List of Corporate Repeat Offenders
FTCR research, including extensive information reported in the legal newsletter Corporate Crime Reporter, identifies corporate entities found guilty of “strikes” — convictions or pleas to felony criminal charges — over the last decade. Many companies with only one “strike” violation were also found to have a history of lesser criminal and civil convictions, fines and settlements. Some of these non-“strike” infractions are included in italics.
3 “STRIKE” CONVICTIONS
Teledyne, in 1989, was convicted of felony fraud and conspiracy charges in the “Ill Wind” corruption scandal for arranging to buy secret government contract data through Pentagon insiders. The company paid $4.3 million in fines, reimbursements and court costs.
In 1992, Los Angeles-based Teledyne Relays pleaded guilty to criminal charges of preparing and submitting false statements to the government and paid a $17.5 million fine. The corporation defrauded the federal government selling it relay switches for four times their value by asserting that the switches had undergone intensive testing they had not received.
Teledyne was convicted again a year later, this time filing a guilty plea to three felony counts of making false statements to the government about commissions paid to a Taiwanese consultant in order to solicit business with Taiwan. Teledyne paid a $1.5 million fine for this crime.
In 1995, Teledyne again pleaded guilty, this time to conspiracy to violate the US Arms Export Control Act by illegally exporting cluster bomb components to a Chilean arms dealer. The components were alleged to have eventually ended up in Iraqi bombs. The corporation was fined more than $13 million.
Teledyne has no incentive to change its criminal ways. Not only has the company been convicted of at least four felony acts, it was also involved in numerous civil cases in which multi-million dollar fines were assessed. Two whistleblower suits involving the falsified testing of military equipment and fraudulent accounting practices were settled in 1994 for $112.5 million. In 1995, Teledyne settled an additional whistleblower claim for $2.2 million which alleged that the whistleblower had been harassed into quitting after informing investigators that the company was falsifying tests to sell radio gear to the federal government. The company settled federal civil charges in the matter for $19 million.
2 “STRIKE” CONVICTIONS
Arizona Chemical Co., a wholly-owned subsidiary, pleaded guilty to felony charges of violating the Clean Water Act and Resource Conservation and Recovery Act for manipulating a wastewater treatment system and misrepresenting the storage of hazardous wastes.
In 1991, the company pleaded guilty to another five felony environmental violations, and paid $2.2 million in criminal fines, for knowingly generating, storing and treating hazardous wastes without a permit.
Louisiana-Pacific was fined $37 million, and was placed on five years probation, in 1992 when it pleaded guilty to 18 felonies, including: conspiring to violate the Clean Air Act and False Statement Act, tampering with a mill’s air pollution monitor, and lying to the Colorado Department of Health about its violations. The investigation included both environmental and consumer fraud violations.
In 1995, Ketchikan Pulp Company, a wholly owned subsidiary, pleaded guilty to dumping harmful sludge and wastewater into Alaska’s Ward Cove, including an intentional dump that lasted for five straight days. The company paid over $6 million in fines and penalties.
In 1992, Rockwell pleaded guilty to four felony violations of the Resource Conservation and Recovery Act and to one felony and five misdemeanor counts of the Clean Water Act for illegally storing, treating and discharging hazardous wastes generated during the production of nuclear weapon components at its Rocky Flats, Colorado plant. The plant’s discharge included trace amounts of plutonium, one of the most hazardous toxic substances known. In 2003, the site’s cleanup — directed under Environmental Protection Agency guidelines for the nation’s most contaminated “Superfund” sites — continues.
In 1996, the company’s Rocketdyne subsidiary pleaded guilty to three felony counts of illegal waste disposal and agreed to pay a $6.5 million fine in connection with a chemical explosion that killed two scientists at the firm’s Santa Susana Field Laboratory in Simi Hills, California. Prosecutors alleged that the scientists had been illegally destroying explosive waste materials, in the guise of testing, and the environmental violations had led to the men’s deaths.
