Madoff Whistleblower alleges that GE is a 'bigger fraud than Enron'

General Electric shares fell after Madoff whistleblower Harry Markopolos targets the conglomerate in a new report, calling it "a bigger fraud than Enron."

Markpolos released a 175-page report that claims General Electric has hidden the extent of its financial problems and will need to significantly raise insurance reserves. “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 says in the report.

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.”

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.

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