Corporate Executives and Their Felonies (Part 1) Quiz

Answer: CEO fled the U.S. in 2006 to Namibia after stock scheme

Kobi Alexander was the CEO of Comverse Technology and fled the U.S. in 2006 to Namibia to dodge U.S. charges after federal prosecutors prepared a 35-count indictment against him for a massive stock options backdating scheme-using hindsight to pick grant dates when Comverse's stock price was at a low point.

This made the options instantly valuable, creating millions in paper profits. The scheme violated accounting rules, forcing the company to restate its earnings and overstate its net income for several years. Prosecutors also alleged that he attempted to bribe a colleague to take the blame for the crimes. Alexander chose Namibia because it had no extradition treaty with the United States.

He sought to establish himself in Namibia by making large charitable donations and promising to invest millions in the local economy. U.S. authorities requested his arrest under a provisional warrant after Namibia amended its extradition laws.

Answer: Defrauded FTX customers in cryptocurrency scheme

The founder and former CEO of the FTX cryptocurrency exchange, Sam Bankman-Fried, was sentenced to 25 years for defrauding customers and investors of billions of dollars in a scheme that led to the company's collapse. Prosecutors proved that he directed the secret transfer of billions of dollars in customer funds from FTX to his crypto hedge fund, Alameda Research, by disguising the relationship between the two companies.

His Alameda hedge fund was granted special privileges, like an almost unlimited line of credit funded by FTX customer deposits.

This practice was not disclosed to investors.

Answer: $130 million Biscayne Capital Ponzi scheme

Roberto Gustavo Cortes Ripalda, the co-founder, co-owner, and former CEO of the international investment advisory firm Biscayne Capital, was sentenced to 10 years in April 2025, after pleading guilty in September 2023 to conspiracy to commit wire fraud.

He led a $130 million Ponzi scheme that defrauded over 110 victims, many of whom were his own friends and family. Prosecutors proved that their real estate development business, South Bay, began experiencing financial trouble Cortes and his co-conspirators raised funds from investors through private structured investment products. But, instead of using the money for real estate projects, they used it to pay outstanding interest and principal debt obligations to other investors.

Answer: False claims of valuable renewable energy projects

New Jersey authorities indicted Ari Goldstein (CEO) and Abbie Mandell (Senior Executive) of Breezy Point Energy Corp. for allegedly defrauding investors of $3.3 million by falsely claiming the company had valuable renewable energy projects in Montana. Prosecutors say they used the money for personal expenses including renting a mansion, leasing luxury vehicles, and large cash withdrawals.

They were charged with multiple crimes, including second-degree securities fraud, theft by deception, and misconduct by a corporate official, In reality, authorities say Breezy Point Energy Corp. never owned or controlled any land in Montana and engaged in limited, if any, legitimate renewable energy business activity.

They used investor money to pay themselves large salaries, rent a mansion for Goldstein and his family, lease multiple luxury vehicles, and making numerous large cash withdrawals.

Answer: Goldman Sachs director, convicted of insider-trading

Rajat Gupta, a former director of Goldman Sachs and former managing director of McKinsey & Company, was convicted of insider-trading-related felony charges. In June 2012, a federal jury in New York found Gupta guilty on three counts of securities fraud and one count of conspiracy. Prosecutors proved that Gupta passed confidential boardroom information to his friend Raj Rajaratnam, the founder of the Galleon Group hedge fund.

The case was notable for relying heavily on circumstantial evidence, including phone records showing the suspicious timing of Gupta's calls to Rajaratnam along with wiretapped phone conversations.

Answer: Stole $150 million from Tyco

Dennis Kozlowski, the former CEO of Tyco International, was convicted in 2005 for stealing over $150 million from the company, which he used to finance an extraordinarily lavish lifestyle, including $6,000 shower curtains. Along with his deputy, CFO Mark Swartz, Kozlowski was found guilty of stealing through a combination of secret loans that were never intended to be repaid and unauthorized bonuses.

They were also accused of finagling Tyco's stock price by lying about the company's financial health, which allowed them to cash out their own shares for an extra $430 million in illegal profits. Both men were convicted on 22 of 23 counts, including grand larceny, securities fraud, conspiracy, and falsifying business records.

Answer: His country's largest property developer, convicted of bribery

Thomas Kwok, along with his brother Raymond Kwok, were co-chairmen of Hong Kong's largest property developer (Sun Hung Kai, Hong Kong). They were arrested by Hong Kong's Independent Commission Against Corruption in March 2012 on bribery charges, alleging that the Kwok brothers bribed Rafael Hui, the former Chief Secretary for Administration of Hong Kong, the city's second-highest official, with HK$8.5 million (about US$1.1 million) to act as their look-out in government.

A nine-member jury found Thomas Kwok guilty of one count of conspiracy to commit misconduct in public office, while his brother Raymond was acquitted of all charges. Rafael Hui was convicted on five charges and sentenced to 7½ years.

Answer: Fraud and conspiracy at Enron

Enron was once the seventh-largest company in the United States but went bankrupt in December 2001 after it was revealed that the company had used off-the-books partnerships to inflate profits and conceal more than $1 billion in debt. The scandal cost 4,000 employees their jobs (many losing their life savings) and caused billions of dollars in losses for investors. Ken Lay, the founder and former chairman of Enron, was indicted by a federal grand jury in Houston in July 2004 and the trial began on January 30, 2006, finding him guilty on 10 counts related to the fraud on May 25, 2006. Lay faced a potential sentence of 25 to 40 years in federal prison and then died of a heart attack at sentencing.

