Accounting Scandals Of Enron Company

1070 Words Apr 27th, 2015 5 Pages
Baasit Kazi
Ms. Bogert
College Accounting 1-1B
28 April, 2015

Accounting Scandals Reflection

Enron was founded in July of 1985. Enron was an electricity and natural gas company which was a fortune 500 company and it was ranked the sixth largest energy company in the world. Enron’s stock went from a peak of $90.75 to $0.67. This was very detrimental to stockholders. Enron’s top executives sold their stock a long time before the stock price fell. A lot of lower level employees could not sell their stock because of deals they made with the company. This later caused a lot of these employees to lose their life savings and everything they had worked for. Enron used a very complex accounting method to trick the stock market. This method was
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In the end, Arthur Andersen, Enron’s accounting firm and Kenneth Lay were both charged for obstruction of justice. Lay died before serving his sentence, and Skilling is still serving his twenty four year sentence in jail.

Bernie Madoff is another person who ran a multibillion dollar ponzi scheme. He is now serving 150 years in prison. Madoff tricked many investors out of $65 billion. He did this by running the largest and the most complicated ponzi scheme ever. A ponzi scheme is an illegal investment operation in which the operator takes money from one investor to pay off an older investor. The company looks like it is making profit for investors in the stock market while it is not making any profit at all. That is because the money that Madoff promised investors that he was investing in the stock market was not actually being invested in the stock market. It was really being use to pay off older investors. The name “ponzi” came from a man name Charles Ponzi. Ponzi promised people a 50% return on their investment. To make his deal more convincing, he promised the high rate of returns in a 90 day period. Madoff lured investors in a similar way. He said that would invest investor money in the stock market. He promised decent returns and showed the public that he was running a very successful investment securities company. He promised a high percentage of returns that were high, but not as

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