• 8 hours ago
Uncover the shocking truth behind some of the most notorious corporate deceptions in modern history. From financial fraud to environmental lies, these companies fooled investors, customers, and regulators with their elaborate schemes and unethical practices.
Transcript
00:00Wells Fargo traded its hard-earned reputation for short-term profits.
00:05Welcome to WatchMojo, and today we're looking at various controversial companies that deceived customers and lawmakers.
00:12Forbes even naming her the youngest female self-made billionaire with a net worth of $4.5 billion.
00:20Enron.
00:21This was supposed to be a very solid company. No worries about your future, right?
00:25If you come from a small dot-com startup, you go to Enron to have a safe future.
00:31But that's no longer there.
00:33This energy and commodities company was one of the hottest names of its time.
00:37By 2000, they were claiming $100 billion in revenue, and their stock price was shooting through the roof.
00:43Everyone was getting on that gravy train.
00:46It was the NVIDIA of the 90s.
00:48But that bubble had to pop eventually, and Puppet did in 2001.
00:52Especially because many workers are losing not only their jobs, but also their retirements, as Enron's stock keeps plunging.
00:59I think that many, many people have lost a substantial amount of money.
01:03Enron had been practicing in widespread accounting fraud,
01:06using fancy terms like off-balance-sheet partnership and special-purpose entities to deceive investors
01:13and make their numbers look much better than they actually were.
01:16The company filed for bankruptcy, and $60 billion in market value instantly evaporated.
01:22It is now remembered as one of the biggest examples of corporate fraud in American history.
01:27Ultimately, more than 20,000 had their careers uprooted.
01:30Many lost all their retirement savings.
01:32The people at the top lost their dignity.
01:35They became national villains.
01:36Some went to prison.
01:38For the man at the very top, it was a sudden and total fall from grace.
01:43FTX.
01:44We need transport.
01:46Weapons, cars, the works, and quietly.
01:50Cool, but I'm just going to need cash, okay?
01:52None of that crypto stuff.
01:53Crypto trading blew up in the late 2010s, and the charge was led by FTX.
01:58Short for Futures Exchange, it allowed people to buy and sell digital currencies like Bitcoin and Ethereum,
02:05and it quickly became one of the most popular platforms for crypto trading.
02:09But its image of reliability was shattered when it was revealed that FTX was grossly mismanaging customer funds.
02:16The FTX group have commenced voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code.
02:22Wiped out. Total wipeout.
02:24In Delaware.
02:25Total wipeout.
02:26The company allegedly used money from its customers to cover risky investments
02:30and losses incurred by its partner firm, Alameda Research.
02:34FTX went bankrupt following the news,
02:37and its founder, Sam Bankman-Fried, was brought up on numerous fraud charges.
02:41In 2024, he was sentenced to 25 years in prison.
02:45Who are the victims here?
02:47And is there any world where they get to receive a payout?
02:50Well, there were investors in FTX.
02:51There were employees within the company that felt that they were betrayed.
02:53But the biggest of all, of course, is the customer base.
02:56Volkswagen.
02:57Michael Horn, head of Volkswagen in the U.S., testifies to U.S. lawmakers,
03:01blaming the scandal on a few engineers.
03:04Senior management was not involved, he says.
03:07People are trying to make the world a cleaner place, and some companies are having absolutely none of it.
03:13Enter Volkswagen, who made international news in 2015 in the midst of Dieselgate.
03:19Volkswagen had marketed its diesel vehicles as environmentally friendly alternatives,
03:24drawing praise from activists and lawmakers alike.
03:26Stop less, go more.
03:28The Passat TDI cleaned diesel with up to 814 highway miles per tank.
03:32Just one reason Volkswagen is the number one selling diesel car brand in America.
03:36However, they had secretly installed defeat devices
03:40to emit lower levels of nitrogen oxides during emissions testings
03:44than they did under normal driving conditions.
03:46Once back on the road, the device was disabled,
03:49and the car emitted up to 40 times more NOx than was legally permitted.
03:54Despite their promises to the contrary,
03:56the company's deceptive practices increased NOx emissions
03:59and significantly contributed to air pollution.
04:02Mr. Liang came to Detroit today to accept responsibility for his actions.
04:07He's one of many people at Volkswagen who got caught up in this emissions scandal,
04:13and he's very remorseful for what occurred.
04:15Worldcom.
