Archive for the ‘Corporate Crime’ Category

The Real Law and Order Solution

Thursday, March 22nd, 2018

Large banks have paid out more than $87 billion in fines and settlements to resolve allegations about the sale of toxic securities in the period leading up to the financial meltdown a decade ago. Another $43 billion was paid out in connection with mortgage abuses.

It’s unclear whether these unprecedented penalties had any lasting deterrent effect. As has been made clear in the Wells Fargo scandal, bad bank behavior has hardly disappeared. And now the financial services industry is pushing to weaken the modest restrictions implemented under the Dodd-Frank Act.

Imagine how different things might be if the federal government had the tools and the inclination to hold top bank executives personally responsible for the reckless and fraudulent behavior of their institutions. What if, instead of making payouts that they regarded as a tolerable cost of doing business, financial CEOs found themselves behind bars?

This tantalizing prospect is made a bit more real in legislation recently introduced by Sen. Elizabeth Warren: The Ending Too Big to Jail Act.

One component of the bill would require top executives of banks with more than $10 billion in assets to certify annually that they have conducted due diligence and found no criminal conduct or civil fraud within their institution. This would make it easier to bring individual prosecutions when it turns out that such certifications were false.

Another portion of the bill would create a permanent investigative unit for financial crimes. Designed along the lines of the Special Inspector General for the Troubled Asset Relief Program, which brought successful cases against executives at smaller banks, it would be known as the Special Inspector General for Financial Institution Crime. Properly funded, this unit could take on expensive and complicated cases.

Finally, the bill would mandate judicial oversight of deferred prosecution agreements, or DPAs. Along with the failure to prosecute top executives, the Obama Justice Department also continued the dubious practice that started under Bush of making numerous deals with large corporations by which they escaped prosecution for their transgressions, on the condition that they paid a financial penalty and promised to end the offending behavior. Since 2003 about 140 DPAs have been created, along with a larger number of cases involving a variant, the non-prosecution agreement.

It is unclear how much effort the Justice Department put into enforcing the DPAs. Warren’s bill would give the courts the power to oversee compliance with these agreements. In fact, it would require courts to determine whether a proposed DPA is in the public interest.

Finally, the legislation would require the Justice Department to establish a searchable database of DPAs. Until that comes into existence, you can use Violation Tracker to find information on more than 300 DPAs and NPAs.

Warren’s bill would greatly advance the kind of law and order the country truly needs.

Trump Goes Easy on Major Corporate Offenders

Thursday, February 15th, 2018

It’s unclear to what extent the Obama Administration’s practice of extracting unprecedented monetary penalties on miscreant companies proved to be an effective deterrent, but at least the billion-dollar fines and settlements served to highlight the ongoing problem of corporate crime.

The Trump Administration seems to be a lot less interested in cracking down on the most egregious corporate offenders. Although the enforcement arms of agencies such as OSHA and EPA are still operating along normal lines, there has been a sharp decline in the number of mega-penalty cases announced by the Justice Department.

This conclusion emerges from an analysis of the data recently added to the Violation Tracker database covering cases through the end of the Trump Administration’s first year in office on January 19.

Since the largest penalties are normally imposed on the largest corporations, I did an analysis focusing on the Fortune 100 list of the very largest U.S. publicly traded companies. I found that overall federal penalties imposed on these firms during Trump’s first 12 months totaled $1.1 billion, compared to an annual average of more than $17 billion during the Obama years.

The Obama totals, of course, reflected extraordinary settlements with the largest banks to resolve allegations relating to their role in bringing about the financial meltdown of a decade ago. These included, for example, the $16 billion settlement with Bank of America in 2014 and the $13 billion settlement with JPMorgan Chase the year before.

Those financial services sector settlements peaked during the middle years of the Obama era. Yet Trump’s $1.1 billion first-year total is still far below the annual average of more than $9 billion for the Fortune 100 during Obama’s final two years in office. It also trails behind the $3 billion total during Obama’s first year.

