Cooking the books: an outbreak of corporate greed has shaken the economy, evaporated trillions in value from the market, and altered millions of American lives.

• Author: Vilbig, Peter
• Position: National

The arrests have come with the regularity of a drumbeat. There's John Rigas, the 79-year-old founder of Adelphia Communications, the nation's sixth-largest cable TV company. Prosecutors say he and his sons turned the company into their "personal piggy bank," looting $1 billion from it to pay for such indispensable personal items as a $13 million private golf course and a lavish African safari vacation.

There's L. Dennis Kozlowski, chief executive officer of Tyco, a conglomerate with a quarter of a million workers worldwide. Prosecutors suspect he raided millions from his company to buy vacation homes and artwork; he's already been charged with trying to duck $1 million in sales taxes for some pricey European paintings, and destroying records to hide the scheme.

And there's David Myers and Scott Sullivan, senior executives at WorldCom, which owns MCI, the nation's second-largest long-distance company. Investigators say they manipulated company records to hide billions of dollars in losses, which inflated publicly reported profits. The company, now bankrupt, says the misstatements totaled a staggering $7.1 billion.

A WAVE OF BUSINESS FRAUD

In all, more than 20 large companies, from AOL Time Warner to Kmart, are under investigation for accounting irregularities--in other words, "cooking the books." CEOs and corporate leaders have been paraded in handcuffs into courthouses, accused of plundering their companies and lying to investors to cover up losses. Others have been accused of using insider information--secret advance knowledge that a stock's value is going to change--to unload their shares and avoid losses that were then passed on to average stockholders.

Today, more than half of all Americans own stock, either directly or through mutual funds. Thus, this wave of corporate fraud has left millions of people with financial losses, laying waste to retirement plans and college-tuition accounts that depended on stock market investments. Sensing a tide of national resentment, late-night TV hosts have been quick to pounce on corporations for breaking the rules. "How come all these companies are off billions in their accounting?" Jay Leno wondered one night on The Tonight Show. "If you bounce a $15 check at the Quickmart, the feds are at your door!"

Most corporate leaders aren't breaking the law, and most publicly traded companies have scrupulously reported their finances to stockholders. But the size and depth of the offenses have sent shock...