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Global Research Limited

Edition: February 2010

STOCK MARKET

CapitalVia - White Paper

With that in mind.capitalvia. we'll look at some of the alltime greatest cases of companies betraying their investors. For example.com | 2 . Some of these cases are truly amazing. But these assumptions can be disastrous. these shareholders had no way of knowing what was really happening as they were being tricked into investing. we assume reported earnings and revenue figures are correct. Unfortunately. and that management I nvesting in a stock takes a lot of in the future. try to look at them from a shareholder's s t a n d p o i n t .Stock Market World Scams !! Edition: February 2010 STOCK MARKET .WORLD SCAMS requires us to make a lot of assumptions. research. but it also World Stock Market Scams Crisis !! The Worst Thing About These Scams is competent and honest. U nderstanding happened in how disasters the past can help investors avoid them www.February 2010 Edition Global Research Limited White Paper .

the CEO of Centennial Technologies. posited that this carpet cleaning company of the 1980s would become the "General Motors of carpet cleaning". and his management recorded that the company made $2 million in revenue from PC memory cards . According to the Securities and Exchange Commission (SEC). 1996 Enabyel Pinez (CEO) Scam 1996 n December 1996. ZZZZ Best went public in December of 1986. Centennial overstated its earnings by about $40 million. Minkow shelled out more than $4 million to lease and renovate an office building in San Diego. eventually reaching a market capitalization of more than $200 million. but he did so through forgery and theft.com | 3 .50 per share on the New York Stock Exchange (NYSE).. the owner of this business. Amazingly. Barry Minkow was only a teenager at the time! He was sentenced to 25 years in prison.000 phony documents and sales receipts without anybody suspecting anything. Emanuel Pinez.WORLD SCAMS ZZZZ Best Inc.February 2010 Edition Global Research Limited White Paper . Although his business was a B complete fraud designed to deceive auditors and investors. www.capitalvia.000 investors lost almost all of their investment in a company that was once considered a Wall Street darling.Stock Market World Scams !! Edition: February 2010 STOCK MARKET . 1986 Barry Minkow (Owner) Scam 1986 arry Minkow.the company was really shipping fruit baskets to customers. He created more than 10. Over 20. between April 1994 and December I 1996. Centennial Technologies Inc. Amazingly. Minkow appeared to be building a multi-million dollar corporation.. But the employees then created fake documents to appear as though they were recording sales. the company reported profits of $12 million when it really lost about $28 million! The stock plunged to less than $3. Centennial's stock rose 451% to $55.

www. it took down with it Arthur Andersen. Its Indonesian gold property.capitalvia.70.February 2010 Edition Global Research Limited White Paper . 2001 Energy Trading Co. recorded fictitious revenues.com | 4 . which lost $100 million and the Ontario Municipal Employees' Retirement Board. run by Enron executives. The stock price for Bre-X skyrocketed to a high of $280 (split adjusted). the Ontario Teachers' Pension Plan. making millionaires out of ordinary people overnight.WORLD SCAMS Bre-X Minerals.Stock Market World Scams !! Edition: February 2010 STOCK MARKET . Doing so fooled investors and analysts into thinking this company was more fundamentally stable than it actually was. Through some fairly complicated accounting practices that involved the use of shell companies. Enron. The fiasco at Enron made the phrase "cook the books" a household term once again. basically imploded after David Duncan. Additionally. the complex web of deceit unraveled.4 rior to this debacle. Andersen. The major losers were the Quebec public sector pension fund. the seventh largest company in the U. the shell companies. and the share price dove from over $90 to less than $0. Eventually. the fifth leading accounting firm in the world at the time. a Houston-based energy trading company was. As Enron fell. which lost $70 million. Bre-X had a market capitalization of US$4. which lost $45 million. ordered the shredding of thousands of documents. based on revenue. 1997. But the party ended on March 19. (Accounting Disaster) P Scam 2001 times. which was reported to contain more than 200 million ounces. essentially recording one dollar of revenue multiple T billion. when the gold mine proved to be fraudulent. 1997 Canadian Company (Largest Stock Swindles In History) Scam 1997 his Canadian company was involved in one of the largest stock swindles in history. Enron was able to keep hundreds of millions worth of debt off its books. Enron's auditor. and the stock tumbled to pennies shortly after. At its peak. Enron's chief auditor. Enron. thus creating the appearance of incredible earnings figures.S. was said to be the richest gold mine ever.