Looking at all corporate offenders, there were 44 cases with penalties of $1 billion or more during the Obama era yet only two during Trump’s first year, and he doesn’t really deserve credit for those. One is the $5.5 billion settlement reached by the Federal Housing Finance Agency with the Royal Bank of Scotland relating to the sale of toxic securities to Fannie Mae and Freddie Mac. That case had been filed in 2008, and the settlement had been negotiated under Obama. The other is the a $1.4 billion penalty against Volkswagen for its emissions cheating that appears in EPA records with a date of May 17, 2017 but was actually part of a larger $4.3 billion settlement announced by the Justice Department during the last days of the Obama Administration.

There is also an interesting pattern among Trump Administration penalties in the next tier down—those of $100 million or more. The parent companies involved in about two-thirds of these cases are foreign, especially those with the largest penalty totals. They include the Chinese telecom company ZTE, which was penalized for export control violations, and the Swedish telecom Telia, which was punished under the Foreign Corrupt Practices Act.

It appears that the Trump Administration is more likely to get tough with a corporate violator if the company is not based in the United States, while domestic companies get treated more leniently. I guess the slogan is: Make Domestic Corporate Criminals Great Again.

Note: you can do analyses of your own on Violation Tracker using our new feature allowing search results to be filtered by presidential administration.

Stopping the Growth of Rogue Corporations

Thursday, February 8th, 2018

The federal response to corporate misconduct over the past two decades has alternated between tougher monetary penalties and the promotion of voluntary measures to lure companies into behaving better. Neither has worked very well.

Companies came to saw the increased fines as a tolerable cost of doing business (especially when they were tax deductible), while voluntarism was never a match for corporate greed.

It was thus intriguing when the Federal Reserve recently adopted a new approach in dealing with Wells Fargo. That bank, of course, has become notorious for its brazen scheme of creating millions of accounts not requested by customers, in order to generate illicit fees. It paid a fine of $100 million, with a lot more expected to follow. This came after a series of other scandals, including mortgage abuses that resulted in a $5.3 billion settlement in 2012.

The Fed, on Chair Janet Yellen’s final working day in office, issued an unusually blunt press release saying that the board was taking steps in response to “widespread consumer abuses and other compliance breakdowns” at Wells.

In an unprecedented step, the Fed imposed a restriction on the bank’s ability to grow “until it sufficiently improves its governance and controls.” In an industry for which getting larger is the guiding principle, Wells will feel intense pressure to satisfy the Fed’s demands. In fact, concurrently with the Fed’s action Wells announced that it would replace one-quarter of its 16-person board of directors by the end of the year.

Bank-friendly politicians have not had much to say about the Fed’s action, but it is clear that the restriction placed on Wells represents a forceful rebuttal to those pressing for a weakening of financial industry regulation. The ouster of Yellen by President Trump was a coup for the deregulation crowd, but we can take some solace in reports that her successor Jerome Powell oversaw the Fed’s negotiations with Wells.

The Fed’s action should be promoted as an example of how regulatory agencies and the Justice Department need to get more creative in dealing with egregious and repeat violators. Rogue corporations will only change their behavior if the penalties really sting.

The restriction on growth begins to meet this requirement because it makes Wells more vulnerable. An inability to become larger through acquisitions means that the bank will lose ground to its big competitors. Wells is probably too big to be a potential takeover target itself, but it could come under pressure from activist investors to restructure or even sell off portions of itself.

Moreover, the restrictions will probably depress the bank’s stock price, and that will be felt personally by the executives who encouraged or overlooked the misconduct.

At the same time, the house-cleaning among directors is an important message to send to board members at other misbehaving companies. That message would be even more effective if directors are not just removed but held personally liable for allowing the corrupt practices to happen.

The Fed has not always been the most aggressive of regulators. Let’s hope its action on Wells inspires other agencies to get tougher with corporate miscreants.

The 2017 Corporate Rap Sheet

Wednesday, December 20th, 2017

The year began with a burst of announcements by the Obama Administration of cases it rushed to resolve before leaving office. In the period between election day and the inauguration, the Justice Department and various agencies announced more than $30 billion in fines and settlements.

