They just don’t teach these things in business school. Ivan Boesky leveraged insider trading to reap profits from overhyped deals, his greed big enough to make him the model for “Wall Street” tycoon Gordon Gekko. Eddie Antar created the concept of the discount electronics chain, then looted his own business, proving how “crazy” he was.
Financial misdeeds of the past several years — at Enron, Worldcom, Tyco, and on and on — have left investors and working Americans soured on the way executives do their jobs. But sham deals and accounting scams have a long, ignominious history. The 1980s, for example, had more than its share of infamous moments, with folks like Boesky, Michael Milken and Charles Keating taking up the headlines. But they had plenty to learn from earlier generations of corporate crooks.
Ivar Kreuger, the “Swedish Match King,” cooked up shell companies like popcorn in the 1920s until his schemes fell through. Philip Musica’s con-man past didn’t stop him from taking charge of drug firm McKesson and Robbins in the 1930s. In addition to selling pharmaceutical alcohol to the Mob, he claimed millions in imaginary inventory and perpetuated such a fraud that the SEC was given control of accounting oversight. And don’t forget Charles Ponzi, whose ability to pull off pyramid schemes has made his name immortal.
Most of the time, there was a penalty to pay. After cooperating with authorities, Boesky spent 22 months in prison. Milken and Keating got time behind bars, too. Kreuger and Musica killed themselves when their plans went bust.
Governance reforms like the Sarbanes-Oxley law have helped soothe the pain a bit, but one year after the bill’s passage, it’s worth remembering that there were bad guys in the boardroom long before the era of $6,000 shower curtains.
(CNBC's John Metaxas contributed to this report.)
