1/ For 100 years in this country, the 1890 Sherman Act was known as the tool that President Theodore Roosevelt used to attack John D. Rockefeller. The complaint the Unites States Justice Department pursued for 10 years against Standard Oil Trust was finally settled in 1911 before the Supreme Court, when Standard Oil Trust, which controlled 92% of the oil and gas business in this country, was broken up into seven pieces. It was not until 1999, when President Bill Clinton and Attorney General Janet Reno went after Bill Gates and Microsoft that the Sherman Act was back in the headlines (see Case 24-5 in your text). Using this antitrust legislation, Clinton and Reno succeeded in getting a federal district court decision to fine Microsoft $5 billion, and ordered it broken up into four separate companies. Microsoft appealed to the Federal Circuit Court of Appeals, and politics hit home. Bill Clinton and Janet Reno headed for retirement, and President George W. Bush and Attorney General (former Senator) John Ashcroft took over the Justice Department. Within 5 months of taking office, in May, 2001, Bush and Ashcroft settled the deal with damages reduced to $300 million and no Microsoft breakup. Is this just too political to be allowed? Review the 1890 Sherman Act and the Microsoft Case in your text. Under the guidance of the 1890 Sherman Antitrust Act, what would you have done as Attorney General of the United States? 2. 2. 2/ On pages 136-138 in your text, review Exhibit 6-1 the "Recent Major White-Collar Crime Sentences. " Select three of these "criminals," and discuss their offenses, punishment, and how it is affecting ongoing business today. When the next edition of this text is published in 2016, who do you think will have been added to this list of the convicted? EXHIBIT 6-1 RECENT MAJOR WHITE-COLLAR CRIME SENTENCES Allen Stanford. Sentence: 110 years Allen Stanford, 63, was a Texan financier accused of running a $7 billion Ponzi scheme. He had investors invest billions of dollars into his bank, and then spent the money on private jets, yachts and acres of undeveloped Antiguan land among other expenditures. In December 2008 Stanford International Bank had $88 million in cash, but it fudged its numbers to say it had $1 billion in assets. In the same month it finally owed investors $7 billion when they tried to pull out their money, and the bank had no money to cover the costs. In 2012, a jury found Stanford guilty of conspiracy, along with 12 other criminal charges including obstruction. He was found innocent of one wire fraud charge. Stanford was sentenced to 110 years in federal prison. Bernard Madoff, Businessman. Sentence: 150 years Madoff, 72, directed one of the largest Ponzi schemes in U.S. history. Madoff, in his role as CEO of Bernard L. Madoff Investment Securities LLC, stole from his clients in a $65 billion Ponzi scheme. Despite a continuing decline in the economy, Madoff continued to assure his clients that his numbers (investment returns) would continue rising. As the economy continued to decline, Madoff's increases became suspicious and clients began to contact him to get their money back. When the requests for returned funds reached $7 billion, Madoff met with his sons and told them that his business was fraudulent. The sons turned Madoff in to the authorities. In 2009, Madoff pleaded guilty to, among other things, securities fraud, wire fraud, money laundering, making false filings with the SEC, and making false statements. He was sentenced to the maximum 150 years in prison for his offenses. His projected release date is November 14, 2159. Since Madoff's plea, David Friehling from his accounting department has pled guilty to securities fraud, investment advisor fraud, and making false filings with the SEC. Additionally, Frank DiPascali has pled guilty to securities fraud, investment advisor fraud, mail fraud, wire fraud, income tax evasion, international money laundering, falsifying books and records, and more. Joseph Naccio. Sentence: 6 years Joseph Naccio, 60, was the chief financial officer and chairman of the board for Qwest Communications International. Qwest is a telecommunications provider in the western United States. When the economy began to decline, Naccio continued to assure Wall Street that the company would continue making large returns even though he knew that such returns would not occur. Based on inside information, Nacchio sold $52 million of Qwest stock just before the prices fell. In 2007, Naccio was convicted on 19 counts of insider trading and sentenced to 6 years in federal prison. Additionally, Naccio was ordered to pay a $19 million fine and restitution of the $52 million he had made as a result of illegal stock transactions. Although his conviction was overturned in 2008 because of improperly excluded expert testimony, the conviction was reinstated in 2009 when he finally began serving his six-year term. Jamie Olis, Vice President of Finance. Sentence: 24 years Jamie Olis, 38, was vice president of finance and senior director of tax planning at Dynergy, a natural gas energy company. Olis attempted to conceal more than $300 million in company debt from public investors. When the attempted concealment was discovered, millions of investor dollars were lost, including a $105 million loss suffered by 13,000 participants in the California Retirement Plan. In 2004, Olis was sentenced to 292 months in prison after being convicted of securities fraud, mail fraud, and three counts of wire fraud. The 24-year sentence is one of the longest terms for fraud in U.S. history, in part because of the large financial losses to thousands of investors. In addition to the jail time, Olis was fined $25,000. Olis, however, did not act alone in the concealment. Gene Foster and Helen Sharkey, both former Dynergy executives, pled guilty to conspiracy and aided in the investigation. They then entered into a plea bargain under which Foster and Sharkey were to receive sentences of up to 5 years in prison and $250,000 in fines. 136 137 In 2004, Quattrone was found guilty of obstruction of justice. He was sentenced in September 2004 to 18 months' prison and 2 years' probation. He was also fined $90,000. Near the end of that year, the National Association of Securities Dealers permanently banned Quattrone from the securities industry, although he had planned to appeal the ban to the Securities and Exchange Commission. Richard Scrushy, CEO of HealthSouth Richard Scrushy, the founder of HealthSouth, is no stranger to white-collar criminal allegations. After being acquitted of charges under the Sarbanes-Oxley Act for lack of evidence in 2005, Scrushy was indicted on new charges a mere four months later. The new charges were for bribery and mail fraud linked to former Alabama Governor Don Siegelman. The charges involved fraud through exchanging campaign funds for political favors. Scrushy was ultimately found guilty by a federal jury in 2006 for bribery, mail fraud, and obstruction of justice. He was sentenced in 2007 to almost 10 years' imprisonment, in addition to having to pay a fine of $150,000 and an additional $267,000 in restitution to the United Way. Scrushy is currently in jail. Walter Forbes, CEO of Cendant Corporation In 2004, Walter Forbes went on trial for fraudulently inflating the company's revenue by $500 million to increase its stock price. Forbes was charged with wire fraud, mail fraud, conspiracy, and securities fraud. In addition, Forbes was also accused of insider