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From Teapot Dome to Theranos: The Consequences of Corporate Crimes

Corporate scandals have always been a part of the business world. Over time, some of these scandals have gained greater public attention as they exposed the unethical practices of big corporations and led to financial and personal losses for many people.

This article will discuss some of the most notorious corporate scandals in history, including the Teapot Dome scandal, Bernie Madoff’s Ponzi scheme, and Volkswagen’s emissions scandal. We will also examine the legal leeway that the rich and powerful enjoy, which often allows them to engage in unethical and illegal activities with little to no consequences.

Historical Corporate Scandals

Teapot Dome Scandal

The Teapot Dome scandal was a government corruption scandal that took place in the early 1920s. The scandal involved bribery of government officials by oil companies to secure lucrative oil contracts.

The scandal became public when it was revealed that Albert B. Fall, the secretary of the interior, had accepted bribes from oil company executives.

The scandal rocked the nation and led to the first major investigation by the U.S. Senate into corruption in the federal government. McKesson & Robbins Fraud

The McKesson & Robbins fraud was a financial scandal that took place in the 1930s.

The scandal involved fraudulent accounting practices by the two companies that led to the overvaluation of their stock prices. When the fraud was exposed, the stock prices plummeted, causing significant losses for investors.

The scandal led to the passage of the Securities Act of 1933, which increased transparency and reporting requirements for public companies. General Electric, Westinghouse and Others

In the 1960s, a group of companies, including General Electric and Westinghouse, were found guilty of price fixing, a violation of antitrust laws.

The companies colluded to set prices and allocate markets to maintain high profits. The scandal led to hefty fines for the companies involved and increased scrutiny of antitrust violations.

The Vegetable Oil Scandal

In the 1990s, a major financial scandal involving vegetable oil rocked the edible oil industry. The scandal involved the trading of low-quality vegetable oil as high-quality oil, leading to false reporting and price manipulation by companies.

The scandal led to major losses for investors, some of whom lost their life savings. The perpetrators were prosecuted, and the scandal led to increased regulatory oversight in the industry.

The Collapse of Herstatt Bank

In 1974, Herstatt Bank, a German bank involved in currency speculation, collapsed due to its inability to carry out foreign exchange transactions. The bank’s collapse had a domino effect, causing major losses for other banks and investors.

The incident led to the introduction of new regulations to prevent the collapse of institutions and protect investors.

The Savings and Loan Debacle

In the 1980s, many savings and loan institutions became insolvent due to deregulation and poor lending practices. The scandal cost taxpayers billions of dollars, and many people lost their life savings.

The scandal sparked increased regulatory oversight and led to the creation of the Resolution Trust Corporation to oversee the orderly liquidation of the failed institutions.

The Bre-X Mining Scandal

In the 1990s, Bre-X Minerals, a Canadian mining company, was found to have fraudulently reported the discovery of a massive gold reserve in Indonesia. The stock price of the company soared, and many investors poured money into the company, only to later realize that the gold reserve was a complete fabrication.

The scandal led to the collapse of the company and major losses for investors. Bernie Madoff’s Ponzi Scheme

Bernie Madoff’s Ponzi scheme is perhaps the most infamous financial fraud in history.

Madoff deceived investors by promising high returns on their investments, but in reality, he was using new investments to pay off old investors. The fraud was massive, estimated to be worth over $50 billion.

The scandal led to Madoff’s imprisonment and increased scrutiny of investment schemes. Volkswagen’s Emissions Scandal

In 2015, Volkswagen was found to have cheated on emissions tests for their diesel vehicles.

The company altered the software in the vehicles to pass emissions tests while polluting at levels far beyond the legal limit when on the road. The scandal led to hefty fines for Volkswagen and increased public scrutiny of emissions regulations in the automobile industry.


Theranos was a start-up company that claimed to have developed a revolutionary blood testing technology that required very little blood and produced results quickly. However, it was later revealed that the claims were false, and the technology was inaccurate.

The scandal led to the collapse of the company and charges of fraud against its founder.

Legal Leeway for the Rich and Powerful

Cutting Corners

Unethical conduct and illegal activities are often overlooked when it comes to the rich and powerful. Many wealthy individuals and corporations are found to be cutting corners in order to maintain or increase their profits.

The financial industry is notorious for it. Between 1990 and 2015, banks paid over $200 billion in fines for various types of misconduct.

Accounting Shenanigans

Financial manipulation is used regularly by corporations to inflate their numbers and maintain their stock price. Accounting shenanigans include practices such as overstating revenue, understating expenses, and overstating assets.

