- Enron - it wasn't a case of overstated profits - Enron was literally a Ponzi scam from the ground up, engaging in heavier borrowings each year just to keep the place running. This is why the "whistleblower" Sherron Watkins was given way way too much credit - there was nothing to Enron but corruption to its core
- Mutual Funds - the "market timing" issues brought to light by Spitzer were awful - mutual fund owners were not serving their shareholders by allowing the hot after hours money, and they knew it all along
- Insurance Brokers - Marsh and other firms that claimed to shop for insurance quotes but who really "steered" business to favored clients who gave them a back-door cut of the action
- The Nasdaq bubble - 5 years ago this month the Nasdaq index hit a peak, and hucksters were pushing the famous "POS" stocks like crazy, knowing that it was all a bubble in their hearts (and through their emails) and making money all the way up and shorting them all the way down...
- Other financial scandals - WorldCom under Ebbers totally cooked the books and many others did in various other ways large and small
- Note one thing all of these items had in common - the auditors didn't catch them and they either were fooled, willfully ignorant or knew what was going on but didn't want to put their fees at risk by confronting the client
Another one has come to light recently. When executives made money on their options, they didn't want to pay taxes. So they created a Family Limited Partnership or FLP ("flip") that they moved the options to (who then sold them right away) and then wrote a note back to the executive to defer gains over 30 years. This doesn't sound legit, and the IRS recently ruled that they are unlawful.
To compound the problem, the company didn't take a legitimate tax deduction on the value of the options exercised by the executives because the executives didn't want the IRS to look through these deductions and then start searching through the executives' individual returns.
Finally - who made these things up? The law firms and accountants who were advising the company! They set them up and issued "opinion letters" saying it was OK. Sprint executives were hit hard, and many more will follow since the IRS has offered an amnesty if they 'fess up.
Geoffrey Colvin of Fortune writes an excellent article on this topic - you may need to be a Fortune subscriber to read the whole article.
From someone who used to be an auditor, the auditor culpability or just plain ignorance in the face of these events is hard to stomach. I don't expect much from the lawyers, but I expected more from the accountants. I was wrong.