozlowski was indicted on June 4 on charges that he evaded more than $1 million in New York State sales taxes on some $13.2 million worth of art. Since then, both the Securities & Exchange Commission and outside counsel hired by Tyco have begun a broad-ranging probe into possible misuse of corporate funds by senior executives, including Kozlowski and former general counsel Mark A. Belnick. The SEC is also looking at Tyco's accounting.
Ex-CEO Samuel D. Waksal was indicted on June 12 by federal prosecutors in New York on charges that he tipped off friends and family that the Food & Drug Administration would reject its application for approval of cancer drug Erbitux. May be expanded to include people Waksal contacted.
...while others remain under the microscope
Grand juries in New York and Pennsylvania are looking at a number of unconventional transactions benefiting the founding Rigas family. These include $4.6 billion in off-balance-sheet loans to the family and the purchase of a golf course in Pennsylvania. None were approved by the board. The company has denied culpability and has launched its own probe.
Securities fraud, insider trading, and perjury
The activities of former CFO Fastow are at the center of the investigation into whether Enron partnerships were fraudulent. To win a conviction, the Justice Dept. would have to show that the partnerships were designed to deceive investors by hiding Enron's precarious finances. The feds are also looking at sales of Enron stock by insiders, including former Execs Lay and Skilling, and whether Skilling perjured himself in his congressional testimony.
Insider trading, securities fraud
The FBI and the SEC are looking at swaps of capacity on the company's fiber-optic network. The feds are investigating whether these swaps misleadingly hiked the company's revenues. Similar swaps were also allegedly practiced by Qwest Communications and energy traders such as Dynegy. The SEC is also looking at insider sales of $1.3 billion in Global Crossing stock by company execs, especially Chairman Gary Winnick.