Learn how companies fell and the lessons they taught the business world
Over the past decade, the corporate world has witnessed several significant fraud cases that have not only led to substantial financial losses but also shaken public trust in major institutions. These incidents underscore the critical need for robust regulatory frameworks and vigilant oversight. Below is an overview of ten of the most impactful corporate fraud cases from the past ten years.
1. Wirecard AG Scandal (2020)
Wirecard AG, a German payment processor and financial services provider, was embroiled in a massive accounting fraud that came to light in 2020. The company falsely reported €1.9 billion in cash balances that did not exist. This deception led to Wirecard filing for insolvency, marking one of Germany’s biggest corporate scandals. The fallout resulted in significant financial losses for investors and raised questions about the effectiveness of financial oversight in Germany.
2. Luckin Coffee Accounting Fraud (2020)
In 2020, Chinese coffee chain Luckin Coffee admitted to fabricating sales figures amounting to approximately $310 million. The company’s stock plummeted, and it was subsequently delisted from the NASDAQ. This scandal highlighted the risks associated with rapid corporate expansion and the importance of accurate financial reporting.
3. Theranos Deception (2015-2018)
Theranos, a health technology company, claimed to have developed revolutionary blood-testing technology. However, investigations revealed that the technology was ineffective, and the company had misled investors and patients. Founder Elizabeth Holmes and former president Ramesh “Sunny” Balwani faced multiple charges of fraud. The case underscored the dangers of unchecked innovation claims in the healthcare sector.
4. FTX Cryptocurrency Exchange Collapse (2022)
FTX, once a leading cryptocurrency exchange, collapsed in 2022 after it was revealed that customer assets were misused for risky investments, leading to an $8 billion shortfall. Founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in the collapse. This incident highlighted the vulnerabilities in the rapidly growing cryptocurrency market and the need for stringent regulatory oversight.
5. Steinhoff International Accounting Scandal (2017)
South African multinational retailer Steinhoff International was involved in an accounting scandal in 2017, where it overstated profits and assets by nearly $7.4 billion. The company’s share price plummeted, leading to significant losses for investors. The scandal resulted in numerous legal proceedings and highlighted the importance of corporate governance and transparency.
6. Adani Group Allegations (2024)
In 2024, the Adani Group faced allegations of bribery and fraud to secure contracts for Adani Green Energy. The U.S. indictment led to a market value drop of approximately $33 billion for the conglomerate. Key deals were stalled, including TotalEnergies halting further investments and the U.S. International Development Finance Corp reevaluating a $550 million loan for a Sri Lankan port project involving Adani. These developments reflect significant international and domestic repercussions for the Adani Group following the indictment.
7. Archegos Capital Management Collapse (2021)
Archegos Capital Management, a family office, collapsed in 2021 after failing to meet margin calls, leading to over $10 billion in losses for Wall Street banks. Founder Bill Hwang was sentenced to 18 years in prison for fraud and market manipulation. The incident exposed the risks associated with high-leverage investments and the lack of transparency in family offices.
8. Kenneth Leech’s “Cherry-Picking” Scheme (2024)
In 2024, Kenneth Leech, former co-chief investment officer of Western Asset Management Co (Wamco), was charged with fraud and false statements. Leech allegedly ran a $600 million “cherry-picking” scheme between January 2021 and October 2023, favoring certain client accounts by allocating more profitable trades to them while disadvantaging others.
The investigation began when Franklin Resources, Wamco’s parent company, revealed the misconduct in August 2023. Leech’s actions reportedly aimed to support portfolio strategies that faced significant losses from exposure to Russian and Credit Suisse debt. Leech faces both criminal charges, which could lead to a 20-year prison term for each major charge, and civil charges from the U.S. Securities and Exchange Commission (SEC).
Wamco’s reputation and financial standing have suffered, evidenced by a $55 billion withdrawal by clients and a significant financial impairment.
9. Morgan Stanley’s Client Vetting Issues (2024)
In 2024, Morgan Stanley faced significant scrutiny over its wealth-management division’s client vetting processes, which were found to lack adequate anti-money laundering controls. Internal documents and employee testimonies revealed that the firm overlooked serious red flags in numerous accounts, such as a convicted terrorist with links to al Qaeda and a self-proclaimed princess with dubious wealth sources.
This led to regulatory investigations by the Justice Department, Federal Reserve, SEC, and others. Despite internal warnings, the bank prioritized speed and gaining clients, including attracting risky international clients from high-risk countries. The bank’s reliance on outdated, paper-heavy methods and lack of adequate language skills among staff further exacerbated these problems.
Morgan Stanley is now attempting to rectify these issues by increasing investments in technology, enhancing due diligence processes, and recruiting experienced professionals to improve compliance and risk management.
10. Serious Fraud Office’s Investigation into Eurasian Natural Resources Corporation (ENRC) (2013-2023)
The UK’s Serious Fraud Office (SFO) spent £27 million on a failed ten-year investigation into Eurasian Natural Resources Corporation (ENRC), which could ultimately cost UK taxpayers over £250 million. Initiated in 2013 over suspected bribes, the investigation was marked by significant legal challenges.
In 2022, the High Court found that much of the evidence was inadmissible due to procedural errors. This case highlighted the difficulties regulators face in prosecuting complex corporate fraud cases and the need for more robust legal frameworks to tackle such issues effectively.
The past decade has been marked by numerous high-profile corporate fraud cases, each serving as a stark reminder of the need for vigilance, transparency, and accountability in business practices. These cases highlight the importance of robust regulatory frameworks, the ethical use of financial and technological tools, and the critical role of oversight bodies in maintaining corporate integrity. As industries evolve, the lessons learned from these scandals must shape the future of governance and compliance.