04:16You know, the new CEO of Worldcom was faced with this very problem.
04:22The company was linked to one of the largest fraud cases in history,
04:26so he proposed to change the name.
04:29Exactly.
04:29People just don't learn, or don't care.
04:32Worldcom was a major telephone company
04:35that played a significant role in the growth of Internet infrastructure throughout the 1990s,
04:39and it was doing the exact same thing as Enron at the exact same time.
04:44Now, the folks responsible for Enron, Worldcom, Madoff, and Hisilk...
04:54I gotta believe there's a special place in hell for those people.
04:57Yup, it too was engaging in fraudulent accounting practices,
05:00grossly inflating its profits, and artificially raising its price on the stock market.
05:05CEO Bernard Ebers was a charismatic leader
05:09who played a key role in maintaining the facade and bolstering public confidence,
05:13especially at a time when other telecommunications companies were struggling.
05:17But everything collapsed in 2002
05:20when an internal audit revealed massive financial discrepancies and fraud.
05:24Worldcom filed for bankruptcy,
05:26people lost billions,
05:28and Ebers was sentenced to 25 years in prison.
05:31Former Worldcom CEO Bernie Ebers,
05:32who was convicted of orchestrating a multi-billion dollar fraud at that company,
05:36died yesterday at the age of 78, according to his family.
05:39Lehman Brothers.
05:41You should see what's going on at the bigger firms.
05:42I mean, I know all the information.
05:44It's true.
05:45Goldman, Lehman Brothers, Merrill, collateralized debt obligations.
05:49The 2008 financial collapse is often blamed on Lehman Brothers and its historic bankruptcy.
05:55Founded back in 1850,
05:57it grew into one of the largest investment banks in the United States,
06:00and they were particularly active in the mortgage-backed securities market.
06:04However, they fooled both investors and clients
06:07by manipulating balance sheets, over-leveraging,
06:10and engaging in risky business practices like collateralized debt obligations.
06:14Being the crafty and morally onerous chef that I am,
06:17whatever crappy levels of the bond I don't sell,
06:20I throw into a seafood stew.
06:21See, it's not old fish.
06:24It's a whole new thing.
06:25And the best part is, they're eating three-day-old halibut.
06:29That is a CDO.
06:31The average investor, and even many institutional investors,
06:34did not fully understand the complexity of the financial products that Lehman was involved with,
06:39making it easier for them to mask potential issues.
06:42But the company collapsed in 2008,
06:44leading to the largest bankruptcy filing in U.S. history,
06:47and significantly worsening the ongoing financial crisis.
06:51A's, zero.
06:53B's, zero.
06:54Double B's, zero.
06:56Triple B's, zero.
07:00And then that happens.
07:02What is that?
07:05That's America's housing market.
07:07Wells Fargo.
07:08I told them no, I had not been purchasing XYZ and Best Buy,
07:13and all they needed was just for me to verify one text message they sent to me
07:17to confirm the identity on my account.
07:20There was a time when Wells Fargo was regarded as a safe and stable bank.
07:24Not anymore.
07:25While the bank's reputation flourished during the financial crisis,
07:28it collapsed in 2016 after regulatory bodies uncovered a widespread culture of fraud and deception.
07:35Wells Fargo had an aggressive sales culture driven by high-pressure quotas.
07:40And to meet these unrealistic goals,
07:42employees created millions of fraudulent accounts without customer consent.
07:47No one will even notice it.
07:48It's going to be like, sponsored by Wells Fargo.
07:51They were often unaware that these accounts had been opened in their name
07:54until they were suddenly hit with maintenance fees and unexpected charges.
07:58Investigations revealed that around 3.5 million fraudulent accounts had been opened,
08:03leading to massive fines and damaged trusts,
08:06not only with Wells Fargo, but the entire banking sector.
08:09I had 15 accounts at once.
08:11It was just very frustrating.
08:13And these are accounts I never opened.
08:14Boeing.
08:15But in late 2017, as production of Boeing's new 737 MAX ramped up,
08:21Ed Pearson says he started to see things that alarmed him.
08:25On October 29, 2018, Lion Air Flight 610 crashed into the Java Sea, killing 189 people.
08:33Less than five months later, Ethiopian Airlines Flight 302 crashed and killed another 157.
08:39Both planes were Boeing 737 MAXs, and both had a secret feature that pilots didn't know about.
