White Collar Crimes
boddabing
Enron.docxRunning head: ENRON 1
ENRON 2
Having revenue that is more than $100 billion and the named distinction by fortune as most innovative company in America, Enron was the indestructible energy seemingly giant at the start of the 2000s. Therefore, during the time it rises in the 90’s, there were rumors that it had accounting procedures that were illegal with the accounting firm Arthur Andersen LLP, and also the Big Five accounting firm (Ferenczy, 2019). Jeffrey Skilling, who was a Chief Executive Officer, had millions of dollars of debt that was hidden through poor financial reporting, accounting loopholes using special entities purpose. Andrew Fastow, Chief Operations Officer, deceived the Board of Directors with his board practices and the Arthur Andersen firm went along for the ride. After plummet of the stock, the Security and Exchange Commission conducted an investigation and it ultimately resulted in a 24-year prison sentence for Jeffrey Skilling and a six-year term for Fastow. Kenneth Lay, who was a founder, died of a heart attack before sentencing.
The Enron scandal was public by October 2001. The scandal brought out the bankruptcy of the Enron Corporation, an energy company based in Houston, Texas and the dissolution of the accounting firm Arthur Andersen, LLP. This was the largest bankruptcy of an American Organization in history at the time. Shareholders of Enron filled a lawsuit of $40 billion after the price of the stock in the company; this brought a high of $90.75 per share in the middle of 2000, and plummeted to less than $1 by the end of November 2001. The United States Exchange and Securities Commission started an investigation, and rival competitor Houston Dynegy made a lowball offer to purchase the company. There was a fail in the deal, and on December 2, 2001, Enron filed for Chapter 11. Enron’s 63.4 billion dollar assets made it being the biggest bankruptcy in corporate America’s history until the bankruptcy of WorldCom the next year.
Many Enron executives were charged with a variety of crimes and sentenced to prison (Ugwulali, 2019). Arthur Andersen LLP was caught destroying documents that were pertinent Security and Exchange Commission’s investigation which render void its ability to audit a public trading company. The company was audited and effectively closed. Shareholders and employees at Enron received returns that were limited in lawsuit, despite having lost billions in stock prices and pensions. Consequently, due to the scandal, new legislation and regulations were made for expanding the financial reporting accuracy for public trading companies. One legislation piece, the Act of Sarbanes-Oxley, increased the penalties for altering, fabricating or destroying federal investigation records for trying to defraud shareholders.
Court Documentation, Articles, Reports
ARTHUR ANDERSEN LLP V. UNITED STATES. (2005, May 31). Retrieved February 25, 2020, from https://www.law.cornell.edu/supct/html/04-368.ZS.html
Former Enron Chief Financial Officer Andrew Fastow Pleads Guilty to Conspiracy to Commit Securities and Wire Fraud, Agrees to Cooperate with Enron Investigation. (2004, January 14). Retrieved February 25, 2020, from https://archives.fbi.gov/archives/news/pressrel/press-releases/former-enron-chief-financial-officer-andrew-fastow-pleads-guilty-to-conspiracy-to-commit-securities-and-wire-fraud
Former Enron Chief Financial Officer Andrew Fastow Sentenced to Six Years in Prison for Conspiracy to Commit Securities and Wire Fraud. (n.d.). Retrieved February 25, 2020, from https://www.justice.gov/archive/opa/pr/2006/September/06_crm_647.html
Skilling v. United States, 561 U.S. 358 (2010). (n.d.). Retrieved February 25, 2020, from https://supreme.justia.com/cases/federal/us/561/358/
United States Department of Justice, & Doj. (n.d.). U.S. Department of Justice Case Highlights. Retrieved February 25, 2020, from https://www.justice.gov/archive/index-enron.html
References
Ginsburg, M. D., Rocap, D. E., & Levin, J. S. (2019). Mergers, Acquisitions, & Buyouts: November 2019 Edition. Aspen Publishers.
Ugwulali, J. (2019). Essentials of Forensic Accounting and Fraud Management. First Edition Design Pub.
Ferenczy, I. H. (2019). Employee Benefits in Mergers and Acquisitions: 2019-2020 Edition. Aspen Publishers.