That flurry of activity disappeared once Donald Trump took office. Agency enforcement activity soon resumed,  thanks to the efforts of career officials, but it appears that the volume of cases has declined compared to previous years. The same goes for the Justice Department, where high-profile prosecutions of large companies have continued but have become less frequent. Here is a rundown of selected major cases resolved during 2017, divided between the two administrations:

Obama Cases

Sale of Toxic Securities: Two of the year’s biggest penalties came in cases stemming back to the period leading up to the financial meltdown in 2008. During its final days the Obama Justice Department got Deutsche Bank to agree to pay $7.2 billion to resolve allegations that it misled investors in the sale of mortgage-backed securities. A day later it announced that Credit Suisse would pay $5.3 billion in a similar case. Moody’s reached an $864 million settlement with the federal government and 21 states for providing flawed credit ratings on what turned out to be toxic securities.

Money Laundering. In January Western Union agreed to forfeit $586 million and entered into agreements with the Justice Department and the Federal Trade Commission to resolve criminal allegations that it failed to maintain an effective anti-money-laundering system and that it abetted wire fraud.

Environmental Fraud: In January the Justice Department announced that Volkswagen would plead guilty to three felony counts and pay a $2.8 billion penalty to resolve the criminal charges brought against the automaker in connection with its scheme to use a device to cheat on emissions tests.

Auto Safety Fraud: In January Takata Corporation agreed to pay a $1 billion criminal penalty in the case brought against the Japanese company for fraudulent conduct in the sale of defective airbag inflators.

Trump Cases

Sale of Toxic Securities: In July the Federal Housing Finance Agency announced that Royal Bank of Scotland would pay $5.5 billion to settle allegations relating to the sale of mortgage-backed securities to Fannie Mae and Freddie Mac.

Export Control Violations: In March the Commerce Department’s Bureau of Industry and Security announced that the Chinese company ZTE would pay $661 million to resolve allegations that it shipped telecommunications equipment to Iran and North Korea in violation of U.S. export restrictions.

Bribery: In September the Swedish telecommunications company Telia was fined $457 million by the Securities and Exchange Commission for violating the Foreign Corrupt Practices Act through illicit payments to government officials in Uzbekistan.

False Claims Act: In August the pharmaceutical company Mylan agreed to pay $465 million to settle allegations that it misclassified its EpiPen devices as generic drugs to avoid paying rebates to Medicaid.

Illegal Drug Promotion/Distribution: In July the U.S. Attorney’s Office in Los Angeles announced that Celgene would pay $280 million to settle allegations that it illegally promoted two cancer medications for uses not approved by the Food and Drug Administration. In September AmeriSourceBergen pled guilty and agreed to pay a total of $260 million to resolve criminal liability for its distribution of oncology supportive-care drugs from a facility that was not registered with the FDA.

Foreign Exchange Violations: In July the Federal Reserve Board fined the French bank BNP Paribas $246 million for failing to prevent its foreign exchange traders from engaging in market manipulation. In September the Fed fined HSBC $175 million for the firm’s unsafe and unsound practices in its foreign exchange trading business.

Consumer Protection: In August the Consumer Financial Protection Bureau fined American Express $96 million for discriminating against consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories by providing them with credit and charge card terms that were inferior to those available in the 50 states.

Price-Fixing: In May the Justice Department’s Antitrust Division announced that Bumble Bee Foods would pay a criminal fine of $25 million in connection with price-fixing of shelf-stable tuna.

Workplace Harassment: In August the Equal Employment Opportunity Commission announced that Ford Motor would pay up to $10.125 million to workers affected by sexual and racial harassment at two company facilities in the Chicago area.

Fair Labor Standards Act: In March the Labor Department’s Wage and Hour Division announced that the Walt Disney Company would pay $3.8 million in back wages to workers affected by violations of minimum wage and overtime rules.

Environmental Violation: In October Exxon Mobil agreed to pay a penalty of $2.5 million and spend $300 million on air pollution controls to resolve allegations that it violated the Clean Air Act by failing to properly operate and monitor industrial flares at its petrochemical facilities.

