Enron's Case: White Collar Crime And Its Victims

Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.

Mr. Madoff’s dealings also affected his business employees, people who woke up thinking they had a job came to work only to realize that the no longer had a job but the y didn’t even have the money they had put into their retirement funds, literally everything they had was gone. Also affected were his investors; people who had invested their earnings and savings believing that Madoff and his company were legitimate. Another tragedy of Mr. Madoff’s action was the impact on his business partners and the business world. The stock market will never be the same and never again will a wise investment be made without the investor doing research to check the validity of said investment, thus considering the risks. The general public no longer puts blind trust in investment companies; thanks to Bernie Madoff the obvious is no longer taken for granted in the world of big business.

The story of Enron is truly remarkable. As a company it merely controlled the electricity, natural gas and communications sectors of the world. It reported (key word, reported) revenues over one hundred billion US dollars and was presented America’s Most Innovative Company by Fortune magazine for six sequential years. But, with power comes greed and Enron from its inception employed people who set their eyes upon money, prestige, power or a combination of the three. The gluttony took over sectors which the company could not operate proficiently nor successfully.

After news broke that Madoff was arrested all of his investors were shocked, Madoff to them, was the most reputable and trustworthy man they new in the stock market. A majority of Madoff’s clients were brought to him by feeder funds that brought in clients from all over the world including banks, charities, and wealthy investors. Once all of these investors realized that all of their money was gone everybody began to panic. Along with the economic downturn, all the investors wanted was their money; once they realized that there was no money to begin with they began to sue anybody who was related to Madoff hoping that they could recover some of their investments. The ones who truly suffered the most were the people who were the beneficiaries of the charities that invested with Madoff (Klein, 2016, pg. 146). Although the financial impact was huge the emotional impact took a far greater toll. A lot of people felt betrayed by Madoff his family included, as a result some investors and even his

The Enron corporation was an amalgamation of Houston Natural Gas and Internorth two of the largest natural gas suppliers in the United States. It was built upon the company 's ability to convince congress to deregulate the sale of natural gas through supplying electrical pieces at market prices. This allowed Enron to begin to sell power at higher prices therefore driving their revenue up. The company also began to spread its grasp out of natural gas and into a myriad of other power sources across the globe including water, pulp and paper plants. This was all done through a massive series of loopholes and massive amounts of money being funneled into Congress to lobby against regulations of such activities.

Enron started as a sound company that had a promising future in the oil and energy business. The companies CEO and CFO were charged on 35 different accounts of fraud, conspiracy, and insider trading that cleared most of its employee’s retirement pensions and billions of dollars for others (Unknown, 2016). It is impossible to account for every transaction that a company will produce, but the revamping of government

Instead, it was such massively deceptive accounting alteration that it raised questions about the proper definition and scope of the white-collar crime. While only a few major employees and members of the company were involved in this fraudulent activity, yet it affected the life of several hundred thousand Americans. As the investigation report about Enron was publically released, the AAA+ credit rated company collapsed instantly making hundreds and thousands homeless and jobless. This had a serious impact on the stability of the stock exchange as well. The collapse of the company was not only composed of the financial stability of the company bit as they have also destroyed their reputation at the global

The history of Enron is described in detail in the film “The Smarted Guys in the Room”. According to the film, Enron was founded by Kenneth Lay in 1985, functioning originally as a producer and supplier of natural gas. Enron built and operated power plants and pipelines all over the United States. The company’s wealth expanded quickly due to marketing, promotional strategies and stock price. One of the important aspects noted in the film was Lay’s relationship with the Bush family. This will be described in detail later on and becomes a crucial piece of information during the California energy scandal. Enron’s traders were involved in a scandal early on in the company’s history involving the misappropriation of money and oil betting, this became known as the Valhalla scandal. Lay encouraged traders to continue these activities until the company was near bankrupt and finally the top traders involved were fired and convicted.