Apparently. with a 'b') worth of normal operating expenses which should all be recorded as expenses for the fiscal year as an Indian stock broker and is alleged to have engineered the rise in the Bombay Stock Exchange in the year 1992.com | 5 . in 2001. Harshad Mehta Aka Deep Chhaya Harshad Mehta (Benefitted From Loopholes In Banking ) w Scam 1992 segments. When the scheme was exposed. Mehta and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many N in which they were incurred were treated as investments and were recorded over a number of years.8 billion (yes. In fact. The next ones to feel the betrayal were the investors who had to watch the gutw re n c h i n g d o w n f a l l o f WorldCom's stock price. www. triggering a rise in the BSE Sensex. the company felt that office pens. WorldCom recorded operating expenses as investments. He was later charged with 72 criminal offenses and more than 600 civil action suits were filed against him. its business was becoming increasingly unprofitable.tens of thousands of them lost their jobs. as it plummeted from more than $60 to less than $0.capitalvia. 2002 Telecommunications (Serious Book Cooking) Scam 2002 ot long after the collapse of Enron. Exploiting several loopholes in the banking system. Who suffered the most in this deal? The employees .Stock Market World Scams !! Edition: February 2010 STOCK MARKET . He died in 2002 at the age of 47 with many litigations still pending against him. Telecommunications giant Wo r l d C o m c a m e u n d e r intense scrutiny after yet another instance of some serious "book cooking". This little accounting trick grossly exaggerated profits for the year the expenses were incurred. WorldCom reported profits of around $1. the banks started demanding the money back.3 billion.WORLD SCAMS WorldCom. pencils and paper were an investment in the future of the company and therefore expensed (or capitalized) the cost of these items over a number of years.20.February 2010 Edition Global Research Limited White Paper . In total $3. the equities market was rocked by another billiondollar accounting scandal. causing the collapse.

WORLD SCAMS Tyco International (NYSE: TYC). Before the scandal. Along with CFO Mark Swartz and CLO Mark Belnick. an infamous $6.capitalvia. without shareholder approval. In early 2002.000 shower curtain and a $2 million birthday party for his wife. The executives escaped their first hearing due to a mistrial.5 million shares of unauthorized Tyco stock for a reported $450 W million.Stock Market World Scams !! Edition: February 2010 STOCK MARKET . siphoned hordes of money from Tyco in the form of unapproved loans and fraudulent stock sales.com | 6 . Kozlowski and Belnick arranged to sell 7. usually disguised as executive bonuses or benefits. Kozlowski used the funds to further his lavish lifestyle. These funds were smuggled out of the company. manufacturing electronic components. the executives at Tyco ensured that 2002 would be an unforgettable year for stocks. www. but were eventually convicted and sentenced to 25 years in jail. During his reign as CEO. Kozlowski received $170 million in lowto-no interest loans. Dennis Kozlowski. Tyco was considered a safe blue chip investment. 2002 Dennis Kozlowski (CEO) Scam 2002 i t h Wo r l d C o m having already shaken investor confidence. who was reported as one of the top 25 corporate managers by BusinessWeek. healthcare and safety equipment.February 2010 Edition Global Research Limited White Paper . which included handfuls of houses. the scandal slowly began to unravel and Tyco's share price plummeted nearly 80% in a six-week period.