The Enron scandal is a prime example of this type of practice.


Corporate scandals have been a part of the business world for many years. Some of these scandals have gained national attention and have led to increased public scrutiny of corporate practices.

The examples discussed in this article demonstrate the various types of corporate scandals from government corruption to financial fraud, and the consequences of these actions. The legal leeway given to the rich and powerful often allows them to engage in unethical and illegal activities with little to no consequences.

As a society, we must hold corporations and individuals accountable for their actions and demand transparency and ethical standards in business practices. Corporate crimes have far-reaching consequences beyond the immediate financial losses.

They can damage the reputation of a company and industry, lead to bankruptcy and job losses, and erode public trust in businesses and institutions. In this article, we will discuss the consequences of corporate crimes, including backfiring, avoidable collapses, whistleblowing, and legal punishments.


One of the risks that companies face when engaging in fraudulent practices or unethical conduct is the possibility of backfiring. In some cases, companies find that their efforts to cover up their wrongdoing only lead to greater exposure and more severe consequences.

In other cases, their illegal actions lead to the failure of the company. For example, in the case of the Enron scandal, the company’s fraudulent accounting practices and manipulation of energy prices were exposed, leading to the collapse of the company.

The scandal shattered public trust in the energy industry and prompted increased regulatory oversight. The reputational damage lasted for years, with Enron’s name becoming synonymous with corporate fraud.

Avoidable Collapses

In some cases, corporate collapses could have been avoided with better regulation and oversight. However, when companies prioritize profits over ethical and legal practices, they create an environment that encourages fraudulent behavior.

Too often, regulators do not have the authority or resources to catch fraudulent activity, or they are swayed by powerful lobbies. For example, in the 2008 financial crisis, investment banks, mortgage companies, and rating agencies engaged in risky lending practices that contributed to the collapse of the housing market.

The crisis led to significant job losses and a global recession. The crisis exposed the need for tighter financial regulations and increased oversight of the financial industry.


Whistleblowers, individuals who report illegal or unethical behavior within a company, can play a critical role in exposing corporate crimes and holding companies accountable.

Whistleblowers are often employees who witness fraudulent activity and are ethically bound to report it.

Whistleblowers can face significant risks and retaliation for speaking out, including loss of their job, harassment, and legal action. However, laws such as the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act offer whistleblower protections.

For example, in the case of

Theranos, whistleblower Tyler Shultz, a former employee and grandson of George Shultz, a member of the company’s board, was one of the key players in exposing the fraudulent claims made by the company’s founder. He faced significant pressure and backlash for his actions, including threats of legal action and harassment from his own family.

However, his whistleblowing ultimately led to the collapse of the company and charges of fraud against its founder.

Legal Punishments

Companies and individuals involved in corporate crimes can face significant legal punishments, including hefty fines and jail sentences. These punishments are intended to serve as a deterrent to future unethical or illegal behavior and to hold those responsible accountable for their actions.

One of the largest fines in a corporate scandal was in the case of Volkswagen’s emissions scandal. The company was fined $4.3 billion by the U.S. Department of Justice for fraud and environmental violations.

Volkswagen also faced significant financial losses in the form of repair costs and loss of reputation. In cases where individuals are found guilty of criminal activity, they can face significant jail sentences.

For example, Bernie Madoff, the architect of the largest Ponzi scheme in history, is serving a 150-year prison sentence.


Corporate crimes have significant consequences beyond financial losses. They can damage the reputation of companies and industries, lead to job losses and economic instability, and erode public trust in businesses and institutions.

The consequences of these crimes can be far-reaching, but they can also serve as a deterrent for future illegal and unethical behavior. It is critical that companies prioritize ethical practices and that regulators and laws provide adequate oversight and protection for whistleblowers.

Ultimately, the consequences of corporate crimes highlight the need for transparency, accountability, and ethical behavior in business practices. Corporate crimes have serious consequences that go above and beyond financial losses.

Unethical practices and fraudulent behavior can damage a company’s reputation, lead to job losses, and erode public trust in businesses and institutions. The consequences of corporate crimes include backfiring, avoidable collapses, whistleblowing, and legal punishments such as hefty fines and jail sentences.

It is important for companies to prioritize ethical and legal practices, and for regulators and laws to provide significant oversight and protection for whistleblowers. We must learn from past corporate scandals and tragedies to ensure that our society prioritizes transparency, accountability, and ethical behavior in business practices.

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