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(CNN Business) —  

General Electric fought back Thursday night after the company was accused of fraud and its stock experienced its worst one-day percentage drop since April 2008.

General Electric shares plunged more than 11% Thursday after Harry Markopolos, who is famous for blowing the whistle on Bernie Madoff’s Ponzi scheme in 2008, accused GE of orchestrating a massive fraud.

GE CEO Larry Culp on Thursday bought 252,200 shares at $7.93 per share, a purchase worth almost $2 million, according to an SEC filing. The buy helped bump GE’s share price around 2% in after-hours trading. Culp’s ownership of GE stock nearly doubled this week after an earlier purchase Tuesday.

GE Board Director Leslie Seidman called the fraud allegations “baseless” and “inflammatory” in an interview on CNBC’s “Closing Bell” Thursday evening. She said Markopolos’ claims do not “reflect the GE I know.” Seidman chairs of the board’s audit committee.

Markopolos said in a report released Thursday that GE was hiding nearly $40 billion of losses in its insurance business. He said this is the largest case of accounting fraud he and his team have investigated.

“In fact, GE’s $38 billion in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” Markopolos wrote in the report, referring to the scandals that eventually helped bankrupt energy giant Enron in 2001 and long-distance telco WorldCom in 2002.

GE strongly denied Markopolos’ allegations.

“The claims made by Mr. Markopolos are meritless,” GE said in a statement, adding that it “has never met, spoken to or had contact with Mr. Markopolos, and we are extremely disappointed that an individual with no direct knowledge of GE would choose to make such serious and unsubstantiated claims.”

Markopolos made several comparisons to Enron in his report and also on a new website with the URL www.gefraud.com. He accused GE of using what he dubbed “the ‘GEnron’ playbook.”

“GE has been running a decades-long accounting fraud by only providing top line revenue and bottom line profits for its business units and getting away with leaving out cost of goods sold” in addition to various other expenses,” Markopolos claims.

Seidman suggested in the CNBC interview that Markopolos misunderstood the company’s accounting practices.

“I think that the basis on which the report was developed is questionable at best,” Seidman said. “We are in full compliance with accounting standards in the US. We prepare them with a rigorous process. I, as the chair of the audit committee, have access to the people and the books and records at GE and I stand behind the financial reporting of this company.”

Markopolos also took issue with how GE accounts for its majority stake in oil services firm Baker Hughes and accused the company of hiding more than $9 billion in losses in its separately traded BHGE (BHGE) unit.

Despite the big drop Thursday, the stock is still up 10% this year, as new CEO Culp has been busy selling off non-core assets to shore up cash.

Those sales may also help turn GE around by making the notoriously complex company leaner and more focused on the power and renewable energy, aviation and healthcare businesses that continue to have solid growth prospects.

GE was not immediately available for further comment about the Markopolos claims. But in its statement, the company took issue with Markopolos’ allegations about accounting in its insurance unit, saying that “current reserves are well-supported for our portfolio characteristics.”

GE also defended how it accounts for its BHGE stake and added that it has “a strong liquidity position” – with ample cash and access to credit lines.

The company noted that “Mr. Markopolos openly acknowledges that he is compensated by unnamed hedge funds” and added that these funds are “financially motivated” to profit from short selling the stock, a move that could push shares lower and “create unnecessary volatility.”

Still, Markopolos points out in his report that he is not making any investment recommendations, adding that “GE’s current and past employees are the victims here as are GE’s lenders, vendors, and customers all of whom have to deal with the aftermath of an accounting fraud.”

Markopolos is far from the only one critical of GE’s accounting.

Activist shareholder firm CtW said in an April letter to GE’s lead independent board director Thomas Horton that “misguided capital allocation strategies and multiple shareholder derivative lawsuits…cast doubt over the company’s financial health.”

CtW also took issue with GE’s continued relationship with auditing firm KPMG, which has been reviewing GE’s books for more than a century. Several other activist shareholders also urged GE to dump KPMG, and GE said in December that its audit committee will consider making a change – but not until 2020 at the earliest.

KPMG declined to comment about its business relationship with GE because of “client confidentiality requirements.”