Madoff whistleblower Harry Markopolos is probing GE: https://www.gefraud.com
A website has been set up to disseminate the report, www.GEfraud.com, where Markopolos calls it “a bigger fraud than Enron.” The financial investigator, who was probing GE for an unidentified hedge fund, writes that after more than a year of research he has discovered “an Enronesque business approach that has left GE on the verge of insolvency.”
“My team has spent the past 7 months analyzing GE’s accounting and we believe the $38 Billion in fraud we’ve come across is merely the tip of the iceberg,” Markopolos said in the 175-page report. Markopolos alleges that GE has a “long history” of accounting fraud, dating to as early as 1995, when it was run by Jack Welch.
“It’s going to make this company probably file for bankruptcy,” Markopolos told CNBC’s “Squawk on the Street. ” “WorldCom and Enron lasted about four months. … We’ll see how GE does.”
Markopolos’s case centers around GE’s long-term care insurance unit, which the company had to boost reserves for by $15 billion last year. By examining the filings of GE’s counterparties in this business, he alleges that GE is hiding massive losses that will only increase as policy-holders grow older. He claims that GE has filed false statements to regulators on the unit, or eight other insurance regulators have done so. Separately, he goes on to find issues with GE’s accounting on its oil and gas unit Baker Hughes.
When asked why GE analysts didn’t see this coming, Markopolos said “the difference is I’m a certified fraud examiner.”