Super Financial Scams: Unveiling the Seven Biggest Scams in Financial History and Thirty Methods

Author: Howard Schilit [USA]
Publisher:
Publish Date: July 1, 2006
Features: Watered-down profit numbers, suspicious write-offs, hidden expenses
Today, to please Wall Street, these and other ambiguous and suspicious financial tactics have become increasingly common and harder to detect. To address this, Super Financial Frauds uniquely analyzes several famous, in history (including the well-known Enron scandal). The book's various checklists, charts, and appendices on basic accounting principles make the complex analysis easy to understand. At the same time, Super Financial Frauds teaches investors and analysts how to use the best tools and methods today to crack through complicated financial statements and identify early warning signs of a company's distress.
The decade from 1991 to 2001 began with President George H.W. Bush taking office and the economy falling into recession. Interestingly, a decade later, his son, President George W. Bush, occupied the White House while the economy hovered uncertainly. However, during those intervening years, the U.S. experienced an unprecedented prosperity period that deeply affected both ordinary people and Wall Street. Unemployment rates fell to levels unseen in generations, and stock market indices were almost daily setting new records. From 1995 to 1999, the Dow Jones Industrial Average had never before seen five consecutive years of growth exceeding 20% annually. This was still minor compared to the Nasdaq index, which, focused on tech stocks, surged by 94% in just one year—1999. Yet beneath all this bright surface, most investors' radars failed to detect the ominous signs of financial fraud emerging—signals of skilled financial manipulation.
The beginning of that decade was marked first by the exposure of the large-scale banking fraud at the Bank of Commerce and Credit International (BCCI), followed by reports of fraud at drug retailer PharMor, retailer Leslie Fay, and waste management company Waste Management Inc. Then, more and more companies joined the ranks of fraudsters: storms at large health maintenance organization Oxford Health, drug retailer Rite Aid, and the notable software company MicroStrategy caused even greater pain for investors. The creative accounting of "new economy" companies made the situation even worse. Investors suffered losses on a scale previously unimaginable. The financial settlements alone in the Cendant fraud case reached $3 billion.
This book introduces investors to how to uncover the truth behind public companies' finances, lists the seven financial frauds companies use, and explains how to use the best tools and methods today to crack through complicated financial statements and identify early warning signs of a company's distress.