Thursday, November 25, 2010

Fraud never pays

With former WorldCom CEO Bernard Ebbers serving a 25-year jail sentence for fraud and conspiracy as a result of the company's fraudulent accounting and financial reporting, the lesson here is that fraud never pays.

WorldCom was by no means the only company to indulge in accounting fraud – other perpetrators to be caught in 2002 alone included Tyco, Enron and Adelphia Communications. There have also been numerous other forms of corporate fraud in recent years, from multi-billion Ponzi schemes run by Bernie Madoff and Allen Stanford to insider trading and options-backdating scandals. Many of the executives who were involved in these frauds ended up serving time in jail and/or paying very stiff fines. In a few instances, top executives have been fired for providing false information about their educational qualifications on their resumes.

As far as an individual is concerned, fraudulent activities can range from perceived trivial ones such as resume falsification or embellishment to more serious offenses such as tax evasion. But if one is found guilty of fraud, the damage to that person's reputation, career and employability can be much greater than any monetary gain from such activities.

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