Enron - The Biggest Fraud in History

Hello, welcome to another ColdFusion video, it's a distant fact now, but Enron was once the 7th largest corporation in the United States, they revolutionized commerce and the energy market there, they were much smarter than their competitors and their business was intricate. and too complex for the average person to understand, except in reality, the whole thing was a big scam full of lies,

fraud

and political manipulation. Enron was the

biggest

scam in American

history

. The consequences of the scam were monumental: billions of dollars stolen, thousands of jobs lost, dozens of convictions, a suicide, and the revelation of a very public identity. display of corporate greed that shone directly into the heart of corporate America.

This is the story of how a company took ten years to grow to a value of sixty billion dollars and then, in less than a month, it went bankrupt. This is the story of Enron. ColdFusion TV Enron began as an energy supply company that dealt primarily with natural gas. Eventually the company moved into trading, it made energy deals in the energy sector and then it moved into broadband and even traded if there was the darling of Wall Street, the company that could never lose and the stock price continued to grow year after year the company was also well connected politically, for example, Enron was the largest contributor to George W.

Bush's campaign Bush even called Kenneth Lay the founder of Enron Kenny boy and it is with Kenny boy that the story begins growing up in a family. poor. Kenneth Leia's father was a Baptist priest. Young Ken often reflected on his future, a future in which he could escape his current conditions. When he grew up, he became a leading figure in the deregulation of the energy sector. The PhD graduate spent his time as a financial analyst at the Pentagon before rising through the ranks and becoming close friends with George Bush Sr. Ken Lay would even send Enron's corporate jet to take George Sr. and his wife to his son's inauguration, as you'll see later. the favors did not go away the first red flag company founder Kenneth said something was wrong within the company occurred during the Valhalla scandal of 1987 oil traders working for Enron bet huge amounts of Lee on behalf of the company transferring money to fake accounts with names like my butt or my butt, concerned auditors told Lai that they found the two traitors moving money into their own accounts manipulating profits and gambling on transactions beyond their capacity, but instead of firing To the two roadside merchants, Lai made no changes, it didn't seem to matter.

Millions later, the two were found guilty of

fraud

. Ken Lay acted surprised saying that he was unaware of his reckless gambling and theft, but as it was later revealed, he actually encouraged him: one of the convicted traders was sent to prison for a year and this gave Ken Lay a big deal. problem: one of his

biggest

moneymakers was behind bars and needed someone new to bring him cash. The CEO was his greatest asset when he came to Enron. He began to move the company in a new direction. He wanted to convert Enron from a gas supply company to a stock market for natural gas.

He also introduced the company to carry out market accounting, an idea that would allow the company to fraudulently obtain billions, so market value accounting simply allows the company to write down profits on its books on day the deal was signed, this would mean that if Enron signed a deal worth $50 million over the next 10 years they could write $50 million on their books that day despite not getting a dime it didn't even matter. If the deal actually failed, this myth that the company was worth more on paper than it had actually earned. Deals were often subjective. They could be worth what Enron thought they were worth when the Securities and Exchange Commission approved the adjustment accounting trick. market prices for Enron, the office celebrated that they knew this was the key to making billions, while Skilling was known for his Darwinian philosophy on the survival of the fittest, his favorite book, The Selfish Gene, describes how Greed and competition motivate human nature at Enron.

Skilling wanted to unlock these instincts in his employees. One way he did this was to rate all employees on a scale of one to five, with one being the best and five being the best. The worst thing is that 10% of all employees had to be older to fire and when they rated you a five they fired you, this created the competition they were looking for skills, people started working 18 hours a day and were ruthless in their efforts to make the company as much money as possible his abilities said that money was the only motivator, unsurprisingly his abilities took big risks and he often embarked on wild adventures with other Enron executives, this included riding cycling on dangerous trails where people often flip their cars and The executive even required stitches after a bicycle accident on one of these trips.

Skilling said he liked guys like this, guys with a little edge. Lao PI. A mild-mannered executive was one of these guys with a bit of skill. Lao PI is intercontinental ICBM. ballistic missile will be CEO of an Enron subsidiary and appears to be motivated by two things: money and strippers. PI is not as mysterious as it could be in such a big scandal that he left and in 2001 with 215 million dollars he became the second largest landowner in Colorado he left his business division with a billion dollars in losses and escaped the whole scandal virtually intact pi would return later in this story a few decades after the dust settles Enron online will change the markets for many commodities that is creating an open and transparent market that replaces the dark and blind system that existed.

