NEW YORK – 2004 will remain in Wall Street memory as Year Three of the great corporate trials. Here is a glimpse of the Law & Order moments of the year:
Martha Goes to Jail:
Martha Stewart (search) fought the good fight, lost — and may yet have the last laugh. The 62-year-old publishing mogul was found guilty in March of lying to authorities about the suspicious sale of her ImClone stocks and was sentenced to serve five months in a West Virginia federal facility. Midway through her sentence, the lifestyle icon has engineered the beginning of a stunning comeback in the form of a reality TV show deal, and her company's stock (MSO) has risen 150 percent.
Stewart could also make out big now that Kmart (KMRT) has acquired Sears, Roebuck & Co. (S) This could mean a wider distribution of her Martha Stewart Everyday line of household items.
Enron Top Brass:
Three years after the energy giant's collapse that resulted in more than 5,000 lost jobs, trial dates have not yet been set for top executives Jeffrey Skilling, Richard Causey or Kenneth Lay for their roles in misleading investors about stock values and using accounting tricks to hide more than $1 billion in debt. When it went under, the company ended up filing what was then the largest bankruptcy filing in history.
In February, former CEO Jeffrey Skilling (search) pleaded not guilty to a 35-count indictment that included wire and securities fraud charges, conspiracy, insider trading and making false statements on financial reports. Charges against former chief accounting officer Richard Causey (search) totaled 31 counts.
Skilling was also involved in an incident in New York City, which ended with police sending the drunken former CEO to the hospital as an "emotionally disturbed person." On April 9, Skilling scuffled with his drinking partners after accusing them of being undercover FBI agents. A federal judge later ordered Skilling to stop drinking alcohol and submit to a curfew.
Kenneth Lay (search), Enron’s founder and highest ranking executive, pleaded not guilty to an 11-count indictment. After surrendering to the FBI, he held a news conference to proclaim his innocence.
Former CFO Andrew Fastow (search) pleaded guilty to two counts of conspiracy, admitting to orchestrating a series of schemes to hide debt and inflate profits while enriching himself with millions. Fastow agreed to serve the maximum 10 years in prison and surrender nearly $30 million in cash and property. Wife Lea Fastow also got one year in jail.
Tyco Retrial:
The six-month criminal trial against Dennis Kozlowski (search), former chairman of Tyco International (TYC) and collector of $6,000 shower curtains, ended in a mistrial in April amid severe jury fatigue and threats against a juror.
Kozlowski and ex-Chief Financial Officer Mark Swartz (search) are accused of looting Tyco of $600 million. Their retrial on charges of conspiracy, grand larceny and securities fraud is scheduled for January 2005.
Kozlowski is also to be tried separately for neglecting to pay sales tax totaling $1 million on several pieces of artwork, including pricey paintings by Monet and Renoir, valued at about $13 million.
A Star (Banker) Falls:
Frank Quattrone (search), former investment banking star and poster boy for the dot-com boom, was sentenced in September to 18 months in prison for obstructing justice. The fallen Credit Suisse First Boston exec, who made as much as $120 million a year, was convicted in May of attempting to block grand jury and regulatory investigations by forwarding an e-mail to co-workers reminding them to "clean up" their files.
The sentence made Quattrone the most prominent Wall Street figure since junk-bond dealer Michael Milken (search) to face time behind bars. The blow is likely to be softened by the family's financial assets; Quattrone's wife has $50 million and his daughter has $26 million in a trust fund.
Rigases Out:
In July, a jury found Adelphia founder John Rigas (search) and his son, former CFO Timothy Rigas, guilty of looting the cable TV company of more than $100 million, hiding over $2 billion in debt and generally using the company as their "personal piggy bank." A federal judge has postponed sentencing for the father and son until Feb. 23.
The trial of John Rigas' other son, Michael, ended with a deadlocked jury. A retrial will take place in 2005.
After months of attempting to frame a reorganization strategy as a stand-alone company, Adelphia has put its cable properties out for bid and recently said a sale could close in the fourth quarter of 2005. The company claims the Rigas family owes it $3.2 billion.
WorldCom's Bernie Ebbers:
Ex-WorldCom CEO Bernard Ebbers Jr. (search) was charged in March for his role in an $11 billion accounting fraud case at the fallen long-distance provider, which filed the largest corporate bankruptcy case ever in 2002.
Federal prosecutors say Ebbers and former CFO Officer Scott Sullivan (search) orchestrated schemes to inflate profits and hide expenses in order to let the telecom giant meet earnings targets. Ebbers is also accused of taking $366 million in personal loans from the company.
Ebbers' much-expected trial will start on Jan. 18.
The Associated Press and Reuters contributed to this report.
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