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Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 2:17 pm
by Addie
The Guardian
General Electric shares tank following accusation of 'bigger fraud than Enron'

GE’s share price tanked after Madoff whistleblower claimed company is engaging in accounting fraud worth $38bn.

The whistleblower who called out Bernard Madoff’s Ponzi scheme has accused General Electric of wide-scale fraud in a move that has sent the conglomerate’s share price into a tailspin.

In a report titled General Electric, a Bigger Fraud Than Enron, investigator Harry Markopolos claims GE is engaging in accounting fraud worth $38bn. He said GE is heading for bankruptcy and is hiding $29bn in long-term care losses.

“GE’s $38bn in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” he writes, referencing two of the largest corporate accounting scandals in history.

GE’s share price sank close to 15% after the report was released.

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 2:26 pm
by tek
and for an opposing viewpoint
https://www.cnn.com/2019/08/16/investin ... index.html
GE isn't the only one pushing back on his most recent claims. Another firm that specializes in exposing accounting problems, Citron Research, took issue with the Markopolos findings too. The company said in a tweet that the report "was the worst that activist short selling has to offer. Aggressive accounting is not fraud." Citron added that the Markopolos report was "disingenuous all the way through."

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 4:41 pm
by Hurtzi
If this so called "aggressive accounting" falsifies the true state of GE's finances, it is fraud.

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 5:26 pm
by Sterngard Friegen
He said GE is heading for bankruptcy and is hiding $29bn in long-term care losses.
What are "long term care losses"?

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 6:00 pm
by Sunrise
I have long term health care insurance and my policy is currently owned by GE. I assume this is what was being referred to.

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 6:02 pm
by realist
He’s also working with a firm which is shorting stock. Gee, I can’t imagine why he’d make such an announcement. Oh, wait. :smoking:

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 6:06 pm
by tek
Lots of fluff in the air on this right now.

I can see both sides. And both sides are not without vested interests.

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 6:17 pm
by Hurtzi
Hurtzi wrote:
Sat Aug 17, 2019 4:41 pm
If this so called "aggressive accounting" falsifies the true state of GE's finances, it is fraud.
I have no clue on GE. I know about accounting.

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 7:02 pm
by tek
Hurtzi wrote:
Sat Aug 17, 2019 6:17 pm
Hurtzi wrote:
Sat Aug 17, 2019 4:41 pm
If this so called "aggressive accounting" falsifies the true state of GE's finances, it is fraud.
I have no clue on GE. I know about accounting.
Yeah, and not clear what is really up here.

I have incredibly mixed feelings about GE..
On the one hand, it's GE.. been here longer than my (deceased) grandparents, driven a lot of good research, developed a lot of good things.
On the other hand, it's GE. They have totally f'd many rivers in my (and my ancestors) homeland, and left many cities in ruin.

And I know nothing about accounting. (well, not really true, being a business owner)

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 7:17 pm
by ZekeB
I have some GE appliances. For some reason or another they keep trying to sell me an extended warranty for my microwave. The original warranty expired eons ago. It's the same warranty at the same price that I had to purchase, but didn't, before the factory warranty expired. Same great price with the same great discount. Why should I buy a warranty from a firm that is about to go Tango Uniform?

Re: Bigger Fraud Than Enron

Posted: Sat Aug 17, 2019 7:49 pm
by tek
ZekeB wrote:
Sat Aug 17, 2019 7:17 pm
Why should I buy a warranty from a firm that is about to go Tango Uniform?
Today, can't really tell who is gonna go Tango Uniform.

Re: Bigger Fraud Than Enron

Posted: Sun Aug 18, 2019 7:02 am
by Suranis
The basis of the Enron fraud was Mark to Mark accounting. That meant is that if they got a contract for, say, 10 million over the next 10 years, they would book the whole 10 mill as this years profit. Then it branched out to fancy accounting tricks to hide losses and/or push them to the future, and then using their stock and utilities trading arm to cover the losses of their other divisions, while pretending they were not a trading firm.

Re: Bigger Fraud Than Enron

Posted: Mon Aug 19, 2019 4:52 pm
by Lani
Ex-SEC chief: Markopolos targeting GE for a short-seller and not as a whistleblower 'suspicious'
https://www.cnbc.com/amp/2019/08/19/har ... lower.html

GE issued a statement earlier today as well.

Re: Bigger Fraud Than Enron

Posted: Tue Aug 20, 2019 7:45 am
by Chilidog
Sunrise wrote:
Sat Aug 17, 2019 6:00 pm
I have long term health care insurance and my policy is currently owned by GE. I assume this is what was being referred to.
A lot of industrial firms that were big in the heyday of American heavy industry (50s- to early 70's) have significant liabilities due to occupational related diseases.

Re: Bigger Fraud Than Enron

Posted: Tue Aug 20, 2019 8:03 am
by fierceredpanda
There had been rumblings for a while about GE's Health and Finance divisions gobbling up more and more of the balance sheet, as well as about their rather large amount of debt. It wouldn't shock me at all if it turned out that they were doing a lot of funny accounting and paper shuffling in order to prop up the stock price and make themselves appear more creditworthy to the bond market. A buddy of mine from college had been in corporate IT at GE Health and got let go a couple years back (he landed okay, he's at Nike now and loves it). He had told me it felt like something was just "off" for his entire tenure at GE.

Or it could be a short-seller trying to make some waves and take a few points off GE's stock. But I wouldn't bet on that.