Scandal Update

By Dody Tsiantar With Elaine Shannon

If 2002 was the year of the business scandal, this is the year many have gone to trial. President Bush's point man on corporate fraud, Bill Mateja, says that with 316 open cases, more indictments are coming. Here's where the big cases stand:

--COOKING THE BOOKS Enron's Ken Lay, who last week agreed to hand over records to the SEC, and Jeffrey Skilling are poster boys for business-accounting scandals, but they have not been charged. (Other Enron executives have been.) HealthSouth's Richard Scrushy was accused of inflating earnings, while WorldCom's Bernard Ebbers faces securities-fraud charges in Oklahoma. Both men have pleaded not guilty.

--FAKING RESEARCH High-flying Wall Street analysts Jack Grubman of Citigroup and Henry Blodgett of Merrill Lynch got nailed for issuing glowing reports on companies they in fact deemed unworthy. Both men and their firms paid multimillion-dollar fines to the SEC.

--TAKING FROM THE TILL Adelphia Communications' John Rigas and Tyco boss Dennis Kozlowski used company money as their own, say prosecutors. Among the charges against Kozlowski, whose trial is under way: throwing a $2 million party on Sardinia for his wife, funded mostly by Tyco. Kozlowski and Rigas, whose trial starts in February, both say they're innocent.

--BLOCKING INVESTIGATIONS A federal jury could not reach a verdict last month against former Credit Suisse First Boston investment banker Frank Quattrone, accused of ordering the destruction of e-mail about illegally allocated shares of IPOs. But prosecutors plan to pursue a second trial. Homemaker extraordinaire Martha Stewart, whose trial begins on Jan. 12, faces accusations of securities fraud and that she obstructed justice when asked about her ImClone trades. She and Quattrone deny the charges.

--GAMING THE MARKET New York attorney general Eliot Spitzer, Massachusetts regulators and the SEC are on a rampage against fund firms for allowing illegally timed trades. The first to be charged: Putnam Investments. Expect more to be fingered. --By Dody Tsiantar with Elaine Shannon