The Perp Walk

Watching executives climb the courthouse steps became a spectator sport in 2002

It was a year of parades. Parades of CEOs, that is, being marched into courthouses and called before Congress. America hadn't been treated to the shameful sight of so many highly paid executives in custody since the Wall Street scandals of the 1980s. Some have bitten the bullet and acknowledged wrongdoing. Others are still loudly proclaiming their innocence. Here's a rundown of who was charged with what in 2002.

Former Tyco International Ltd. CEO L. DENNIS KOZLOWSKI, indicted first on sales-tax evasion charges, faced a second indictment, along with former CFO MARK H. SWARTZ, for allegedly stealing $600 million from Tyco (TYC ) through enterprise corruption involving stock fraud and unauthorized bonuses and loans. Through their attorneys, both have maintained they did nothing wrong. The scandals at Tyco reached the board as well: Former Director FRANK E. WALSH JR. pleaded guilty to securities fraud, repaying $20 million he had received--but never disclosed--for helping to broker an acquisition, plus a $2.5 million fine.

JOHN J. RIGAS, the 78-year-old founder and former CEO of cable company Adelphia Communications Corp., and his sons TIMOTHY and MICHAEL, both former executives there, were arrested in July on charges that they looted the company of more than $1 billion, using it as their "personal piggy bank." If convicted of the worst criminal charges, each family member could face up to 30 years in prison and millions of dollars in fines. They have pleaded not guilty.

Acknowledging "terrible mistakes" he had made, ImClone Systems Inc. (IMCL ) founder SAMUEL D. WAKSAL pleaded guilty in October to six charges, including securities fraud, perjury, and obstruction of justice, stemming from his role in a flurry of stock sales that occurred in late 2001, after he learned that the Food & Drug Administration was about to reject ImClone's application for approval of a new cancer drug. He faces seven to nine years in prison under federal sentencing guidelines.

Enron Corp.'s former chief financial officer, ANDREW S. FASTOW, pleaded not guilty in November to 78 criminal counts of fraud, conspiracy, money laundering, and obstruction of justice. He is accused of using special-purpose entities to hide debt and inflate profits while enriching himself, actions that led to the collapse of the energy company. His former lieutenant, MICHAEL J. KOPPER, pleaded guilty in August to conspiracy to commit wire fraud and money laundering. Kopper also disclosed that he had paid kickbacks to Fastow and his family in some of their secret deals. DAVID DUNCAN, Arthur Andersen LLP's partner on the Enron account, pleaded guilty in April to obstruction of justice for destroying key documents. He agreed to cooperate with government investigators building a case against Fastow and others.

Former WorldCom Inc. CFO SCOTT D. SULLIVAN pleaded not guilty to multiple fraud charges in connection with an accounting fraud of more than $9 billion that he is accused of engineering at the bankrupt telecommunications giant.

GARY MULGREW, GILES DARBY, and DAVID J. BERMINGHAM, three former National Westminster PLC bankers in London, were charged by a Texas grand jury with wire fraud stemming from a secret investment in an Enron partnership. Getting them extradited to the U.S. could be a challenge, though. Their lawyer has declined to comment.

In Munich, brothers THOMAS and FLORIAN HAFFA are on trial for allegedly misleading investors in their once high-flying media group, EM.TV, by knowingly releasing inaccurate forecasts in 2000 that included figures from deals that had not yet been done--and some that never came to fruition. The trial is the first under a new German law that makes it illegal to manipulate share prices. The brothers say they never intentionally lied and were unaware of the true financial state of EM.TV.

The four former top executives at drug retailer Rite Aid Corp. (RAD )--CEO MARTIN L. GRASS, Chief Counsel and Vice-President FRANKLIN C. BROWN, Executive Vice-President and Finance Chief FRANKLYN M. BERGONZI, and Executive Vice-President for Pharmacy Services ERIC S. SORKIN--pleaded not guilty to various combinations of charges in a 37-count criminal indictment in June that ranged from conspiracy to defraud to conspiracy to obstruct justice. Each faces as many as 10 years in prison for allegedly operating an illegal accounting scheme that triggered a $1.6 billion restatement of net income.

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