The Securities and Exchange Commission has won the court battle over the first billion-dollar financial fraud it ever tackled, a case filed against the former chief financial officer of Waste Management Inc. back in March 2002.
Accounting scandals at WorldCom Inc. and Enron Corp. have since dwarfed the estimated $6 billion that civil fraud and securities violations at the country's largest trash hauler cost investors. However, when the SEC filed the charges more than four years ago, it was the biggest case ever brought by the agency.
Former chief financial officer James Koenig was found liable for civil fraud and other securities violations, including securities fraud and lying to auditors. His next hearing will be held on July 17, and the government is expected to ask for him to pay a hefty fine as well as be barred from serving as an officer or director of a public company.
Koenig has maintained that his accounting of the company's earnings was completely accurate, and his lawyer said that he will consider an appeal. Several witnesses called at the trial were accountants from the now-defunct Arthur Andersen firm.
Waste Management restated its earnings by $1.7 billion in 1997. The company's founder and former chairman and chief executive, Dean L. Buntrock, along with four other executives, settled with the SEC in September 2005 for more than $30 million.
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