Former chair financial officer Andrew S. Fatsow pleaded to two counts of conspiracy. Fatsow was sentenced to six years in prison (WashingtonPost, 2006). Michael J. Kopper former top aide to Fatsow pleaded guilty to two counts of conspiracy and was sentenced to three years and one month in prison (WashingtonPost, 2006). Former chief accounting officer Richard A. Causey pleaded guilty to one count of securities fraud. Causey was sentenced to five and a half years in prison (WashingtonPost, 2006). Andrew Fatsow, Michael Kopper, Richard Causey all testified against Kenneth Lay and Jeffery Skilling. Enron founder and former chairman Kenneth Lay was convicted on ten counts of fraud, conspiracy, and false statements to banks. He died six weeks after
Kenneth Lay, former Chairman and CEO, and Jeff Skilling who was also a CEO and COO of Enron, had the major part in Enron when it collapsed and went bankrupt. Because of deregulations Ken Lay enter Enron in 1985 through a merger a vast network of natural gas and pipeline. Later, Enron grew into an energy trading company which was worth $68 billion in 2000. Lays family was poor, which made him ambitious to earn wealth regardless of the path he takes, hence, unethical professionalism at Enron. Enron took advantage of his decision to let gas prices float on the market. Rich Kinde found out about Enron’s oil scandal in 1987 by the misappropriation of
Kenneth Lay, (former Enron Chairman and CEO) and Enron poured millions of dollars into both political parties, cultivating access and using the entrée to lobby Congress, the White House and regulatory agencies for action that critical to the energy company’s spectacular growth.
The following case is one of the most famous white-collar crime cases known to date. Enron Corporation was an American energy company based out of Houston, Texas. Kenneth Lay formed Enron in 1985 after a huge merger. Over time Enron’s Chief Financial Officer (CFO) and other corporate executives misled auditors and the board of directors in major financial transactions. Thus, $11 million dollars was lost by shareholders after Enron’s stocks dramatically fell in the end of 2001. Enron was then bankrupt. In this case, many Enron executives were sentenced to prison, a rare punishment for white-collar crime. As a result of this incident, the Sarbanes- Oxley Act was enacted. This act ensured that there would be
Last week brought the first criminal consequences, as former financial executive Michael Kopper pleaded guilty to charges that he helped build a web of partnerships that disguised Enron's waning fortunes and funneled millions to himself, Mr. Fastow and others. The plea made it clear the federal government is now preparing a case against Mr. Fastow.
On December of 2001, the nation’s seventh largest corporation valued at almost $70 billion dollars filed for bankruptcy. Illegal and fraudulent accounting procedures would led to the demise of the company. Over 20,000 people lost their jobs, and about $2 billion in pensions and retirement funds disappeared. Despite all this, Kenneth Lay, Jeffrey Skilling and Anthony Fastow profited greatly from Enron. These events resulted in the implementation of new legislation on the accuracy of financial reporting for public companies. The fall of Enron became known as the largest corporate bankruptcy in the United States at the time.
Andrew Fastow, former chief financial officer and Jeffery Skilling former chief executive officer of Enron both received lengthy sentences. Andrew Fastow worked as chief financial officer from 1998 through 2001 and was indicted on 98 charges of conspiracy, fraud, money laundering and other counts. Fastow plead guilty in 2004 to two conspiracy counts and cooperated fully with prosecutors. Fastow is currently serving six years in prison and will serve two years of full-time community service once released. Jeffery Skilling, worked as chief executive officer in 2001, was convicted of 18 counts of fraud and conspiracy and one count of insider trading. Skilling is serving twenty-four years in federal prison. (Fraud)
Mr. Jeffrey Skilling was one of three executives at Enron Corporation that were indicted for manipulating financials to show the public inflated numbers about Enron’s profitability. By showing these numbers to the public they were trying to mislead the public into thinking the company was more profitable than it really was. Mr. Jeffrey Skilling was convicted by a Texas federal district court of conspiracy, securities fraud, making false representations to auditors, and insider trading. Mr. Skilling had been the C.E.O. of Enron Corp. Mr. Skilling appealed, he argued he was prosecuted by the government under an invalid legal theory and that the jury he had was biased.