Rocketdyne’s Simi Hills laboratory (now owned by Boeing) is under intense scrutiny again, this time suspected of being the source of possible perchlorate contamination on the floor of the West San Fernando Valley. Percholorate, linked with thyroid dysfunction and a variety of health problems, and is suspected to have trickled down the hillside where the lab is located to contaminate the ground near West Hills and Chatsworth homes.
ROYAL CARIBBEAN CRUISES
Royal Caribbean pleaded guilty in 1998 to felony charges of dumping oil off the coast of Florida and Puerto Rico, and agreed to pay $9 million in fines & penalties. After the guilty plea, the company ran advertisements in local newspapers about its behavior, and pledging to do a better job. One of the ships convicted of dumping was then found to have repeated its acts, and covered up the action with false records as before, a month after the ads were printed.
A year later the company was convicted of related charges. It paid another criminal fine, this time for a record $18 million, & pleaded guilty to 21 felony counts of dumping waste oil, hazardous chemicals, and other pollutants and lying about its violations to the Coast Guard. The charges were filed in six US cities where federal environmental laws were violated, including Los Angeles, California. The company admitted it routinely dumped waste, including in environmentally sensitive areas, while promoting itself as a “green” company. The investigation also uncovered that eight of Royal Caribbean’s cruise ships continued to dump illegally, even after being notified the company was under investigation in 1994.
UNITED TECHNOLOGIES CORPORATION
Pleaded guilty in 1991 to six felony violations of federal environmental laws after illegally dumping hazardous waste at a Connecticut aircraft facility.
Pleaded guilty again in 1992 to four felony counts of conspiracy to defraud the government by using insider information to bid on defense contracts and paid $6 million in penalties.
United Technologies also paid $150 million in 1994 to settle civil fraud suits.
1 “STRIKE” CONVICTION
ARCHER DANIELS MIDLAND, AJINOMOTO CO. & KYOWA HAKKO KOGYO
The three companies pleaded guilty, in separate filings, to felony violations of the anti-trust Sherman Act, for participating in conspiracies to fix prices and allocate sales in lysine and citric acid markets worldwide. The companies paid combined criminal fines of over $120 million.
ARTHUR ANDERSEN LLP
In 2002, Andersen was convicted of a felony count of obstruction of justice in connection with its destruction of evidence in the federal investigation of financial fraud at Enron Corporation.
In 2001, Arthur Andersen settled a Sunbeam shareholder lawsuit for $110 million. The shareholders alleged that the corporation was responsible for losses incurred when Andersen allowed Sunbeam to file inflated earnings statements. Shortly on the heels of this settlement, Anderson paid a $7 million fine to the SEC. They were cited for improper professional conduct for filing a false and misleading audit of Waste Management, Inc. (WMI) which included overstating WMI earnings by $1.4 billion. Arthur Andersen paid another $217 million to settle a civil lawsuit in 2002 brought by shareholders of the Baptist Foundation of Arizona who also charged the corporation with misleading audits of the company.
The company pleaded guilty to conspiracy to violate the Prescription Drug Marketing Act for providing kickbacks to doctors — by giving them free samples they would then bill to Medicare — to induce them to prescribe an AstraZeneca cancer drug. The company paid $355 million to settle criminal and civil charges.
BANK OF CREDIT AND COMMERCE INTERNATIONAL (BCCI)
Two of the bank’s units pleaded guilty in 1990 to 29 felony counts of laundering illegal drug profits, some of which were connected to Panamanian dictator, Manuel Noreiga. The bank paid $550 million in restitution, fines and penalties.
Pleaded guilty in 1999 to three felony counts of making false entries in bank books and records to enhance the bank’s financial performance.
Company pleaded guilty in 1993 to a felony charge of violating the Anti-Boycott Statute by providing information to the Arab League about its dealings with Israel.
BLUE CROSS BLUE SHIELD OF ILLINOIS
The company pleaded guilty to eight felony counts of obstructing justice and conspiring to obstruct federal auditors under the False Claims Act, by concealing evidence of poor performance in processing Medicare claims. The company paid $144 million to settle the charges.
BLUE SHIELD OF CALIFORNIA
Blue Shield pleaded guilty in 1996 to charges of falsifying Medicare audit reports and concealment of claims processing errors. The company admitted to three felony counts and was fined $1.5 million.
