The Enron Fraud Case

Improved Essays
In the summer of 2001, Vice President of Corporate Development, Sherron Watkins, alerts the executives to some accounting irregularities. She directed the higher-ups to the fact that the books and records for Enron were inflated. Company officials ignore Sherron’s warning. In the trials, Watkins duly noted that she “… fully expected Mr. Lay to conduct a thorough into my concerns.” Sherron became one of the important witnesses for the government but not the only one.
In August of 2001, the company reached its 100 billion dollars in revenue. At the same time the CEO, Jeff Skilling, unexpectedly resigned and cashed in nearly 60 million dollars’ worth in Enron shares. The resign resulted in Wall Street questioning if Enron was actually steadily improving and becoming more successful.
Common knowledge is that Skilling used Andy Fastow, the CFO, to create the Special Purpose Entities in order to offload the bad debts and bad assets to make the appearance that Enron was sounder than they actually were.
…show more content…
The government’s stance is that Enron committed this premeditated fraud that swindled not only the investors of Enron but the employees as well as the public. I think the nail in the coffin for both Skilling and Lay was a recorded call from 2001 between Skilling and an inquisitive Wall Street analyst. The analyst told Skilling that they are the only financial institution that cannot produce a balance sheet or a cash flow statement with their earnings. After the analyst had posed the question, Skilling laughed and spit out multiple random “You” and finally said thank you very much we appreciated this and called the analyst a name before hanging up while continuing to laugh. The light that was shed with this crucial information was that Skilling was most certainly annoyed that the analyst questioned Enron’s books and records while the company was on the up-and-up and didn’t want the analyst to look further into

Related Documents

  • Improved Essays

    At Wells Fargo, millions of fake customers accounts were created by its employees in order to boost their quarterly reports. Cue an investigation and somewhat 5000 employees are fired. However, before the heroics of Elizabeth Warren, the executive board remained untouched. They continued cashing in the ludicrous paychecks and remained silent against accusations. This clear-cut example uncovers the faults of regulations and exposes the current increasing trend of neglecting the interests and voices of stockholders.…

    • 700 Words
    • 3 Pages
    Improved Essays
  • Superior Essays

    In return company made more than $2.5 million in fees. These fake accounts were noticed first by the help of an investigation report which held by the LA Times. Soon after this report City of Los Angeles and federal regulators involved in the case and Wells Fargo announced that they are paying $185 million to settle the allegations. But it did not help the top management to close the case and continue their c-suite life. Senator Elizabeth Warren crushed CEO John Stumpf in front of the Banking Committee Hearing.…

    • 865 Words
    • 4 Pages
    Superior Essays
  • Great Essays

    He decided to come clean and accept the fraud he has committed. The Wall Street has collapsed due to the Ponzi scheme as it was the massive investment fraud which has affected many people including the high profile investors. And also the fraud scam has left more than 12,000 investors and many faking investment returns over the years. Madoff has taken in client assets and transferred it to his personal accounts. He mailed…

    • 1356 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Toshiba’s lasting reputation in innovation and constant growth was stunted when over $1.2 billion dollars was deemed fraud. Profits over seven years were overstated and undetected by independent auditors of Ernst & Young. When the fraud was eventually discovered, minimal was done to the culprits including resignation and probation. Since the discovery of the fraud, Toshiba has started to see the consequences of the fraud be alleviated and trust be regained. This paper serves as an insight into the aspects behind the fraud and how auditors could potentially discovered the fraud.…

    • 884 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Healthsouth Scandal Essay

