25 June 2002: WorldCom admits $3.8 billion in fake profits

On June 25, 2002 WorldCom revealed that it had improperly booked about $3.8 billion of ordinary expenses as capital investments, inflating its profits. The total later grew to around $11 billion. The telecom giant filed for bankruptcy a month later, then the largest in US history, and CEO Bernie Ebbers went to prison. Coming after Enron, it helped push Congress to pass the Sarbanes-Oxley Act.

The lesson: Watch cash flow, not just earnings; accounting profits can be manufactured, cash is much harder to fake.