BORDEN INC. and SOUTHLAND CORPORATION
The companies jointly pleaded guilty to felony charges of bid-rigging in the sale and supply of dairy products to Florida school programs and military installations.
BP-ARCO [subsidiary: BP Exploration, Inc]
Pleaded guilty to one felony count for illegal disposal of hazardous waste on Alaska’s North Slope, and paid $22 million to resolve the case and related civil claims. The company was responsible for the injection of waste oil and hazardous substances down the outer rim of oil wells located on an island NE of Prudhoe Bay.
BP has also been involved in numerous civil cases, including: $45.8 million settlement with the California Attorney General for widespread underground tank violations; a $43.8 million settlement to compensate for 40 years of polluting a California coast oil field, where the company was also found guilty of 3 misdemeanor pollution charges; $3 million in misdemeanor & civil fines for a chemical release at a Northern California refinery that sickened hundreds of residents; and a $4.22 million fine to settle a civil suit charging BP with violating the Clean Water Act at a San Francisco Bay refinery.
The food company pleaded guilty to federal criminal charges, including a felony wire fraud count, and additional counts of adulterating, mis-grading and mis-weighing grain in order to defraud farmers and increase its own profit and inventories. ConAgra paid $8.3 million in penalties.
ConAgra paid $1.5 million in 2003 to settle a lawsuit filed by the Equal Employment Opportunity Commission on behalf of disabled workers who alleged they were discriminated against by the company after the conclusion of a strike action.
Pleaded guilty to six felony violations of the Clean Water Act and Oil Pollution Act for discharging harmful amounts of oil and grease into the Charles River in 1995. The company paid a $2.5 million fine.
The generic drug manufacturer pleaded guilty to a felony count of conspiracy to defraud the FDA by changing manufacturing methods and falsifying records of the changes. Copley paid a fine of $10.65 million in 1997.
COSTAIN COAL INC.
Pleaded guilty in 1993 to 29 criminal charges that it followed a pattern of misconduct that endangered its workers, and concealed the hazardous conditions from federal regulators. The charges followed a mine shaft explosion involving methane gas which killed 10 workers. The company paid a $3.75 million fine.
DAIWA BANK, LTD
Pleaded guilty in 1999 to 12 felony criminal charges, including conspiracy to defraud the United States, falsifying bank books and records, wire fraud, and obstructing a bank examination. The company was found to have covered up massive securities trading losses by deceiving and defrauding bank regulators
In 1992, Dexter pleaded guilty to eight felony counts of violating the Clean Water Act when the company illegally disposed of waste at its Windsor Locks facility, paying $13 million in fines and penalties.
EASTMAN CHEMICAL COMPANY
The company pleaded guilty in 1998, and paid an $11 million fine, for participating in an international price-fixing conspiracy in the food preservatives industry.
EKLOF MARINE CORPORATION
The corporation pleaded guilty to one state felony environmental charge in connection with a 1996 oil spill off of Rhode Island, and paid $8.5 million in fines and conservation payments.
F. HOFFMANN-LA ROCHE & BASF AG
Both companies pleaded guilty to felony anti-trust charges for violations of the Sherman Act and were fined a record $725 million, combined. The two corporations led a worldwide conspiracy to raise and fix prices, and allocate market shares, for commonly used vitamins in the US and elsewhere for nearly 10 years.
San Francsico-based Genentech, majority-owned by Roche Holdings, was convicted in 1999 of criminal charges for improper promotion of its drug hormones and paid a $50 million fine.
FREQUENCY ELECTRONICS INC.
After an eight year investigation, Frequency Electronics pleaded guilty to one felony count of filing a false statement with the government in connection with a defense satellite subcontract it was working on with TRW. The company paid a $400,000 fine and $1.1 million for the costs of the government investigation.
GEORGIA PACIFIC CORPORATION
The company pleaded guilty in 1991 to a felony charge of tax evasion for falsely claiming a $24 million charitable contribution deduction for a piece of land the company had bought three years earlier for just $2 million.