www. taped caught Scrushy talking about the fraud. allowing him to ensure a seat on the hospital regulatory board. In the late 1990s. experiencing rapid growth and acquiring a number of other healthcare related firms. An independent law firm concluded the sale was not directly related to the loss. as the stock fell from a high of $20 to a close of $0. The scandal unfolded in March.4 billion. Scrushy arranged political contributions of $500.Stock Market World Scams !! Edition: February 2010 STOCK MARKET . working with the FBI.capitalvia. when the SEC A announced that HealthSouth exaggerated revenues by $1. the company was one of America's largest healthcare service providers. the CEO was acquitted of 36 counts of fraud.com | 7 . 2003.000.45 in a single day. At the time. prior to releasing an earnings loss. 2003 Richard Scrushy (CEO) Scam 2003 ccounting for large corporations can be a difficult task especially when your boss instructs you to falsify earnings reports.WORLD SCAMS HealthSouth (NYSE: HLS). but investors should have taken the warning. The first sign of trouble surfaced in late 2002. The repercussions were swift. CEO and founder R i c h a rd S c r u s h y b e g a n instructing employees to inflate revenues and overstate HealthSouth's net income. Amazingly. Apparently. The information came to light when CFO William Owens. when Scrushy reportedly sold HealthSouth shares worth $75 million. but was later convicted o n c h a r g e s o f b r i b e r y.February 2010 Edition Global Research Limited White Paper .

11 million) in the books) Raju claimed in the same letter that neither he nor the m a n a g i n g d i re c t o r h a d benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed n 7th January 2009. an overstated debtors' position of Rs.com | 8 . O m Big Sca 2009 www.651 crore (US$ 546.WORLD SCAMS Satyam Scam'2009 Ramalinga Raju (Company Chairman) an accrued interest of Rs.94 million) (as against Rs. an understated liability of Rs.capitalvia. 376 crore (US$ 77.230 crore (US$ 253.040 crore (US$ 1. Raju confessed that Satyam's balance sheet of 30 September 2008 contained: inflated figures for cash and bank balances of Rs 5.1 billion) crore reflected in the books). company Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. 2.38 million) on account of funds was arranged by himself. 490 crore (US$ 100. 1.46 million) which was non-existent.February 2010 Edition Global Research Limited White Paper .04 billion) (as against Rs 5.361 crore (US$ 1.Stock Market World Scams !! Edition: February 2010 STOCK MARKET .

Always invest with care and diversify.Stock Market World Scams !! Edition: February 2010 STOCK MARKET . diversify. but instead remain mere speed bumps on your path to financial independence. it is nearly impossible to ensure that disaster never strikes again. The Security bodies works hard to prevent such scams from happening. These scammers can pick a lifetime's worth of garbage and not even come close to repaying those who lost their fortunes. All Rights Reserved. Users have th e right to choose the product/s that suits them the most. This material is for personal information and we are not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above. CapitalVia does not purport to be an invitation or an offer to buy or sell any financial instrument.WORLD SCAMS Conclusion The worst thing about these scams is that you never know until it's too late. The information herein. We.capitalvia. Analyst or any person related to CapitalVia might be holding positions in the stocks recommended. It is understood that anyone who is browsing through the site has done so at his free will and does not read any views expressed as a recommendation for which either the site or its owners or anyone can be held responsible for. www. Those convicted of fraud might serve several years in prison.February 2010 Edition Global Research Limited White Paper . together with all estimates and forecasts. If found so then Serious Legal Actions can be taken. Sincere efforts have been made to present the right investment perspective. Our Clients (Paid Or Unpaid). Investment in Commodity has its own risks. can change without notice. our website & all the service we provide are believed to be reliable. but we do not accept any responsibility (or liability) for errors of fact o r opinion. which in turn costs investors/taxpayers even more money. diversify. Disclaimer The information and views in this report.com | 9 . however. Any third party or anyone else have no rights to forward or share our calls or SMS or Report or Any Information Provided by us to/with anyone which is received directly or indirectly by them. Any surfing and reading of the information is the acceptance of this disclaimer. but with thousands of public companies in the World. do not vouch for the accuracy or the completeness thereof. Is there a moral to this story? Sure. The information contained herein is based on analysis and up on sources that we consider reliable. The stock price projections shown are not necessarily indicative of future price performance. Maintaining a well-diversified portfolio will ensure that occurrences like these don't run you off the road.

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