08:46Boeing implemented the Maneuvering Characteristics Augmentation System on the 737 MAX,
08:52but they hid its existence from pilots and did not feature it in the flight manual.
08:56Boeing's contention from the beginning was that even though the pilots did not know that MCAS existed,
09:05that they did not need to know that.
09:08This was likely to minimize pilot retraining costs and rush the plane to market in order to compete with Airbus.
09:15Unfortunately, the system erroneously activated on both flights,
09:19causing the plane to dip and spiral toward the ground.
09:22The pilots failed to regain control.
09:24Two minutes into the flight, based on faulty data from the AOA sensor,
09:29MCAS kicked in and began pushing the nose down.
09:33Bernard L. Madoff Investment Securities.
09:36Bernie Madoff ran the biggest criminal enterprise in the history of Wall Street.
09:40He was a financial sociopath, a serial financial killer.
09:44Seems like white-collar crimes are a dime a dozen, and the 2000s was an especially bad time for it.
09:51Former NASDAQ chairman Bernie Madoff ran Bernard L. Madoff Investment Securities,
09:56through which he conducted the most prosperous Ponzi scheme in history.
10:00He employed a strategy that few understood and kept his business operations opaque,
10:05allowing him to steal over $60 billion in investments.
10:09Regardless, it took investor Harry Markopoulos literally five minutes to realize that something was up.
10:14How long did it take you to figure out that there was something wrong?
10:18It took me five minutes to know that it was a fraud.
10:21But his repeated warnings were ignored,
10:23and it wasn't until Madoff's own sons turned against him that the deception was finally unveiled.
10:29Many people lost their life savings, and Madoff was sentenced in 2009 to 150 years in prison.
10:36He died in April 2021.
10:38This former iconic figure on Wall Street has allegedly, but by his own admission,
10:43destroyed many lives, charities and reputations on Wall Street and around the world.
10:48Theranos. She thought that she couldn't be held accountable,
10:51that she thought that she could tell investors anything,
10:54that she could tell institutions and financial agencies whatever she wanted to and not be held accountable.
11:01And that's just false. You know what they say.
11:04If something sounds too good to be true, it probably is.
11:07Enter Theranos, a company that claimed to have revolutionized blood testing.
11:11They had supposedly made a device that could quickly and accurately test blood from just a small finger prick.
11:17If true, this would have upended the entire blood testing process and revolutionized the healthcare industry.
11:23No, no, no, no, no, no. This is your vision, Elizabeth, and it's inspired everyone here.
11:29Of course, it wasn't true.
11:31Its founder, Elizabeth Holmes, had deceived investors out of $700 million
11:36and gave many customers false hope, not to mention false test results.
11:41The truth was eventually unveiled.
11:42Theranos was dissolved, and Holmes was brought up on numerous charges,
11:46resulting in a prison sentence of just over 11 years.
11:50Elizabeth Holmes taking her last steps of freedom,
11:54looking back as her partner and parents wave goodbye and blow kisses her way.
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12:14Purdue Pharma.
12:15This year has led to the beginnings of a reckoning for the manufacturers, marketers, and distributors of opioids.
12:22The epidemic has taken hundreds of thousands of American lives over the past two decades.
12:28Often considered one of the most deplorable companies in American history,
12:32Purdue Pharma was founded back in 1892, but collapsed under the infamous Sackler family.
12:37The company developed a number of highly addictive prescription drugs,
12:41most notably OxyContin, which they tricked the world into taking in order to raise their profit margins.
12:47They essentially bribed doctors into prescribing it to their patients.
12:50But worst of all, they outright lied about the drug's addictive nature.
12:54Physicians need to know it could take its place next to penicillin as one of the most important in the history of medicine.
13:03Let's hold more weekend seminars to explain to physicians how truly revolutionary this drug is.
13:10Purdue claimed it was less prone to abuse compared to other painkillers, which was blatantly false,
13:15and they downplayed the health risks to doctors and patients alike.
13:19This led to widespread overprescribing, which in turn led to widespread addiction,
13:24and, resultingly, the ongoing opioid epidemic.
13:27I think they knew that they were they were mismarketing it,
13:30and they continue to do so anyway because it really was all about profit.
13:35Did you fall for the scam? Let us know in the comments below.
13:39So at what point did you start to think, hey, there might be something wrong with what we're doing here?
13:45Did you enjoy this video? Check out these other clips from WatchMojo,
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