It's really easy to turn on your computer and it's right there. If you want to do business, you press the button; that is our vision and we are trying to change the world. It wasn't just internet companies that were feeling the fever and shares had tripled in the space of two years. Everyone who had a little extra money was playing the stock market game and knew that as long as the company met or exceeded endless expectations, the stock price would continue to rise and somehow they always met or exceeded those expectations during this time, While Jeff Skilling was at company conventions telling his staff to put more of their 401k into Enron, he knew that profits were actually going in the opposite direction around the world.

Around the world they were losing billions on natural gas projects. Enron had invested billions of dollars in appliances. In India, you have to realize that India could not afford to buy the electricity. The site was in ruins, but that didn't stop Enron executives from scoring. future profits from the project on their books and giving themselves huge bonuses. The analyst. The very people who were supposed to stop the corruption fell under the spell of the abilities. The complexity of the company and the charisma of the skills caused analysts to simply take it at its word. In fact, those who didn't were fired, the company soon began marketing bandwidth after some quiet inspiration, they made a deal with Blockbuster to provide streaming services, but the technology simply didn't work well enough, but the deal fell through, but Enron still remained fifty. three million dollars on their books because things started to get out of control and Enron soon began trading the weather, yes the weather, like sun and rain, they would soon be selling futures on the weather, essentially betting what the temperature would be, You'd probably imagine most people would.

Be skeptical of this, but it was activities like this that led to the Fortune 500's list of most innovative companies, but a Fortune reporter would soon start asking questions and this would later lead to the company's demise. Bethany McLean, Fortune reporter. She was doing an article on Enron, she had a phone call with John Skilling where she asked him some simple questions like how exactly Enron makes its money. Skilling said he couldn't answer because he wasn't an accountant, so he sent some finance guys, including Andy asked the CFO to answer his questions the next day, they sat in the office for three hours poring over the documents in the end while Others had left the room and he turned to the journalist and said: I don't care what you write about him, the company just doesn't make us look bad.

Andy Foster was a character described as having no moral compass, he made the Enron deaths disappear by moving them. to show companies so that on paper and in execution it was profitable he even created his own fraudulent company just to buy assets in Iran, this fraudulent company was called ljm. Andy would later convince ninety-six bankers to invest in the scam. the ljm company. ljm would give Andy Faust our forty-five million dollars, but it seemed like the banks were also involved in the deal that bought Merrill Lynch. three Nigerian Enron barges and sold them five months later, this was to help anyone manipulate their accounts and then several bankers would go to jail for this.

They both trained him and knew that even this couldn't last forever, they needed a new gold mine and then they turned their eyes to the Golden State of California now the skills became increasingly volatile coming to work unshaven and retiring on a call of investors in 2001 even called an investor in a hole a brazen reaction from a Fortune 500 CEO the pressure was getting to him the company They had to continue setting quarterly goals even though their businesses failed at home and abroad foreign. California was going to be his next big thing. Enron merged with Pacific Gas & Electric, giving them access to California's grid.

Once this was achieved, strange things began to happen in the new country. California's deregulated electricity market Rolling blackouts became common but, strangely, the state had nearly doubled demand capacity, so why did this happen? Turns out Enron traders were manipulating the market, they moved electricity out of state to increase demand and when the price rose high enough they would move it back, they even called the power plants and asked them to give excuses to shut down for a few hours, increasing the price, as the traders with lower demand had energy maps and the control to move the energy that they knew exactly how to squeeze. down to the last dollar of the people of California, as the state faced blackouts that put unknown holes in the lives of Californians, Enron traders high-fived each other for their bonuses.

Ken Lay even said that it doesn't matter how many rules you Californians make. I have a group of smart people here who will figure out how to make money anyway. The year-long ordeal would cost California $30 billion, but why didn't the state put an end to it? The law states that it is a matter for the federal government and it is their responsibility to take care of it and guess who was the president at the time. That's right, his good friend George W. Bush Bush refused to intervene, saying his administration believed intervention would solve nothing. The Federal Energy Regulatory Commission did too.

