The 10 biggest company scandals of 2020

The year 2020 was overwhelmed with COVID related news the majority of the time.

In addition, the phrases “unprecedented times” and “social distancing” were used far more than we ever thought they would. With all the news media focused on the pandemic, many of the significant company scandals of 2020 were overlooked.

This article uncovers some of the less talked about company scandals and how they affected others during the health crisis.

#1. Wirecard

The German payment processing company, Wirecard, disclosed an “accounting error” that inaccurately inflated their balance sheet by $2.3 billion. Shortly after the admission, CEO Markus Braun resigned from his position.

After an investigation by German authorities, Braun was arrested and accused of market manipulation and false data. This shocking revelation left investors with empty pockets after company stocks plummeted and Wirecard filed for insolvency.

#2. Luckin Coffee

China-based Luckin Coffee was operating a scam where their reported sales and actual sales were two significantly different numbers. This wouldn’t be a big problem for Americans except that Luckin Coffee is listed on the U.S. stock exchanges. 

Luckin Coffee intentionally positioned itself as a growth stock, which manipulated investors to have confidence in their key metrics. After the scandal was uncovered, CEO Jenny Zhiya Qian and COO Jian Liu were fired.

The U.S. Securities and Exchange Commission is currently investigating the matter.

#3. Wells Fargo

Wells Fargo was embarrassed yet again after it was revealed that more than 100 employees created fake profiles to file fraudulent applications. Their intent? To monetarily benefit from the Small Business Administration relief program.

The relief program was created during the Covid pandemic to help small businesses that were forced to close down or significantly reduce business practices.

To add insult to injury, this latest fake account scandal was not the first. In 2018, an asset cap was placed on Wells Fargo due to employees creating fake accounts. Due to the pandemic, the Federal Reserve Board temporarily lifted the cap so the bank could provide these loans to small businesses. Once again, employees engaged in the same behavior.

Before lifting the asset cap, Wells Fargo CEO Charlie Scharf testified during a Congressional hearing that, “People can trust Wells Fargo to do the right thing, yes.”

#4. Tesla

It seems Tesla CEO Elon Musk values profits over employees according to his actions during the 2020 pandemic. With the infection rate soaring, California enacted health measures that restricted many businesses’ operations, including Tesla.

During the lockdown order, which caused most non-essential businesses to stop operating, the company called its workers back to the Fremont factory in defiance of the order in April. However, this first attempt of defiance was thwarted when Alameda County officials stepped in. 

This intervention by the government was met with fierce verbal attacks from CEO Musk.

A month later, Tesla called back its workers and started manufacturing vehicles, again in defiance of the orders. After the company was back in operation, county officials decided to allow Tesla to reopen as an “essential business.”

The reopening was met with controversy, and many workers contracted the coronavirus soon after opening. Musk later attempted to be sympathetic about the situation and said employees could stay at home if they felt unsafe. However, some of those that did were subsequently terminated.

#5. Nikola

The liquid hydrogen and electric trucking company Nikola attempted to establish itself as a fierce competitor in the trucking industry with its new technology. In 2016, the company released a promotional video of a Nikola freight truck driving down the roadway powered by the fuel alternative. 

CEO Trevor Milton promised miracles with Nikola’s new technology, which caught the attention of General Motors. His impressive sales speech and pitches landed plans for a major partnership with General Motors, giving GM a major stake in the company. 

It was later discovered that Milton routinely inflated and fabricated his company’s technological ability and misrepresented its success. So much so that the 2016 promotional video was actually filmed as the Nikola freight truck was rolling downhill, rather than solely under its own power.

The scandal and inaccurate representation of the company caused the company stock to fall from $79.73 a share in June 2020 to $20.74 in January 2021.

#6. Zoom

2020 should have been a massive success for Zoom, but the glitches and lack of security caused substantial company problems. When Covid initially hit, its popularity skyrocketed as a massive influx of employees began working from home. Zoom was the go-to service for hosting video meetings.

However, their security holes were quickly discovered as meetings were infiltrated by spammers streaming offensive content for all to see. 

In addition to the offensive content, it was discovered that Zoom neglected to use end-to-end encryption for video meetings, which exposed the personal information of millions of users. 

#7. Beam Financial

This fintech startup is an investment platform primarily accessed through a mobile app. Beam promised investors interest rates that were above current market rates. In addition, the company said customers’ deposits were federally insured and accessible at any time. 

As the startup rapidly grew, it quickly gathered around $2.4 million from 30,000 customers. However, customers quickly started realizing their requests to withdraw their money was not granted. The company provided a myriad of reasons why withdrawal requests couldn’t be processed. 

The rising number of complaints led to multiple lawsuits and is now subject to a federal investigation. The results of this investigation are not yet known, but Beam is quickly releasing customer funds back to investors. According to Beam, they have returned 98% of all withdrawal requests and are actively working to return 100%.

The Federal Trade Commission is accusing Beam CEO Yinan Du of “unfair or deceptive acts.” Time will tell if this company was engaged in any type of Ponzi scheme.

#8. Marble Ridge Capital LP

The New York hedge fund Marble Ridge founder Daniel Kamensky was charged with securities fraud, wire fraud, extortion and bribery, and obstruction of justice. These charges came after it was discovered Kamensky attempted to influence and stop another competitor from bidding on assets related to Neiman Marcus’ bankruptcy. 

Kamensky wanted to purchase the assets for 20 cents per share but found another investor bid up to 30 cents. When Kamensky discovered this, he threatened to use one of his official positions to block the bid and threatened to stop doing business with the investor unless they canceled their bid. 

During a phone call, Kamensky admitted to the scandal and tried to cover up his tracks, which was later disclosed to prosecutors. 

#9. West Point

While not technically a “company,” the United States Military Academy West Point was plagued by a class of cheaters in May. 

Cadets completed an online math test, and instructors immediately noticed peculiar similarities in the students’ answers. After an initial investigation, 73 cadets were accused of cheating on the online calculus test.

Fifty-five of those accused admitted to cheating and were retained by being put on probation for the remainder of their courses at West Point. In addition, they also must complete a six-month-long “ethics-focused rehabilitation program.”

#10. Twitter

Many had forgotten about July 15, 2020, when Elon Musk, Barack Obama, Kim Kardashian, and other verified accounts tweeted out a Bitcoin scam. When the activity on these verified accounts was discovered, Twitter shut down all tweets from its verified accounts while it investigated.

The large social media company began investigating a possible elaborate security breach. The company later discovered an employee at Twitter inadvertently provided the credentials needed to reset account passwords and their email addresses to a Florida teenager.