Note: Additional details on all these cases can be found in Violation Tracker. During 2017 my colleagues and I expanded the database to 300,000 entries with total penalties of $400 billion. Coverage now includes cases from more than 40 federal regulatory agencies and all divisions of the Justice Department dating back to the beginning of 2000.

Tracking U.S. Attorney Prosecutions

Thursday, December 14th, 2017

When Donald Trump fired dozens of U.S. Attorneys last March, there was speculation that the main objective was to remove some, especially Preet Bharara in Manhattan, who might be investigating the president’s business interests.

It remains to be seen what will happen with such probes, but the move highlighted the importance of the more than 90 federal prosecutors around the country who pursue a wide range of matters on behalf of the Justice Department.

The vast majority of those matters involve cases against individuals, especially those accused of drug offenses. Yet there is a significant subset of cases brought against for-profit corporations and non-profit entities. The U.S. Attorney’s Offices (USAOs) are a key front in the fight against corporate crime.

The latest expansion of Violation Tracker contains more than 1,000 USAO civil and criminal case records with corporate defendants dating back to 2000. Together they account for more than $18 billion in fines and settlements.

Assembling the list involved examining the press release archives of all the USAOs to identify those that announced the resolution of relevant cases. Among these are numerous high-profile prosecutions of major corporations, including three dozen with penalties of $100 million or more. This group is dominated by banks (such as JPMorgan Chase and Deutsche Bank) and pharmaceutical companies (such as Merck and opioid culprit Purdue Pharma).

Among the most common offenses on the full list are violations of the Controlled Substances Act (by drug wholesalers and pharmacies), the False Claims Act (by for-profit and non-profit hospitals), anti-money laundering laws (by banks and casinos), and environmental laws (by companies of many kinds).

The offenses with the biggest aggregate penalties are those involving the False Claim Act ($4.2 billion), fraud ($3.5 billion) and anti-money laundering laws ($2.7 billion).

While business cases were found at nearly all USAOs, they are far from evenly distributed. The offices with the largest number of corporate cases are: the Southern District of New York (Manhattan), the Eastern District of Pennsylvania (Philadelphia), the District of Massachusetts and the Eastern District of New York (Brooklyn).

In terms of penalty totals, the Southern District of New York is far and away the leader, with nearly $10 billion in fines and settlements. Massachusetts is second with $1.2 billion.

The USAO entries complement the cases already in Violation Tracker from the various divisions of Justice Department headquarters in Washington (Antitrust, Civil, Environment & Natural Resources, etc.). They also represent the last significant portion of federal enforcement activity to be added to Violation Tracker.

Our next objectives include the collection of data from state attorneys general and state regulatory agencies as well as private litigation, especially class actions (we’re already gathering information on major wage and hour collective action lawsuits).

We’ll also continue updating the data from the agencies already covered, and if any USAO (or other prosecutor) brings a successful case against the Trump Organization, we’ll be sure to add that to the Violation Tracker mix.

Who Pays the Penalties for Volkswagen’s Crimes?

Thursday, December 7th, 2017

It’s refreshing to see the book thrown at a corporate criminal, but it would have been even better if federal prosecutors had aimed higher.

Oliver Schmidt, who had once been a mid-level manager at VW’s engineering and environmental office in Michigan, was sentenced to seven years in prison for his role in the company’s long-running scheme to defraud the federal government in diesel emissions testing. The charges against him included conspiracy and violations of the Clean Air Act. He was also fined $400,000.

Schmidt, who was arrested when he foolishly came to the United States for a family vacation, must be pissed off at having to pay such a severe personal price while higher ranking VW officials back in Germany will probably remain unscathed. Appearing at his sentencing hearing in a prison jumpsuit with his wrists shackled, Schmidt admitted culpability and did not point the finger at any company superiors. However, he did not let VW completely off the hook.

In a letter to the judge overseeing his case, Schmidt said he felt “misused” by the company and that he was following VW talking points when he met with a California air pollution official in 2015 and concealed the existence of the software that made the cheating possible.

