- Waste Management, Inc.

experienced many fraudulent crimes within its company between

the years of 1992 and 1997.

- The senior officers at Waste Management, Inc., which included Dean Buntrock (Founder and
CEO), Phillip Rooney (Former President), Thomas Hau (CAO), James Koenig (CFO), Herbert
Getz (General Counsel), and Bruce Tobecksen (Vice President of Finance), began to engage
in fraudulent activities involving the company’s accounting books.

- One of the fraud activities that occurred was avoiding depreciation expenses by assigning
and inflating salvage values and extending the useful lives of the garbage trucks that the
company owned. Every year, depreciation expense must be included in a company’s financial
statements as the assets owned become used up and do not have the same value as it
originally had.

- Moreover, another fraudulent activity that occurred with the accounting books was how the
officers were refraining from recording expenses for any decreases in the value of the
landfills. By doing this, it would state less expenses for the company, when, there should
have been more added for this.

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- Next, the officers also refused to record necessary expenses to write off the costs of
unsuccessful and discarded landfill development projects. This, in turn, stated less expenses
on the company’s financial statements. In addition, the officers assigned salvage values to
assets that previously had no salvage values whatsoever. In other words, this would extend
the residual value of an asset that originally did not have any.
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- Another fraudulent activity included improperly capitalizing a variety of expenses. This would
defer expenses paid on the books. The company also used geography entries to move
millions of dollars between the various line items on their income statement. Ultimately, the
company had false profits moving into retained earnings, false assets, and no increase in
liabilities on their financial statements.
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- In 1998, Waste Management, Inc. restated its 1992-1997 earnings by $1.7 billion, which
made it the largest restatement in history. This created the Waste Management, Inc. 1998
fraud scandal as it is known today.
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- The reason why the Waste Management, Inc. 1998 scandal occurred was in an attempt to
meet predetermined earnings targets by expanding profits and pushing down or foregoing
expenses. Revenues were not increasing as fast as they should have been. The chief officers
recognized this and began to commit fraudulent activities as aforementioned in order for
their financial statements to state what they wanted them to state.
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- These officers had the opportunity to commit fraud within the company’s financial
statements because they were all high up in the hierarchy of the organization. The founder
and CEO, Dean Buntrock, initiated a lot of the fraud and he himself was the company’s own
founder. Buntrock, along with the other stakeholders, let greed get in the way of operating
the company in an honest and efficient manner.