GUIDANT CORP [subsidiary: Endovascular Technologies]
Pleaded guilty to 10 felony counts, and paid a $94 million penalty, for misleading shareholders, hospitals and the public about defects in a medical device meant to strengthen the aorta. The device contributed to the deaths of at least 12 patients, and led to emergency surgery on 57 patients.
HAL BEHEER BV [subsidiary: Holland America]
Pleaded guilty to felony charges of illegal bilge discharge and keeping false records. The company paid a $2 million fine and was placed on probation for five years in 1998.
IBM [subsidiary: IBM East Europe/Asia Ltd]
Corporation pleaded guilty to 17 felony counts of illegally exporting computers to a Russian nuclear weapons laboratory, and paid an $8.5 million fine in 1998.
IROQUOIS PIPELINE OPERATING CO
Pleaded guilty to felony charges of violating environmental and safety laws, including the Clean Water Act, when the company failed to clean up or restore damage to streams and wetlands as a result of rushing to meet construction deadlines on a natural gas pipeline. The company paid $22 million in criminal and civil fines
JOHN MORRELL & CO
Pleaded guilty to a felony violation of the Clean Water Act after dumping slaughterhouse waste into a South Dakota river over an eight year time span, and concealing its crime. The company paid a $2 million criminal fine and established a $1 million local environmental cleanup fund.
Two Litton units paid $18.5 million in fines and restitution when they pleaded guilty in 1999 to felony charges of conspiracy, mail fraud and filing a false statement with the government. The company was accused of concealing bribes to consultants to secure defense business in Taiwan and Greece.
Pleaded guilty in 1999 to a felony violation of the Sherman Act for participating in a conspiracy to fix prices and allocate sales of vitamin B3. The company paid a $10.5 million criminal fine.
MOTIVA ENTERPRISES [joint venture of Royal Dutch Shell & Saudi Aramco]
Motiva pleaded no contest to one felony charge of criminally negligent homicide & six misdemeanor assault charges for the 1999 death of a worker (& injury of several others) when an acid storage tank collapsed, exploded and burst into flames at a Delaware refinery. Company paid just $296,000 in penalties (the maximum in DE).
Motiva is also currently under investigation for federal environmental violations, for which it could face millions of dollars in fines.
OLSTEN CORP [subsidiary: Kimberly Home Health Care]
The company paid $61 million in criminal and civil penalties, and pleaded guilty to three felony charges of conspiracy, mail fraud and violating the medicare Anti-Kickback statute, in connection with a scheme to defraud Medicare with Columbia/HCA.
OLYMPIC PIPELINE & EQUILON PIPELINE
Olympic pleaded guilty, and Equilon pleaded “no contest”, to charges stemming from a 1999 gasoline pipeline rupture in Washington state, including violations of the Clean Water Act and the Hazardous Liquid Pipeline Safety Act. The rupture resulted in an explosion which caused the deaths of three people, as well as contaminating nearby waterways. Olympic paid $11 million, and Equilon paid $25 million, in civil and criminal fines, and both were placed on five years probation.
PALM BEACH CRUISES
Pleaded guilty in 1994 to a felony violation of environmental law by discharging waste oil into the ocean and causing a 2.5 mile oil slick off of Florida.
Cruise line pleaded guilty to one felony count of dumping garbage into the Atlantic Ocean in 1993 in violation of a 1987 law regulating ocean dumping.
RYLAND MORTGAGE COMPANY
The company pleaded guilty to felony charges that its mortgage subsidiary defrauded the US government and paid $8.7 million in fines and restitution in 1998.
SGL AG, UCAR INTERNATIONAL, SHOWA DENKO CARBON & TOKAI CARBON
The four companies were separately charged and tried for participating in an international cartel to fix prices and allocate supply of graphite electrodes sold in the US and elsewhere. Each pleaded guilty to anti-trust violations of the Sherman Act, and paid over $260 million in criminal fines.
SUMMITVILLE CONSOLIDATED MINING CO.
Pleaded guilty to 40 federal felony charges in 1996 for dumping toxic chemicals into the headwaters of the Rio Grande, and deceiving federal regulators about the practice, for at least three years.