Schmidt could not have participated in a conspiracy all by himself. Yet the Justice Department does not appear to have tried very hard to land any bigger fish (though at least one person senior to Schmidt is being prosecuted in Germany).

Instead, the DOJ took the typical route of bringing a case against the company as a whole and letting it buy its way out of the entanglement. In 2015 the DOJ, along with the Federal Trade Commission and the State of California, agreed on a civil settlement under which VW had to spend up about $10 billion to compensate customers and $4.7 billion on pollution mitigation.

That was followed by a criminal case in which VW had to pay a $2.8 billion penalty. At least this involved a real criminal plea rather than one of those deferred-prosecution or non-prosecution shams, but it is unclear what consequences VW has faced beyond the payout.

The company is technically on probation and has a compliance monitor, but that will probably not mean much. Even before these cases, the company had already been under federal supervision because of a consent decree stemming from a 2005 case also involving emissions irregularities.

Given the severity of the VW cheating and the fact that it was in effect a repeat offense, the DOJ should have done more to prosecute top executives, and the case against the company itself should have had more than financial consequences.

Whereas strict limitations are placed on the activities of individual felons, VW has been able to go on operating as if the scandal had never happened. A case can be made that the company should have been shut out of the U.S. market, but instead it has been advertising heavily and seeking to regain market share. The main challenge is that it can no longer promote its vehicles under the banner of “clean diesel.” Presumably, VW is working on a new way to deceive the public.

Unfettered Corporate Power

Thursday, October 26th, 2017

Once upon a time, there was a debate on how best to check the power of giant corporations. Starting in the Progressive Era and resuming in the 1970s with the arrival of agencies such as the EPA and OSHA, some emphasized the role of government through regulation. Others focused on the role of the courts, especially through the kind of class action lawsuits pioneered by lawyers such as Harold Kohn in the 1960s.

When regulators were seen as too aggressive, business apologists pushed back by arguing that corporate misconduct should be addressed through litigation. When class actions grew more effective, those apologists started lobbying for tort reform and arguing that regulatory agencies (especially those dominated by industry) were the better forum.

This year, amid a supposed populist upsurge, that debate is dying out. The Republican-controlled Congress and the White House are undermining both regulation and litigation. Virtually all legislative “accomplishments” since Inauguration Day have consisted of Congressional Review Act maneuvers to roll back business regulations. Now, with the Senate’s move to kill the Consumer Financial Protection Bureau’s restriction on forced arbitration, Congress has used the same device to reduce the ability of consumers to seek redress through the courts — what Sen. Elizabeth Warren aptly described as “a giant wet kiss to Wall Street.”

The result of these moves is that big business is increasingly being allowed to operate with no effective controls at all. This unilateral disarmament is taking place when corporate misconduct is rampant. Among the companies that will benefit from the arbitration move are the likes of Wells Fargo and Equifax, whose willingness to mistreat customers has been truly astounding.

We should be careful, however, not to overstate the effectiveness of damage awards in class action lawsuits in changing corporate behavior. It’s unfortunately true that large corporations have come to regard substantial monetary settlements as an acceptable cost of doing business.

That’s true both of private litigation and cases brought by regulatory agencies and the Justice Department. As shown in Violation Tracker, 40 corporations have paid $1 billion or more in fines and settlements. Seven of those have paid $10 billion or more, including all the giant national banks: Bank of America ($57 billion), JPMorgan Chase ($29 billion), Citigroup ($16 billion) and Wells Fargo ($11 billion).

These amounts have involved scores of different cases dating back to 2000. In other words, the banks are repeat violators that are willing to pay out large sums in order to continue doing business more or less as usual. More class action lawsuits are unlikely to change this dynamic.

I believe that banks and other large corporations should continue to face heavy financial penalties for their misconduct, but it has become clear that these penalties alone are not going to put an end to the corporate crime wave. It’s time to go beyond damages in addressing the damage caused by these companies.

