Enron Scandal

White collar crime (2001 Enron Scandal)

Securities Fraud and Trading

Houston Texas 2001, a major energy company with over 29,000 employees and operations in 84
different countries worldwide, declares bankruptcy. Where systemic corporate fraud and corruption was
based solely on the greediness of financial gain while stepping on the backs of its victims no matter the
cost.

Information were compiled from other sources.

It took 16 years for them to go from 10 billion in assets to 65 billion in assets and eventually in the end
only 10 days to go bankrupt. The upper echelon of the of the now defunct company were all blinded by
the almighty dollar and all 29,000 employees as well as others were built out of billions, they were
locked out of their accounts and couldn’t dump the soon to be worthless stock no matter how hard
they tried. Put all you eggs in one basket they said, and now they could only watch their stock began to
plummet in the single digits and there wasn’t a goddamn thing they could do about it.

Their future retirements were extinguished into ashes in a matter of weeks but not if you were the top
executive on the 50th floor. NO. You literally have the bid’s eye view of when the projected impact of
that god forsaken house of cars would come tumbling down. But all the other good citizens who
invested every dime they have due to your phony accounting and projected futures didn’t have a clue
what was happening that all those silk breasts pocketed assholes walking around in four thousand dollar
suits we're jumping ship and cashing and stashing everything away in some sunny offshore Caribbean
account most likely later to be accessed by your stripper girlfriend or yourself when you finally finished
your sentence at that federal prison which in my opinion wasn't long enough to make up for the countless
suicides and heartache that the millions of people experienced while you were away on business wearing
that orange jumpsuit getting three hot meals a day along with free medical care at the taxpayers expense.
So I don't want to read it in a book someday about how hard it was on you and how an innocent man who
conveniently Jump Ship months before the bottom fell out from underneath those who had no way of
knowing. But magically you and your Confederates did and that you were just the Patsy and the real
criminals have either already died or plea bargained in exchange for a lighter sentence and you were the
one left holding the bag. Your excuses will never be enough your sentence will never be enough nor will
you ever receive redemption from anyone you ever lied and cheated on this very planet we call earth.
Now that you have heard about how some of the victims of the now famous Enron scandal feel as well as
I put some of my own feelings in there in case you didn't get it. Remember I'm just a bystander who

witnessed the aftermath on television

and in the newspapers. now can you
imagine how those who personally
experienced this grand larceny and
corruption must feel. but some of you may
be wondering what the hell is Enron or
should I say what was Enron ?

well according to several sources on the

Internet
- Enron was an American energy commodities and services company based in Houston Texas.
- formerly located at 1400 Smith Street in the United States of America.
- it was founded in 1985 as a merger between Houston natural gas and enter North
- both relatively small regional companies before its bankruptcy in 2001, it was a major electricity
natural gas communications and Pulp & Paper Company with claimed revenues of 101 billion
dollars in the year 2000.
- Fortune magazine also named Enron America's most innovative company for six consecutive
years an Enron spent over $100,000 in focus groups and consulting to finally come up with the
name it is now synonymous with.
- so then CEO Ken Lay pushed aggressively for deregulation of the energy companies from the
beginning.
- he was the son of a preacher and grew up in Tyrone Missouri and had a PhD in economics from
University of Missouri in Columbia Missouri
- he founded ENRON in 1985 and was best buds with a couple of Texas oilmen whom you may be
familiar with named George Bush Senior and George W Bush the 41st and 43rd presidents of
these United States
- Jeffrey Skilling was hired by Ken Lay in 1990 as a chairman and CEO after working with him in
1987 where Skilling helped Enron create a forward market in natural gas
- he was promoted to president and COO (chief operating officer) of Enron during 1997 and
according to former employees it was sort of a killer be killed type atmosphere and it was
expected of you to come up with bigger and better ideas and then the guy sitting next to you
because if you didn't there were hundreds of others just wait willing and waiting to take your job in
an instant
- but old Jeff Skilling had the biggest idea of them all
- Enron would become a stock market of natural gas and he would only join Enron if he would be
able to use mark-to-market accounting I will put it down here in writing so you know what I'm
talking about
- now in a nutshell this is where they were able to value future profits on the very day the deal was
signed with very little money coming in basically Enron's profits could be whatever they said they
were and they could place that decimal point wherever they wanted to which in my own opinion
doesn't seem legal does
- it well believe it or not it is legal and has been in use for the last 90 years mostly in the futures
market
- Jeff Skilling was a risk taker he had gambled away huge sums of money in the stock market back
when he was in his 20s and he was somewhat of a legend in the company and believe it or not all
the men wanted to emulate him

