The Biggest CEO Outrages Of 2009

Almost a year ago, Bernard Madoff raised the bar for corporate malfeasance to an all-time

high when he was arrested on charges of orchestrating a $50 billion Ponzi scheme.

Unsurprisingly, nobody managed to top Madoff's crimes in 2009, but 10 executives showed

enough greed, hubris and chutzpah to altogether give him a run for his (stolen) money. Here

are the biggest CEO outrages of the year (in honor of the holiday spirit, we're choosing

them now and letting off anyone caught red-handed in December 2009).

In November a federal court sentenced Robert Moran, a UBS private banking client who is also

the chief executive of Moran Yacht & Ship, to a two-month prison sentence for tax fraud.

Moran's case came out of a larger government investigation into wealthy Americans who have

used UBS to hide their money offshore and avoid U.S. taxes. Moran had pleaded guilty in

April to filing a false tax return, and had admitted to concealing more than $3 million in a

secret UBS account. He finishes at No. 10 on our list.


While Moran was busy rigging his yachts, David Rubin (No. 9) was busy rigging auctions,

according to the Department of Justice. In October prosecutors indicted Rubin, the chief

executive of CDR Financial Products, a municipal bond brokerage, on conspiracy and fraud

charges. According to the indictment, Rubin's firm rigged auctions that help determine which

banks get the lucrative business of assisting governments in raising money. The prosecutors

contend that participating banks kicked a portion of their profits back to Rubin, who denies

the allegations. Like everyone on this list who has been indicted but not yet found guilty,

he of course must be presumed innocent until proven guilty. But also like all the rest, he

has gotten himself into a heap of ugly trouble in any event.

R. Allen Stanford (No. 8), the cricket-loving Texan who was, according to Forbes, a

billionaire until this year, scored high in chutzpah in 2009. He and his co-defendants

allegedly sold $7 billion worth of certificates of deposit through his Stanford

International Bank and misappropriated most of the money, diverting more than $1.6 billion

in undisclosed loans to him personally. According to his indictment, he got by with a little

help from his friends--in particular the chief executive of the Financial Services

Regulatory Commission of the island nation Antigua and Barbuda, Leroy King. The Securities

and Exchange Commission claims that in return for $100,000 from Stanford, King kept Stanford

abreast of SEC inquiries into his dealings. Stanford has pleaded not guilty. If convicted,

he faces up to 250 years in jail.

Pity the mostly Asian investors who let Danny Pang (No. 7), the founder and former chief

executive of Private Equity Management Group, manage their money. In April the SEC accused

him of running a Ponzi scheme that defrauded his investors of hundreds of millions of

dollars. Pang died in September at age 42, before he could stand trial. A coroner's report

expected by January is expected to say whether he committed suicide.

In October the SEC charged Raj Rajaratnam, founder of the hedge fund Galleon Group, along

with executives from Intel, International Business Machines and McKinsey, with insider

trading. The government relied on wiretaps to show how Rajaratnam (No. 3) allegedly used

private information to help boost the returns at his $3.7 billion hedge fund. He allegedly

made more than $33 million in illicit profits; he strenuously denies the charges and is out

on bail awaiting trial.

Two businessmen displayed especially vivid imagination in their extremely dubious

activities. In Minnesota, Thomas Petters (No. 5) went on trial in October for allegedly

orchestrating a $3.5 billion fraud. Federal prosecutors accused him of promising rich

returns to investors who lent him money to buy flat-screen TVs and other excess goods from

troubled retailers for resale to companies like Sam's Club. The only problem: Petters had

allegedly cooked up fake purchase orders and invoices to hide the fact that those surplus

goods never existed. Prosecutors claim that he used new investor money to pay off old

debts--the old pyramid scheme technique--and used the profits to fund his extravagant

lifestyle. As we go to press the case is before the jury.

Thousands of miles away, B. Ramalinga Raju (No. 4) was living in his own fantasy world. The

founder of the Indian outsourcing company Satyam Computer Services, he confessed in January

to overstating Satyam's profits over several years and creating a fictitious cash balance of

more than $1 billion. He invented more than 10,000 fictitious employees to help him steal

money from the company, and he used his mother's name to buy land with the proceeds. He

confessed, but has yet to face charges in court.

The uproar over Wall Street bonuses this year earned two prominent executives places on our

list. Edward M. Liddy (No. 6), who began running America International Group last September,

faced a nationwide firestorm when it emerged that executives in his firm's financial

products division, who bore considerable responsibility for the insurance giant's near

collapse, were being rewarded for their disastrous results with $165 million in retention

bonuses. The retention packages had been put in place before Liddy joined the firm last year

and were tied to 2007 pay levels, so they weren't affected by the firm's more recent losses.

Liddy insisted that though the bonuses were "distasteful," AIG was legally obligated to

honor its employment contracts. Many across the nation disagreed--and took it personally,

since the company had received almost $200 billion in federal bailout funds courtesy of the

American taxpayer.

John Thain, then the chief executive of Merrill Lynch, pushed through $3.62 billion in

bonuses for his executives last December, rather than waiting until January as usual, just

as the company was being taken over by Bank of America. Then in January, Bank of America

revealed that Merrill had lost $15.3 billion in the fourth quarter of 2008. That bonus push

just made Thain's ill-starred captaincy of Merrill, which had begun with his million-dollar

renovation of his office a year before, look even worse than before. Less than a week later

Kenneth Lewis, the CEO of Bank of America, forced Thain out of his job.

And last but not least: the divine Lloyd Blankfein (No. 1), chairman and chief executive

officer of Goldman Sachs. Despite bearing scant resemblance to, say, Mother Theresa, the

Pope or the Dalai Lama, Blankfein told the Sunday Times of London in November that he was

just a banker doing "God's work." He later said he meant it as a joke, but he certainly pays

himself as if he were accomplishing something greater than human: In 2007 he made $73

million, according to Forbes, and only $25 million in 2008, as the economy tanked, but look

for a recovery in his compensation this year as Goldman Sachs has recovered far ahead of the

economy as a whole. In honor of the modesty of his pronouncement, we lift him to the

celestial height of No. 1 on our list of CEO outrages of 2009.