Word: fraud
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Dates: during 1980-1989
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...issue is who should be held most accountable for detecting and disclosing management fraud. The debate has heated up since the 1982 failure of Oklahoma's Penn Square Bank and the subsequent near collapse of Continental Illinois Bank of Chicago. Litigants are asking at least $400 million from Peat Marwick for its alleged failure to predict the Penn Square debacle. Then came the 1985 furor over E.S.M., the Fort Lauderdale Government-securities firm, amid a scandal that involved massive fraud. E.S.M.'s auditor, Chicago-based Grant Thornton (formerly Alexander Grant), has reportedly since been slapped with some $1 billion...
Melvyn Weiss, a Manhattan lawyer who has spearheaded many of the liability suits, contends that the accounting profession "is suffering for its own failure to deliver on its promise to protect society from fraud." Agrees Price Water...
...strained their modest income until, less than a year later, they had lost their house. But the Millsapses along with eight other families that were hustled in the same scheme, brought a RICO suit and last July won a $115,000 collective settlement. "Congress believed that private victims of fraud are also entitled to relief," says former Federal Prosecutor Charles Wehner...
...RICO in 1970 sought to create matching law-enforcement breadth by focusing on patterns rather than instances of criminal behavior. Thus the law applies to those involved in an interstate "enterprise" that engages more than once in ten years in criminal activities ranging from mail, wire and stock fraud to extortion and murder. While many smiled over the acronym's reference to Rico, the archetypal gangster played by Edward G. Robinson in Little Caesar, federal prosecutors were slow to use the new legislation. But "since 1980 it's been used aggressively," says the delighted principal drafter, G. Robert Blakey...
Supporters of the law, including consumer advocates and plaintiffs' attorneys, reply that even legitimate businesses can behave in illegitimate ways and that government cannot police every violation. RICO, they add, gives the victims of such practices a needed and powerful means of redress. Existing ) fraud laws or securities regulations were not enough, argues Blakey. "Under RICO, the perpetrator knows, 'If I'm caught, I don't just have to give back what I took. I give back three times what I took. It's suddenly economically unwise for me to engage in fraud...