TAP PHARMACEUTICALS [joint venture: Abbott Laboratories & Takeda Chemical Laboratories]
Pleaded guilty to criminal felony charge of conspiracy to violate the Prescription Drug Marketing Act, settling charges that the company provided kickbacks to doctors by distributing free samples of cancer medication with full knowledge that doctors were going to bill Medicare for the drug. TAP paid the largest fine ever, $875 million, in a health care fraud case.
TENET HEALTHCARE CORPORATION
In 1994, Santa Barbara-based Tenet (then National Medical Enterprises) pled guilty to federal conspiracy charges for paying kickbacks and bribes to doctors, and related medical professionals, to induce them to direct patients to Tenet’s psychiatric hospitals. In some cases, patients were committed without ever having seen a doctor and were typically held at the hospitals, often against their will, until their insurance benefits expired. Tenet paid $375 million in fines and penalties to settle the charges, the largest ever paid at the time in a health care fraud case.
Tenet had paid $200 million the year before to settle legal disputes with insurers over the same actions, and in 1997 settled civil lawsuits by patients against the company for an additional $100 million. The company was again accused of Medicare fraud in 2002, this time through inflated pricing. The corporation paid $4.2 million on February 11, 2003 to settle government claims similar to those in California that its five Florida hospitals were overbilling Medicare. It is currently under scrutiny by the Federal Bureau of Investigation for allegations of false diagnoses and performance of unnecessary heart surgeries at its Redding Medical Center in Northern California.
TRW INC [subsidiary: Vehicle Safety Systems Inc]
TRW, one of the nation’s largest government contractors, has a history of violating workplace safety laws. The company agreed to pay nearly $25 million in penalties to settle charges that, for years, it illegally stored and disposed of toxic chemicals in three states. $12 million of the amount was fines for pleading guilty to 15 felony criminal counts.
TRW also paid $1.7 million to settle a case brought by the Arizona Industrial Commission arising out of an explosion at the company’s plant in the mid-1990’s. The company had a class action suit brought against it by community members who allege plant emissions, and frequent safety violations leading to fires and explosions, caused illness and even death in the community.
In 1997, Tyson entered a guilty plea on one felony count of attempting to influence the Secretary of Agriculture by giving him more than $12,000 when Tyson had issues before the department.
Also in 1997, Tyson Foods paid out a settlement of $6 million in connection with workplace safety violations, which had caused as many as seven worker deaths in a single year. Seven workers died at plants run by Tyson (or Tyson operators) in 1999 due to workplace safety violations. In February of 2003, a US prosecutor filed new criminal charges against the company, this time alleging that Tyson conspired to smuggle illegal workers into the country from Mexico and Central America to labor in Tyson plants.
Company pleaded guilty to an eight-count felony indictment including: conspiracy to defraud the US, bribery, and false claims in order to win federal defense contracts. The company paid $190 million in criminal and civil fines and restitution in 1991.
UNITED STATES SUGAR CORPORATION
Pleaded guilty in 1991 to eight felony counts of environmental charges involving the illegal disposal of hazardous wastes.
USX CORPORATION [subsidiary Marathon Oil]
Pleaded guilty in 1991 to one felony and two misdemeanor violations of the Clean Water Act for illegally discharging pollutants from an Indiana refinery.
Pharmaceutical company pleaded guilty to one felony count of fraud in 1995 for concealing quality problems by failing to notify the FDA about drug stability problems with one of its widely used epilepsy drugs. The corporation paid a $10 million criminal fine.
The company also paid a $3 million criminal fine for falsifying reports on the levels of pollutants it was releasing from a wastewater drainage plant in Puerto Rico, and a $670,000 civil penalty for another case in which it released excessive levels of pollutants.
WASTE MANAGEMENT INC (WMI) [subsidiary: Chemical Waste Management Inc]
Pleaded guilty in 1992 to six felony violations of the federal Superfund law for the company’s failure to notify the government about hazardous wastes released into the environment, and knowingly and intentionally crushing numerous drums containing hazardous substances in order to speed up a clean-up. The company paid a $3 million criminal fine and $2.85 million in criminal restitution.