SCANDALS: Ghostly Insurance

A little more than a month ago, Equity Funding Corp. of America was a rapidly growing conglomerate of financial services with a dazzling record of insurance sales. By last week, Equity and its largest insurance subsidiary were the center of one of the biggest business scandals in history, an unsavory mess that includes charges of false bookkeeping, large numbers of bogus insurance policies and the dumping of huge blocks of soon-to-be-worthless stock by company officers and other investors on the basis of inside information.

As swarms of auditors sift through company records, spreading revelations of fraud indicate losses of many...

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