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 Enron - Houston, Texas Posted by:  JimmyEv
N 29° 45.337 W 095° 22.283
15R E 270693 N 3294062
It’s difficult to decipher the crimes that occurred inside the glass walls of this 691-foot tower, but the crimes that did occur shook America’s financial markets to the core.
Waymark Code: WM1ZHW
Location: Texas, United States
Date Posted: 08/09/2007
Views: 150
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Enron was once an energy company, running pipelines and selling natural gas. With deregulation of the utility markets, the company diversified. It turned from an energy producer to an on-line energy trader. No one could quite figure out exactly what an ‘on-line energy trading company’ did, but it seemed to produce loads of cash, making it a darling of Wall Street.
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Money would come in, money would be shifted around; profits would be recorded on the financial statement. Offshore partnerships named ‘Death Star’ and ‘Jedi’ were set-up in the Carribean by the company’s Chief Financial Officer, Andrew Fastow. Money was shifted to the partnerships and shifted back; profits were recorded on the financial statement. Enron sold products to the partnerships, and bought the products back; profits were recorded on the financial statement. The stock price of the company soared. At its apex, the company’s CEO, Jeffrey Skilling, abruptly resigned and dumped at least $33 million of Enron stock. Ken Lay came in to fill Skilling’s shoes, assuring everyone that nothing was amiss. The stock price of the company began sinking. The SEC opened criminal investigations. A month later, Enron wrote off $1 billion of bad investments. A few weeks later, the company adjusted its previous earnings down $600 million. Dynegy attempted to buy the company, but it was too poisoned. By December, with $23 billion of debt, Enron declared bankruptcy and was liquidated.
The SEC investigation shed light on what was happening behind the glass walls. The executives of Enron had used smoke and mirrors – vague numbers, fake companies, nonsense language – to make it look like the company was making money. This pumped up the stock price. At its peak, the executives sold their stock holdings, making millions before the price plummeted to nothing.
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After the SEC investigation, at least eight people, in addition to Lay, Skilling and Fastow, ended up in jail. Ken Lay was found guilty on six counts of securities and wire fraud. He died before sentencing. Jeffrey Skilling was found guilty on 19 counts of securities and wire fraud. He was sentenced to 24 years in prison. And Andy Fastow, the master mind financial officer behind the offshore partnerships, made a plea bargain. He was sentenced to 10 years in prison and fined $24 million. The shock waves of the scandal went past Enron, bringing about the destruction of Arthur Anderson, the accounting firm that made the sham possible. How much money Lay, Fastow and Skilling actually made off of their stock dumping was never revealed.
Skyline District
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Date of crime: 08/15/2001
Public access allowed: no
Fee required: no
Web site: [Web Link]
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