- the employees were fixated on the company's stock prices so much that it was posted in the
elevator daily so that way everyone knew the health of the company and how it was doing
- what they didn't know is that the top executives were doing something called a pump and dump. it
is a form of securities fraud where top executives would artificially inflate the stock price through
false and misleading positive statements in order to sell cheaply purchase stock at a higher price
- employees at Enron got paid in a large part through stocks
- so you can see this is just a prime example of the shady
business practices they were doing
behind the scenes
- but it gets better or
I should say worse at that time the
company was making a 10 to 15% increase
in profits per year but behind closed
doors they were hemorrhaging money yep
they sure were
-analyst on Wall Street
were also fooled by Enron's illusion and
if they had questions about the company
what did they do they called old Jeff
Skilling
- that's how much they trusted
the guy but to me this is like Satan
himself offering you a home improvement
loan back in 1997 at 2.8 percent when
you know damn good and well that prime
is eight point two five percent so what
did your mama always tell you if it's
too good to be true well then it
probably is.
-Enron stock kept rising
while its businesses kept losing money
but they had a fix for that too

-Enron stock soared 34% in two days this

is insane
-this was mainly due to the
fact that they decided to sell unused
bandwidth as a commodity this was a scam
artists Holy Grail and Enron sealed this
bullshit with a kiss
- in a nutshell it
went something like this:
say I have a company that allows me free
usage of high-speed Internet access from
the hours of 9:00 a.m. to 5:00 p.m. so
therefore the space that is not being
used from the hours of 5:00 p.m. until
9:00 a.m. is just sitting there right
- so Enron would add the unused line to its inventory and find customers who need
bandwidth during that period and
contract it to them
- so my question is how can auditors audit something they can't see touch or feel
- well they never
got that far and in the end it was all a
big fat fail and so in order to get the
loss off their books they brokered a
deal with none other than Colorado
denver-based Quest which is a
communications company
- Quest agreed to
pay Enron 308 million for the use of the
dark fiber that was not in use and Enron
agreed to pay quest a hundred and ninety
five million for access to active
sections of the Quest network
-that's
just another example of how the gray
loopholes they exploited and the shady
dealings between many banks and
companies that experts spent years
trying to untangle
- but anytime they had
an idea that failed the execs dumped
their stock immediately
- the dot-coms
fell at the end of 2000 but Enron stock
soared over 90% percent why
- a reporter from Fortune magazine asked
that simple question to Jeff Skilling
how does Enron make their money Jeff
Skilling was such a sexist bully that he
told her and I quote “if she had to ask
those types of questions then she didn't
do her homework” but when Jeff Skilling
was being deposed after the company
filed for bankruptcy he said and I quote
I only had six minutes to answer her
questions and by the way I'm not an
accountant”
-wait what
you're the president and chief executive
officer of a publicly traded company and
you don't know how your own company
makes its money
-
- well that journalist was Bethany McLean
and she went on to co-author the
best-selling book with Peter Elkind
called the smartest guys in the room
which is about the rise and fall of
Enron
-and then we can't forget old Andy
Fastow yep old Andy who led the fraud
and was told to cover up the fact that
Enron was a financial Fantasyland as the
CFO chief financial officer Andy came up
with something called structured finance
- they were losing money on a cash basis
year after year and yet they were
reporting profits
- Andy had to come up
with something in order to keep the
stock prices up so basically Enron was
stashing its debt in these fictitious
companies so investors couldn't see what
exactly was happening
- it was all smoke and mirrors and misdirection but old
fast out was able to garner or should I
say skim a cool forty five 45 million for
himself in all these crooked and
dishonest dealings
-Fastow decided
hey one for you two for me two for you
three for me
- Lance Skilling may not have
expected Andy to skim all of that for
himself but they definitely knew about
the bogus companies and I wouldn't be
surprised if that was another brainchild
of Skilling's who knows I'll have to
leave that up to you
- by doing this
sleight of hand bullshit fast ow as CFO
can guarantee profits fast I was using
Enron stock as collateral to bet on their own company they sold
this bogus stock to 25 of the big banks
such as JP Morgan Chase, Citibank and
Merrill Lynch and that's just to name a
few
- so in 2001 the accounting firm
Arthur Andersen received a million
dollars a week as well as Enron's law
firm Vinson & Elkins did just as well
- it's a system of checks and balances and
no one said no because why would they
they were all making money
- so who cares
if what we are doing is illegal who cares if we are stealing middle
America's pension fund who the hell