In October of 2001, Enron announced a third-quarter loss of $618 million. The SEC and the U.S. Department of Justice both launched investigations into the sudden fall of the company and found that Enron had overstated their earnings by an estimated $586 million since 1997. Top executives in the company sold their majority shares days before the company’s collapse leaving lower level employees with worthless stocks in their pensions causing them to lose the majority of their life savings (CNN). As of today, charges have been brought against at least sixteen employees and executives in connection with Enron on counts of wire fraud, securities fraud, insider trading and money laundering among others. Flashback to June 17, 1972, and the
He was the CEO, founder and chairman of Enron. He played a leading role in the corruption scandal that led to the downfall of Enron Corporation due to his greed and lack of integrity. He was born April 15th 1942 in Tyrone, MO. He died July 5, 2006 in Snowmass, CO. In 2004 Lay was indicted by a grand jury on 11 counts of securities fraud and related charges. May 25, 2006, Lay was convicted of 10 counts against him; the judge dismissed the 11th. He died of a heart attack while vacationing in Snowmass, Colorado, on July 5, 2006, about three and a half months before his scheduled October 23 sentencing date. Lay was a faithful member of the First United Methodist Church of Houston, and on the day he died, his son, Mark, said that Lay wrote in his journal that Christians should "live by faith and not by
As Bethany McLean and Peter Elkind portray in The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, there was a chain-reaction of events and a hole that dug deeper with time in the life-span of, at one time the world's 7th largest corporation, Enron. The events were formulated by an equation with many factors: arbitrary accounting practices, Wall Street's evolving nature and Enron's lack of successful business plans combined with, what Jeff Skilling, CEO of Enron, believed was the most natural of human characteristics, greed. This formula resulted in fraud, deceit, and ultimately the rise and fall of Enron.
Let me give a short introduce about it, “In 1974, Kenneth Lay joined the Florida Gas Company, eventually serving as president of its successor company, Continental Resources Company. In 1981, he left Continental to join Transco Energy Company in Houston, Texas. Three years later, Lay joined Houston Natural Gas Co. as chairman and CEO. The company merged with InterNorth in 1985, and was later renamed Enron Corp. In 1986, Kenneth Lay was appointed chairman and chief executive officer of Enron.” (editors, n.d.)
In a criminal lawsuit the Corporation can be sued, but the criminality falls to the bodies involved in the criminal activity at the company. Two significant criminal cases of criminal activities in this last century involved several executives, specifically the CEOs of Enron (2001) and MCI (2002) where criminal charges were brought against these leaders for fraudulent accounting practices. In Enron’s case $74 billion was lost in shareholder’s value, thousands of employee jobs, retirement accounts was lost and the company is no longer in existence. Two CEOS, Jeff Skilling and Ken Lay were convicted of 24 years of jail time. In the case of MCI/WorldCom, the company inflated profits by $11 billion, which resorted in $18 billion lost to investors, 30,000 jobs were lost. Bernie Ebbers MCI’s CEO was sentenced to 25 years in jail. These two criminal cases, created the greatest change in business regulations since 1930 and the Sarbanes-Oxley Act of 2002 (SOX) was put into place to protect investors from the possibility of fraudulent accounting activities by corporations. The SOX Act mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.
In 1990 Enron market value increased from $3.5 billion to $35 billion by the end of 1999 (Ivey Business Journal, 2016). During this time Andrew Fastow was the chief financial officer of the Enron Corporation and the pioneer of the financial implication that brought Enron crumbling down. In this nine-year time frame this feat was admired by companies around the globe. Andrew received a CFO Magazine award for his work at Enron and had lavish parties celebrating the results of the quarterly earnings (Ivey Business Journal, 2016). Unbeknownst to Andrew Fastow, just three years after raising the value of Enron by nearly $32 billion, his ethical decisions would cost him his freedom.
When WorldCom, the telecommunications giant, failed and was put into bankruptcy, the U.S. witnessed the largest accounting frauds in history. Former CEO, Bernie Ebbers, was convicted of orchestrating this accounting fraud and was sentenced to 25 years in prison in July of 2005. For Ebbers, who is 63 years old and has a heart ailment, this will likely mean spending the rest of his life behind bars for his role in the biggest corporate accounting fraud in US history. He was convicted by a federal district court in New York of fraud, conspiracy and making false filings.
There were several people responsible for the WorldCom scandal, as well as, whistleblowers that first discovered the accounting fraud. The former CEO, Bernard Ebbers was found to be the main offender of the fraud. He did it by capitalizing inflated revenues with phony accounting entries and he was eventually sentenced to 25-years for fraud, conspiracy and filing false documents with regulators. Scott Sullivan, the former CFO, pleaded guilty to one count of conspiracy to commit securities fraud and was sentenced to 5-years after testifying against Bernard Ebbers. The former Director of General Accounting, David Myers, pleaded guilty to