Waste Management faked $1.7B in earnings — the biggest restatement of the 1990s

From 1992 to 1997, executive officers at Waste Management systematically manipulated the company's financial statements to meet earnings targets. The fraud was simple: they refused to write off costs from failed projects, improperly capitalized operating expenses, and assigned arbitrary salvage values to garbage trucks to reduce depreciation charges. The company's auditor, Arthur Andersen, signed off on the scheme year after year.

In 1997, a new CEO took charge and ordered a review of the company's accounting practices. The review uncovered the full extent of the fraud. In February 1998, Waste Management announced that it would restate its earnings for 1992 through 1997 by $1.7 billion — the largest restatement in US history at the time. Shareholders lost more than $6 billion in market value as the stock price crashed by over 33%.

Waste Management paid $457 million to settle a shareholder class-action lawsuit in 2003. Top officers paid another $30.8 million to settle with the SEC. Arthur Andersen was fined $7 million for its role. The scandal was one of the earliest cases of large-scale corporate accounting fraud in the 1990s, prefiguring the Enron and WorldCom scandals that followed.