    • 2186 Words
    • 9 Pages

    However, the corporation was caught by selling 75 million dollars in shares a day before the company experienced a huge loss, catching the attention of U.S. Securities and Exchange Commission (SEC) . A company which was known for its ambulatory surgery and rehabilitative health care services throughout the United States fabrics one of the most inconspicuous false impressions known to the corporate world. Carefully using deceptions of the Generally Accepted Accounting Principles (GAAP) such as materiality, conservatism, and reliability, verifiability, and objectivity as well as ethics, the company was able to improve their initial appearance. HealthSouth failing to meet the materiality, conservatism, and reliability, verifiability, and objectivity accounting principles as well as ethic standards meets its fall when the company is caught with conspiracy, security fraud, and money laundering carefully scattered along their financial statements and kept hidden by their dedicated employees. Corrupted management, originated financial statements, and falsified numbers all contributed to the history of HealthSouth’s…

    • 2186 Words
    • 9 Pages
    Great Essays
  • Superior Essays

    Enron Scandals In Auditing

    • 1494 Words
    • 6 Pages

    Enron Vice President Sharron Watkins memorandum sent to Kenneth Lay set in movement the unrevealing and exposure of Enron’s corruption (Beenen & Pinto, 2009). Shortly following, on the 16th of October 2001, Enron’s announcement of a $618 million loss in the third quarter and a staggering fall in shareholder equity by just over one billion, shocked investors. Ultimately, this led to the investigation by the Securities and Exchange Commission. It was sufficing to say that a long history of lies by Enron was beginning to unravel (Markham,…

    • 1494 Words
    • 6 Pages
    Superior Essays
  • Great Essays

    The CEO of Enron, Kenneth Lay helped weave the web of lies that Enron’s fake revenue was actually real. Chief Executive, Jeffrey K. Skilling, also partook in this scheme. Lay and Skilling were confronted by over a dozen counts of fraud and conspiracy through the trail of the Scandal. Both were the most famous characters in the scandal. However there was others who contributed to the fall of Enron by helping in falsifying the increase of Enron’s revenue, and concealing its debt.CFO, Andrew Fastow, was another mastermind and contributor of the fall of Enron.…

    • 1383 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Kozlowski, Swartz, and Belnick were all accused of selling their stock without informing shareholders, which under the Securities and Exchange Commission is a requirement. The Securities and Exchange Commission(SEC), the Manhattan D.A. and Tyco all pursued cases against Kozlowski, Swartz, and other former corporate officials on various charges which included: fraud, grand larceny, and falsifying regulatory filings. The SEC originally began an investigation on Tyco in 1999 after an analyst reported questionable accounting practices (SEC). The investigation revolved around the suspicious accounting principles of the company’s acquisitions, including a practice known as “spring-loading” (Forbes).…

    • 822 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    However, only two weeks after the takeover it was discovered that over $40 million of inventory were nowhere to be found, marking the beginning of the end of Crazy Eddie. In June 1989, following the takeover, the new owners of the company filed for Chapter 11 – Bankruptcy (Mock, 2004). In September 1989 the SEC commenced an enforcement action against Antar and others (SEC, 1997). Eventually the SEC and the FBI were able to identify fraudulent activities performed by the Antar family and its associates: • Falsifying the books and records of Crazy Eddie in order to make the company’s financial performance appear stronger that it actually was. • Falsely overstating inventory by approximately $2 million in 1985.…

    • 1769 Words
    • 7 Pages
    Superior Essays
  • Superior Essays

    MIDDLE EAST TECHNICAL UNIVERSITY FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES DEPARTMENT OF ECONOMICS ECON 433 THE RISE AND THE FALL OF ENRON CORP. BERKEHAN KAYA 1917350 Introduction Enron Corporation was the corporation which had the largest natural gas transmission networks in North America continent. In 2000, the company was on the Fortune 500 list with the seventh seat, but its bankruptcy in December 2001 was even larger. The name of the company, then, displayed whenever the subject is corporate greed and corruption. Its collapse costed employees and investors, and the figure of the costs reached over $70 billion because of the lost retirement pensions and lost capitalization. The Creation Enron took shape by the merger…

    • 1368 Words
    • 6 Pages
    Superior Essays

Related Topics