Answer: Samsung leader convicted of embezzlement and bribery

Jay Y. Lee, ostensibly the leader of the Samsung Group, was convicted of bribery and embezzlement related to the scandal that brought down former South Korean President Park Geun-hye. Lee was found guilty of making payments totaling approximately $40 million to foundations controlled by Choi Soon-sil, a close confidante of then-President Park Geun-hye. Prosecutors asserted that these payments were intended to secure the government's support for a father-to-son transition of managerial power at Samsung.

The merger between Samsung C&T and Cheil Industries was considered important to securing Lee's control over the conglomerate, but prosecutors said that in return for the bribes, the government made sure to pressure the National Pension Service (a major Samsung shareholder) to approve the merger.

There were sentences and appeals and reduced sentences and going back and forth until in the end Lee was released on parole after serving 18 months.

Answer: Stock pump-and-dump while at Qwest

Joseph Nacchio was Qwest's CEO from 1997 through June 2002, and between January and September 2001, he sold approximately $100.8 million worth of Qwest stock, knowing but not disclosing that company was unlikely to meet its publicly announced earnings targets.

He had been "specifically and repeatedly warned" by other executives, including Qwest President Afshin Mohebbi, that Qwest's financial projections were greatly exaggerated and that it was relying on one-time sales of assets rather than recurring revenue to meet its projections. On April 19, 2007, a federal jury found Nacchio guilty of 19 counts of insider trading, which covered $52 million in stock sales, and illegally dumping stock while knowing the company was in financial trouble. On July 27, 2007, Nacchio was sentenced to 6 years in prison, ordered to pay a $19 million fine, and required to forfeit $52 million in illegal profits from his stock sales.

Answer: Volkswagen exec conspired to defraud the U.S.

It is known as the "Dieselgate" scandal in which Oliver Schmidt, the General Manager of Volkswagen AG's U.S. Environment and Engineering Office, conspired to defraud the United States, committed wire fraud, and violate the Clean Air Act. He pled guilty on August 4, 2017, and on December 6, 2017, was sentenced to 84 months (7 years) in prison and ordered to pay a $400,000 fine. Schmidt confessed to participating in plans during the summer of 2015 on how to deceive U.S. regulators about the "defeat device" software, which was designed to give misleading results on emissions tests, not by altering the physical read-out of the testing equipment itself, but by causing the vehicle to behave radically differently during a test than it would on the road.

Answer: Turing Pharmaceuticals exec convicted of fraud

Although Martin Shkreli's more notorious reputation was based on raising the price of the life-saving drug Daraprim by over 5,000% while he was CEO of Turing Pharmaceuticals, his prison sentencing stemmed from other acts. He was convicted on two counts of securities fraud and one count of conspiracy to commit securities fraud in 2017.

His schemes while he was CEO, were related to his previous roles as a hedge fund manager and the founder of the pharmaceutical company Retrophin Inc. What he did was lie to investors about the performance of his hedge funds, MSMB Capital and MSMB Healthcare, making up performance updates after suffering major trading losses, and later conspiring to use stocks and cash from Retrophin to pay back defrauded hedge fund investors.

In March 2018, he was sentenced to 7 years in prison, and was ordered to pay a $75,000 fine, and $388,000 in restitution.

Answer: $7 billion Ponzi scheme: 110-year sentencing

R. Allen Stanford founded the Stanford Financial Group in 1985 (originally called Stanford Capital Management), and during his reign, orchestrated a $7 billion Ponzi scheme (one of the largest in U.S. history), involving fraudulent Certificates of Deposit (CDs) from his offshore Antigua-based bank.

He had promised greatly exaggerated returns, but funds were not invested as promised; instead, they financed his real estate, his yachts, his private jets, and his payment returns to earlier investors.

He was convicted on 13 counts of fraud, including wire fraud, mail fraud, conspiracy to commit money laundering, and obstruction of an SEC investigation and sentenced to 110 years.

Answer: ImClone Systems stock selling shenanigans

Martha Helen Stewart Living Omnimedia was the founder, Chairwoman, and CEO of the company Martha Stewart Living Omnimedia. After she had sold approximately $228,000 worth of ImClone Systems stock on December 27, 2001, prosecutors alleged that she had done so because she was tipped off by her broker that ImClone Systems' CEO was selling his own shares because the FDA was about to reject a key cancer drug of theirs.

But Ms. Stewart claimed that she was acting upon a pre-existing agreement to sell that stock if it dropped below $60 per share. Prosecutors called that a fabricated cover story.

She was found guilty of one count of conspiracy, two counts of making false statements, and one count of obstruction of agency proceedings, and on July 16, 2004, she was sentenced to five months in the minimum-security Alderson Federal Prison Camp followed by five months of home confinement and two years of supervised release.

Inmates were only allowed to use a microwave for cooking, leading Ms. Stewart to develop "innovative ways to do microwave cooking" and "creative recipes" according to her lawyer. Fellow inmates reported that she made baked apples with caramel and cinnamon, caramel flan for a potluck, and even jelly from crabapples she picked from trees on the prison grounds, and one inmate taught her a new fried chicken recipe, which later became a favorite of Ms. Stewart's friend, Snoop Dogg.

Answer: Once his country's richest man, convicted of insider trading

Wong Kwong Yu was once the richest man in China, as founder and chairman of GOME Group (Gome Electrical Appliances Holding Limited), China's largest consumer electronics retailer. In 2010, he was prosecuted by the Beijing Municipal People's Procuratorate, charging him with illegal foreign exchange trading of 822 million Hong Kong dollars, and insider trading which yielded him profits over 309 million yuan from trading Shenzhen-listed Beijing Centergate Technologies stock.

He was also convicted of corporate bribery, offering five government officials 4.56 million yuan in cash and properties from 2006 to 2008.

He was sentenced to4 years in prison, fined 600 million yuan ($88.23 million USD), and ordered to forfeit 200 million yuan worth of assets.

He was released on parole in June 2020 after serving approximately 10 years.