Whistleblower Accuses GE of Massive Fraud

August 16, 2019

Last year, we looked at how General Electric lost its spot on the Dow Jones Industrial Average after more than a century on the index. At the time, experts blamed the legendary company’s decline on the collapse of its financial services division along with a number of failed investments. According to a recent report from a well-known whistleblower, however, the recent troubles at GE are far worse than the company previously claimed. In a report released yesterday, forensic accountant Harry Markopolos accused GE of hiding nearly $40 billion of losses in its insurance business. 

“In fact, GE’s $38 billion in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” said Markpolos in his report. “GE has been running a decades-long accounting fraud by only providing top line revenue and bottom line profits for its business units and getting away with leaving out cost of goods sold, in addition to various other expenses.” An experienced fraud investigator, Markopolos was the first person to blow the whistle on Ponzi schemer Bernie Madoff. If his claims are even partly true, many prominent people associated with GE could face serious consequences. After all, executives at Enron and Worldcom received lengthy prison sentences for their accounting crimes. 

GE executives strongly deny any wrongdoing, though. “The claims made by Mr. Markopolos are meritless,” said GE in a statement. The company also said it “has never met, spoken to or had contact with Mr. Markopolos, and we are extremely disappointed that an individual with no direct knowledge of GE would choose to make such serious and unsubstantiated claims.” GE representatives went on to say that the company “are in full compliance with accounting standards in the U.S.” and that they stand by their work. Only time will tell who is being truthful in this tense situation .


  1. Should federal regulators investigate the claims made by Markopolos in his report?  
  2. Do you think GE’s reputation will be damaged due to these accusations? Why or why not?

Source: Paul R. La Monica, “GE Stock Has Worst Day in 11 Years After Madoff Whistleblower Calls It a Bigger Fraud Than Enron,” CNN, August 16, 2019. Photo by Jeff Turner.