They did not intervene until the Senate forced them to have the chairman of the Commission personally recommended by Kenneth Lay. This entire ordeal caused the people of California to turn against their governor and appoint a new one who was better suited for the role of Terminator. One day in 2001, out of the blue, Skilling suddenly quit, maybe he thought he might leave the company years before it imploded, so he could say it was fine when I left regardless. Kenneth Lay took over as CEO just one day later. Sharon Watkins, who worked. The company's chief financial officer, Andrew Foster, sent a letter to Kenneth Lay detailing the staggering amount of corruption and fraud he had found within the company.

The Wall Street Journal would write an article about some of Andy's dealings, and soon the SEC would begin an informal investigation. At this point, investors began to feel nervous. Kenneth Lay tried to bring calm and reassurance to investors and employees as he addressed the company's problem in a speech to employees several blocks away and the accounting firm was busy shredding documents that one of the accounting firms destroyed. a ton of paper on October 23 but it was too late, the walls began to fall andIn the course of a month the company went from that healthy appearance of one of the main innovators to complete bankruptcy.

You want us to believe that you sat there. in his office and I didn't and I had no idea that this place was about to collapse the day I left on August 14, 2001. I believe the company was in a strong financial position. I didn't do anything right that wasn't interesting and everything. When I worked for a corporation run by the interest of the company's shareholders, if I could go back and redo things I wouldn't know, for the thousands of people who owned Enron stock, the market was frozen at the $32 mark and when it reopened, it was worth nine dollars a share, meanwhile, Andron executives held a fire sale of all its shares in the months before the bankruptcy.

Skilling told his employees to blame or actions while he sold all of his as the media began to spin the criminal story. Investigations launched Cliff Baxter, a trader who often participated in Skilling's crazy adventures, collected $30 million from Enron after being called to testify in court. Baxter Cod drove his Mercedes down a quiet street and shot himself. Andy Foster, the former chief financial officer, pleaded guilty to conspiracy. for committing electronic fraud he ratted him out and reached an agreement to testify against other Enron executives he was sentenced to 10 years but only served six and paid 23 million in fines and runs the accounting firm Arthur Andersen the one who shredded a ton of paper was convicted of obstruction of justice the oldest accounting firm in the United States collapsed due to loss of reputation 29,000 people lost their jobs Ken Lay made 300 million from Enron was found guilty of 10 counts of securities fraud and faced 45 years in prison One month before his sentencing, 20,000 people at Enron lost their jobs and health insurance with an average compensation of only $4,500.

The executives received $55 million during the bankruptcy and collected another $774 million the year before the collapse. The mastermind behind Enron was found guilty of 19 counts of security and wire fraud. He was sentenced. to 24 years and 180 million in fines while he was in prison, his parents and his son died. I only served 12 years of his 24-year sentence and was released in early 2019, but this is not where the story ends. A second chance, it appears he is applying for a return to the energy sector just two months after his release from prison in early 2019. He joined as manager of a new company he founded a few years ago.

Lau PI / former Enron executive who left Into the Sunset with Us 250,000,000 are reported to be helping Skilling regain connections and financing according to The Wall Street Journal. Skilling has been holding meetings with former Enron executives regarding starting a new company. This may be difficult for him, since obviously his reputation has been greatly maligned, but other than people's perception, there is technically nothing stopping him, the SEC has banned Skilling from being an officer of any public company, so As long as this company remains private, he can do whatever he wants, so that's the Enron story with a not-so-typical ending despite being one of the biggest players in the biggest scam in US

history

.

US that resulted in billions of dollars in losses for average people, tens of thousands of lost jobs and reaping executives and billions in skills, is out of jail and free to start over. Enron's motto. He was asked why during his astronomical rise it seemed that no one bothered to ask how or where the money came from and now, with the skills to get out of jail and try to re-enter the business world, perhaps once More we should ask ourselves why, so that it ends. our look at Enron thank you for watching this video I hope you enjoyed it if you want to see things like this or much more, you should definitely consider subscribing to this channel if you want to see my latest video on commercial fraud, which was the story of justice.

I'll leave a link to that after this, which is pretty interesting, Elizabeth Holmes, since her father was a former Enron executive. I won't say more anyway, that's all, thanks for watching this. It's been: gogo, you've been watching Cold Fusion and I. See you soon in the next video. Greetings guys, have a good time. Cold fusion. It's me thinking about you.