In 2001, the world was shocked by the demise of Enron, a multibillion dollar corporation that had thousands of employees and people that had affiliations with the company including The White House itself. Because of the financial chaos and destroyed lives and reputations this catastrophe left in its path, questions arose concerning how exactly it happened, why it occurred, and who was behind it. It is essential to understand how this multibillion dollar corporation rose to power and later imploded. Enron itself was born as the result of Houston’s Natural Gas and InterNorth, a gas based pipeline company from Nebraska in 1985. In the final analysis, the conspiracy of Kenneth Lay, Jeffery Skilling, and others, including

When Enron was bankrupt, the most affected people are Enron’s workers and shareholders. Many people lost their jobs, their whole pension and all of the shareholders lost their money (Dunder,n.d.). According to Raver (2006, p4-5), Enron stocks prices were increased nearly double in one year by many ways such as legal and illegal way. The stock price was increasing so fast, many Enron employees bought Enron stock as saving money, and also their pension are in Enron’s stock too. When Enron was failing, Enron’s stock

The Enron Corporation started in 1985 by Kenneth Lay and was the result of a merger between Houston Natural Gas and InterNorth Corporation (Madsen & Vance, 2009). Enron had the biggest gas transmission system in the U.S which consisted of a network of 38,000 miles of pipeline (Giroux, 2008). After the addition of Jeffrey Skilling, Enron transformed itself from a producer and distributor of natural gas to a trading company (Chandra, 2003). Enron lobbied hard for deregulation and was capable of being able to trade almost anything (Chandra, 2003).This idea required vast amounts of liquidity (Chandra, 2003). Enron’s revenue began to increase at a rapid speed (Chandra, 2003). Skilling developed a workforce that enabled the concealing of billions of dollars through the use of special purpose entities, fraudulent financial reporting, and accounting inadequacies (Giroux, 2008). Enron committed fraud over an extended period of time to manipulate earnings in order to maintain compensation of central executives. Despite the collapse of Enron, many executives were paid millions of dollars while other Enron workers were terminated and lost all of their retirement funds (Giroux, 2008). Enron has went down in history as not only being the biggest bankruptcy in U.S. for that time period, but also the largest audit failure (Giroux, 2008).

Question 1 Summarize 1 one page how you would explain Enron’s ethical meltdown: Enron was an energy company founded by Kenneth Lay in 1985 through a merger of vast networks of natural gas lines. Enron specialized in wholesale, natural gas, and electricity, and made its money as a wholesaler between suppliers and customers rather than actually owning any. Enron in fact didn’t own any assets, which made their accounting procedures very unusual. The lack of accounting transparency at Enron allowed the company’s managers to make Enron’s financial performance better than it actually was. The organizational culture at Enron was to blame for it’s ethical meltdown. Enron’s accounting scheme slowly began to erode its ethical practices, which soon led the culture of Enron to become a more aggressive and misleading business practice. Enron reported profits from joint partnerships that were not yet attained in order to keep stock prices up (or make wall street happy). As this was happening employees began to notice the ethics in senior management (leadership) deteriorating, and soon after they to would follow in their footsteps. Senior management thought they were saving their company from financial ruin and though lying was ok if it meant saving the company. Investors would surely sell their stocks if they really knew the situation the

Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990’s, Enron was widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business.

Ethics in the business world can often times become a second priority behind the gaining of profits and success as a company. This is the controversial issue that led to the Enron scandal and ultimately the fall of this company. Enron Corporation was an energy company, and in the peaks of their success, they were the top supplier of natural gas and electricity throughout America. Enron Corporation came about from a merger between Houston Natural Gas and InterNorth. Houston Natural Gas was a gas providing company formed in Houston during the 1920’s. InterNorth was a company formed in Nebraska during the 1930’s and owned one of America’s largest pipeline networks. In 1985, Sam Segnar, the CEO of InterNorth bought out Houston Natural Gas for $2.4 billion. A year later in 1986, Segnar retired and was replaced by Kenneth Lay, who renamed the company and created Enron. Enron was the owner of the second largest pipeline in America that measured over 36,000 miles. The company was also the creator of the “Gas Bank”, which was a new way to trade and market natural gas and served as an intermediary between buyers and sellers. As the company continued to develop, it became more of a trader rather than a producer of gas. This trading extended into coal, steel, water and many other areas. One of Enron’s largest successes was their creation of a website called, “Enron Online” in 1999, which quickly became one of the top trading cites in the world. By the year 2000 Enron as a company was

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?