cares as long as we can keep up the lies

and no one will ever find out right
wrong and run love these deals so much
because they produce cash and they don't
have to show the debt on their balance
sheets they were definitely cooking the
books and it didn't take a rocket
scientist to figure that out
-well I
believe just Jeff Skilling knew long
before anyone else that the Titanic of
energy was going to eventually sink long
before it hit that iceberg
- but
Enron and its energy traders got so
creative that they came up with a scheme
on how to sell energy at double even
sometimes triple the rate due to what
else rolling blackouts
- so you're
probably asking how can you schedule a
rolling blackout in order to make your
quarterly earnings
- well it's pretty easy
if you know the right people you just
pick up the phone and make a phone call
and request it for as long as your
hollow heart desires
- in early 2000 there
were rolling blackouts all over
California
- California was hand selected
by Enron to be deregulated and when it
looked like they weren't going to make
their quarterly reports that year or
that quarter they were going to export
energy out of the state and when the
price dropped they would buy it back

RECORDING
- “traders soon discovered that by shutting down power plants they could create
artificial shortages that would push prices even higher
hey David anyone know there's not much to power at all you know if we shut it down can you be back up
in three or four hours oh yeah why she's go ahead and

shut her down in a bit okay okay

- also they were personally responsible
for all the rolling blackouts the West Coast experienced at that time they
would shut down power plants for three

or four hours the price would rise

they'd sell it for double or triple the
price and then when the power went back
on the price would go down
-they
basically turned the power in California
into a casino
- people were stuck in
elevators and had to be rescued
 - streetlights went completely out as a
result there were numerous car crashes a
state of emergency had to be instituted
in order to get the power back on the
year-long energy crisis cost California
30 billion dollars
- consumers in
California were angry and rightly so for
example a protester even went as far as to throw a blueberry pie in Jeff
Skilling's face as he spoke in San Francisco at the Commonwealth Club
- in the meantime old Kenny boy, Ken Lay
was trying to convince his employees
that all is well aboard this on the
teetering house of cards and that price
control will not solve California's
problem but federal regulators were
urged by the Democratic Senate to force
regional price caps
- that my friends
ended the energy crisis but Enron stock
began to fall but by the end the traders
ran Enron it was like the inmates had
basically taken over the prison
- for
instance California was ablaze that
month due to a due to dry weather and no
rain and when one of the major fires
threatened to destroy power lines and
stations the Enron energy traders were
recorded as saying burn baby burn
- so on August 14th 2001 Jeff Skilling the
president and CEO of Enron suddenly
resigns for personal reasons
- he claims that on the day he left the
company was healthy and in good
financial shape
-so right after Jeff Skilling's
resignation
Ken Lay held another employee meeting
and said and I quote the worst is behind
us this was a massive fraud of enormous
proportions
- it has evolved into the
corporate crime of the century and Andy
Fastow would not put his hands in the
proverbial cookie jar without Jeff Skilling's blessing
- Skilling denied all
of this The Wall Street Journal
published an article regarding Fastow’s
murky deals and the SEC the Securities and Exchange Commission immediately
launched an investigation and investors began to worry that billions in
mark-to-market deals were really
financial losses
 - all right so Ken Lay is still trying to
assure its employees but at the same
time Enron's accounting firm Arthur Andersen began to destroy files.
They
shredded over a ton of evidence
regarding their shady practices with
Enron. They were in bed with them from
the beginning and there was no way this
accounting firm who had been in business
for many years has now been caught
red-handed
- and in September in October
of 2001 Ken Lay cashed in 26 million in Enron
stock lay kept reassuring its employees
as well as investors that the company
was in good financial shape despite the
stock price drop
- and old Andy Fastow was
fired immediately when the company found
out he made over 40 million dollars in
those LJM partnership deals
- Andy Fastow
pretty much became the fall guy. He
cooked the books and all the Enron
executives pointed their fingers at fast
out they made him without a shadow of a
doubt responsible for everything.
The
billions they made and owed in loans and
when they deposed after Enron declared
bankruptcy that son of a bitch, Andy
Fastow took the fifth.
Recording:
“and Ron and its shareholders or with
common sense notions of corporate ethics
and propriety
how do you answer sir mr. chairman on
the advice of my counsel I respectfully
declined to answer the questions based
on the protection afforded me under the
United States Constitution”