The Corporate Death Penalty for Wells Fargo?

Thursday, October 5th, 2017

Wells Fargo’s seemingly endless transgressions have reached the point that there is growing discussion of a possibility rarely considered even in some of the most egregious corporate scandals: putting it out of business.

Rep. Maxine Waters, the top ranking Democrat on the House Financial Services Committee, recently issued a report that recounted the banks sins (including a reference to the $11 billion Violation Tracker tally of its penalties), saying that Wells has “demonstrated a pattern of egregiously harming its customers.”

Such statements have been heard frequently since the Wells bogus account scandal came to light last year. But Waters goes on to argue: “When a megabank has engaged in a pattern of extensive violations of law that harms millions of consumers, like Wells Fargo has, it should not be allowed to continue to operate within our nation’s banking system, and avail itself of all of the associated privileges afforded to it.”

A similar sentiment is expressed in a letter just submitted to the Office of the Comptroller of the Currency by the AFL-CIO, Americans for Financial Reform and five other groups. The letter asks the OCC to consider whether, “in light of the bank’s pattern of law breaking,” the bank “should forfeit its national banking charter.”

The issue was even brought up in a recent Congressional hearing in which Wells CEO Tim Sloan was being grilled by members of the Senate Banking Committee. Sen. Elizabeth Warren said that Sloan should be fired, while Sen. Brian Schatz of Hawaii went further by asking Sloan: “Why shouldn’t the OCC revoke your charter?”

“We serve one out of every three Americans, we have 270,000 team members,” Sloan responded before Schatz cut him off, saying: “So, you’re too big.”

Those comments encapsulate how a debate about the possible shutdown of a bank or other company as large as Wells Fargo would play out. The corporation would emphasize the disruptive effect on its customers and employees, suggesting they would be the unintended victims. Of course, in the case of Wells it was the bank itself that victimized customers and staff.

Schatz’s comment points to the direction any serious effort to penalize a rogue corporation should take: the emphasis should not be a precipitous shutdown but rather a breakup into smaller entities that would be subjected to rigorous regulation and scrutiny. Care should be taken in the process to protect the interests of customers and employees, though upper level executives should be shown the door.

Discussions of the corporate death penalty have come and gone over the years. The need to deal with a brazen recidivist such as Wells may finally bring more serious consideration to a tool that could be more effective than billions in penalties in ending the ongoing corporate crime wave.

Identifying Repeat Corporate Offenders

Thursday, September 21st, 2017

When a new corporate scandal arises, there is a tendency on the part of many observers to treat it as a complete surprise — as something that could not have been anticipated.

The truth is that large companies are rarely first time offenders. If you look into their background, you are likely to see evidence of past behavior that presaged the recent misconduct.

It is now easier than ever to research that track record thanks to a major expansion of Violation Tracker my colleagues and I just rolled out. We posted an additional ten years of data, extending coverage back to 2000 and in the process nearly doubling the size of the database to 300,000 entries. Together, these account for $394 billion in fines and settlements — 95 percent of which was assessed against 2,800 large parent companies and their subsidiaries.

Take the example of Equifax, which is at the center of a growing scandal over its apparent negligence in protecting personal information and its delay in reporting a major hack. Violation Tracker shows that early this year the company was fined $2.5 million by the Consumer Financial Protection Bureau for using deceptive means to lure people into purchasing costly credit-protection services. The company was also ordered to provide $3.8 million in restitution to affected customers. Over the previous two decades, Equifax was fined three times by the Federal Trade Commission.

The announcement by the CFPB last year that it was fining Wells Fargo $100 million for creating bogus customer accounts — a scandal that has subsequently mushroomed — was far from the first time the bank had gotten into trouble for questionable practices. Violation Tracker documents prior penalties totaling some $11 billion going back to 2000 for offense such as mortgage abuses, toxic securities abuses, and discriminatory practices.

Sometimes the prior offense is indistinguishable from the current one. In 2005, a decade before it was revealed to be engaged in a massive scheme to deceive regulators about emissions levels, Volkswagen was compelled to pay a fine of $1.1 million and spend $26 million on a recall to settle allegations that it failed to correct a defective pollution-control sensor.

