US prosecutors are investigating possible fraud by executives at about 130 public companies and are likely to file new criminal charges in dozens of those cases, US Justice Department officials said.
"We had thought that maybe this corporate fraud crisis had reached a peak, but we continue to have new investigations and new allegations on companies on a regular basis," said Keith Slotter, chief of the FBI's financial-crimes section. "At this point, it has not shown any sign of ebbing."
Prosecutors have charged executives with fraud and related crimes in some of the 130 cases, including those involving Enron Corp, WorldCom Inc, Kmart Corp and HealthSouth Corp Slotter declined to name which executives might be charged. Prosecutors are investigating allegations of fraud against officials at Lucent Technologies Inc, Charter Communications Inc, Bristol-Myers Squibb Co and AOL Time-Warner Inc, the companies said.
The Justice Department crackdown also charged executives at Adelphia Communications Corp, Qwest Communications International Inc, and Dynegy Inc
Bryan Sierra, a spokesman for the Justice Department, said prosecutors are working on about 130 fraud cases, including those in which some charges have been filed. The FBI is involved in about 100 of those cases, Slotter said.
The US push began after the collapse in 2001 of Enron, which lost US$68 billion in market value as a result of misstating its finances by hiding debt in off-the-books partnerships.
The effort intensified after New York Attorney General Eliot Spitzer probed stock research at Wall Street firms, new corporate-governance rules were enacted, and the US Securities and Exchange Commission opened a record number of cases of all types.
The stock market slump that began in 2000 exposed circumstances that pushed some executives to commit crimes, prosecutors said. Executives inflated earnings to conceal business weaknesses and pump up the value of their stock options, said US Attorney James Comey in Manhattan.
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