- skilling in a statement believed that

the failure of Enron was due to and I
quote a classic run on the banks
okay blame it on others while you hire
an image consultant to do push back
every time you open your freaking mouth

- December 2nd 2001 less than four months

after Skilling's resignation Enron
declares bankruptcy
NOTE: DECEMBER 3, 2001 Enron Stock (ENE) Is now valued at .40 Cents a share. Trading are now
suspended
- no one would have ever dreamed that Enron would have declared bankruptcy
- skilling began unloading his stock
months before he left the company but
continued to urge others to invest
- but
all others excluding the top executives
they were frozen out of all of their
accounts
- all the top execs unloaded
their stock but as for the little guy
like you and I your hard earned money
was gone and there was nothing you could
do about it
 - Andy Fastow pled guilty to commit wire
fraud and agreed to forfeit 23 million in assets his sentence was reduced to 10 years in federal prison
when he agreed to testify against other
and ENRON executives as of the date of
this video
Andy fast out now lectures on corporate
ethics wait what does he even know what
ethics means?
- well that's an oxymoron if
I've ever heard one anyway he works with
in artificial intelligence company to
root out fraud.
- in 2004 Jeff Skilling was indicted for
insider trading and conspiracy to
defraud investors of course he pled not
guilty and paid his attorneys a retainer
of over 23 million dollars to defend him
- in 2006 he was found guilty and
sentenced to 24 years in prison with a 45 million dollar fine he of course appealed this decision and was
ultimately denied but in 2013 the
Justice Department agreed to shave off
ten years of his sentence and he would
now serve only 14 years behind bars as
of August 208
he was moved to a halfway house and
released from custody in 2019 after
serving only 12 years
- he was also
ultimately barred by a federal judge to
serve as an officer or a director of a
public company ever again
- Enron's accounting firm Arthur Andersen
was convicted of obstruction of justice
- America's oldest accounting firm fell
and in total over 29,000 people lost
their jobs Enron shareholders are suing Enron and
its banks for 20 twenty billion dollars
- Ken
Lay was arrested and convicted by a
grand jury and was found guilty of 10
counts of securities fraud Kenneth Lay
died on July 5th 2006 while vacationing
just up the road here in Aspen Colorado
three months before his scheduled
sentencing
- lei died of a heart attack
and his death resulted in a vacated
judgment
- in 2009 he was voted by
portfolio dot-com as the third worst
American of all time
- 29,000 employees
lost their jobs and medical insurance
the average severance pay for the
employee was only $4,500 but the top
execs were paid bonuses totaling 55
million dollars and in 2001 employees
lost 1.2 BILLION one point two billion dollars in
retirement retirees lost two billion in
pension funds
Enron's top executives cashed in 116 MILLION one
hundred and sixteen million dollars in
stock and that my friends is the whole
enchilada called the Enron scandal oh
and just a little side note according to
an internet magazine old Jeff Skilling
while in prison has come up with a new
IT idea and is looking for investors to
get this up and running
this is not a joke this is the real deal
he truly has called on some of his old
pals from Enron to pitch this so-called
idea - he has not revealed it to anyone
and anyone who has knowledge of this has
to sign a gag order there will be blood

in the streets if you don't so hey good

luck Jeff I hope everything works out
for you so you can pay that 46 million
dollars you owe to the people you stole
it from over 20 years ago man I hope the
government has been accruing interest on
that figure all we can do is hope and
pray that the victims of this horrible
white-collar crime
will be paid back with interest before
that son of a bitch kicks the bucket
alright everyone that's enough bitching
for me I'm pretty sure you're tired of it