Of the 2,800 companies in the Violation Tracker universe, more than 80 were penalized for something or other by federal agencies or the Justice Department every year from 2000 through 2016. The company that has the dubious distinction of leading by this measure is oil giant BP, which has paid out an average of some $1.6 billion in fines and settlements each year during the 17-year period.

No other company comes close. In second place is Verizon Communications, whose average annual penalty was $72 million, followed by FirstEnergy ($71 million), Valero Energy ($58 million), Marathon Petroleum ($54 million), Alcoa ($43 million), Exxon Mobil ($42 million), Koch Industries ($39 million) and Chevron ($34 million).

While they may not have gotten penalized every single year, there are hundreds of other parent companies that have been penalized in multiple years, and in many cases multiple times in a given year. In other words, just about every large company is a recidivist.

Who knows: maybe regulators and prosecutors will start consulting Violation Tracker to identify prior bad acts and take them into account when deciding how to penalize companies for their current sins.

Recalling the Corporate Culprits of Yesteryear

Thursday, September 14th, 2017

Corporate crime has been happening as long as there have been corporations. But if you wanted to choose an event that marked the emergence of what we think of as modern big business misconduct it would be the admission by Enron in November 2001 that it had overstated profits by $600 million. Within months, the high-flying energy trader collapsed amid growing evidence that the company was one big scam. Enron’s lenders, investors, auditors and others were all pulled into the morass.

Enron turned out to be just one of a rash of accounting scandals that rocked the corporate world and severely damaged the legitimacy of American capitalism. The Bush Administration felt compelled to create a President’s Corporate Fraud Task Force headed by none other than James Comey.

I bring up this history because the Corporate Research Project is about to release a major expansion of Violation Tracker that will extend coverage to this period. We are adding ten more years of data, bringing the starting point back to January 2000. The expansion will nearly double the size of the database to 300,000 entries with more than $394 billion in fines and settlements.

More than 95 percent of that penalty amount comes from our universe of large parent companies, which is being increased to about 2,800. These include ones that are publicly traded and privately held, for-profit and non-profit, domestic as well as foreign-based.

Now the universe also includes a bunch of companies like Enron that are defunct but which are kept on the list for historical purposes. Here are some of those zombies. Note that Violation Tracker does not yet include entries relating to private litigation.

The largest penalty total comes from Adelphia Communications, a cable television provider that was riddled with corruption. In 2004 the Justice Department arranged for $715 million of what remained of the company to be handed over to a fund set up to compensate victims of Adelphia.

In 2002 WorldCom, another telecommunications company, filed what was then the largest bankruptcy ever in the wake of a massive accounting scandal. In 2002 the Securities and Exchange Commission reached a $500 million settlement with the company after originally seeking $1.5 billion in penalties. Since WorldCom was taken over by Verizon rather than being dismantled, its entries in Violation Tracker are listed under Verizon.

Enron shows up in nine entries with a penalty total of $446 million, the largest of which was a 2006 agreement with the Federal Energy Regulatory Commission giving the agency a $400 million claim in the company’s bankruptcy proceeding stemming from Enron’s misconduct during the 2000-2001 Western energy crisis.

We also list Arthur Andersen, which had served as Enron’s auditor and was convicted of obstruction of justice for shredding documents relating to that client. The conviction was overturned by the U.S. Supreme Court (and thus is not listed in Violation Tracker) but the firm never recovered from the scandal. We list a $7 million penalty imposed on Andersen by the SEC in 2002 in connection with its audits of Waste Management in the 1990s.

The corporate scandals of the early 2000s shook up the country and in some ways prompted even more aggressive remedial actions than are seen with more recent cases. There were many more criminal prosecutions of individual executives than occurred with the cases stemming from the financial meltdown, though the dollar amounts of penalties have grown larger.

One thing that has not changed is the persistence of wrongdoing by so many large corporations.

Note: The Violation Tracker expansion will officially launch on September 19.