Lessons From Corporate Frauds


With the economy taking a huge hit because of the effects of COVID-19, scams and frauds are occurring far more frequently compared to pre-COVID times. Unfortunately, many people have fallen victim to scammers at this time. From petty phishing scams to large corporate fraud, if people don’t exercise caution now, the chances of becoming victims are quite high.

This article will talk about corporate fraud and how folks can steer clear of it to protect their hard-earned money, especially during tough times like this.

What Is Corporate Fraud?

First, let’s define corporate fraud. Its basic definition is it as an illegal activity conducted by an individual or a company for personal gain. Since its nature is highly illegal, it is done in unethical and dishonest manners that require plenty of deceit and manipulation. One of the most notorious people involved in this type of fraud is Charles Ponzi.

Charles Ponzi

Charles Ponzi was quite notorious to the point that one of the biggest frauds in history is named after him: the Ponzi Scheme.

He started out duping people with reply coupons (basically prepaid postage stamps for recipients of mail). He asked people to help him acquire cheaper reply coupons from other countries, exchanged them for postage stamps, sold them off at higher prices than what it cost to acquire the coupons, and pocketed all the profit.

His creativity led him to what eventually will be his downfall and arrest in 1920. He gathered more people to help finance his business with a double-your-money guarantee in 90 days. But instead of investing their money, he paid them off with money from new investors.

Worst Corporate Frauds in Recent History

Charles Ponzi was but one of the many who have been overcome with greed and love for money. Several other people have gone down the same path as he and tried to take advantage of other people.

Here are a few examples of some of the worst cases of corporate frauds in recent history:

How does one avoid becoming a victim of corporate fraud?


If people only learned from Ponzi, we wouldn’t be riddled with many corporate fraud cases all over recent history. While some of these very public cases have led to arrests, trials, bail requests, and incarcerations, unfortunately, people still haven’t learned their lesson yet.

Below are a few takeaways from corporate fraud cases that should help people steer clear of them:

Watch out for the red flags

In hindsight, scams are easy to spot. However, as it is being cooked up and implemented, things will be masked and kept concealed. But that doesn’t mean that you can’t see any signs that some things are afoot. Be on the lookout for things that are out of place or too good to be true. In most cases, where there’s smoke, there’s fire, so be vigilant and discerning.

Unethical practices aren’t always the results of financial motives

Before even pulling off the scam, Bernie Madoff was already a very successful professional in the field. Money was no longer a thing for him, as he has already admitted. There was no financial pressure on him whatsoever that made him commit the crime.

Similarly, not everyone who gets into corporate or financial fraud is pressured financially. Other contributing factors lead to people making the wrong decisions.

Even good guys do bad things

When someone who has a clean reputation and is well-loved by the people around him commits something as huge as corporate fraud, this leaves them astounded.

Such is the case with Parmalat CEO Calisto Tanzi. He was down-to-earth, personable, humble, and seemed to have the right moral bearings about him. But despite his good behavior and reputation, he still succumbed to the temptation of gain through dishonesty. In the end, it just goes to show that even good men are capable of doing sinister things.

Morals and values are more important than success

At face value, Enron seemed like a very successful company. In fact, it was dubbed as one of the most successful companies in the US before the scandal broke out. Their success, however, was backed by a lot of unethical practices. When news of all the company’s book-cookings went out, things were such a huge mess, and it went down as one of the worst cases of corporate fraud in US history.

So don’t be afraid to dig deeper into things and ask difficult questions to really see what a company is made of.

The moral of the story is, bad things will always be found out, and people will suffer its consequences. Unfortunately, the consequences don’t only affect the person responsible. They also wreak havoc on the lives of other people.

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