This year marks not only the five-year anniversary of the Sarbanes-Oxley Act but the same milestone for the President’s Corporate Fraud Task Force. Announced in July 2002, the task force is chaired by Deputy Attorney General Paul J. McNulty and includes senior Department of Justice officials and seven U.S. attorneys, along with heads of the departments of Treasury and Labor and of the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Energy Regulatory Commission, Federal Communications Commission, U.S. Postal Inspection Service, and the Department of Housing and Urban Development’s Office of Federal Housing Enterprise Oversight.
The group celebrated the occasion by issuing a scorecard of sorts that quantified the number of senior executives convicted (see “Busted” at the end of this article). While the group noted in a report that it “has compiled a strong record of combating corporate fraud and punishing those who violate the trust of employees and investors,” its primary role is to coordinate the enforcement efforts of various federal departments. Several high-profile CFOs, including Enron’s Andy Fastow and WorldCom’s Scott Sullivan, were not on the list, because their cases were handled by a fraud team within the U.S. Attorney’s office.
The charges brought have included securities fraud, insider trading, market manipulation, false statements, stock-option backdating, conspiracy, money laundering, and violations of the Foreign Corrupt Practices Act. In addition to the convictions, the task force noted, more than $1 billion in forfeitures has been distributed to victims of corporate fraud.
The task force cited the role that Sarbox played in facilitating convictions (or, more precisely, plea deals, which occurred in more than 75 percent of cases), although only three CFOs were convicted based on direct violations of Sarbox. New securities-fraud provisions from Title 18 of the U.S. Code, Section 1348, played a role in more than 50 cases. — Kate Plourd
Among the 1,236 people convicted by the Task Force were:
- 214 CEOs & presidents
- 53* CFOs
- 23 Corporate counsels or attorneys
- 129 VPs
* For a complete list of those convicted, click here.