Official Enron (Ken Lay) Trial Thread

[geni]

If Anderson, as a company, really cared for their own existence, they would have shut down the Enron team and refused to audit Enron's books. They were addicted to the high consulting fees Enron paid, and couldn't see the forest for the trees.

Problem is that if auditors really refused to sign off accounts unless they were really sure they were ok there would be a lot of accounts not being sighned off.

 

[specious_reasons]

Problem is that if auditors really refused to sign off accounts unless they were really sure they were ok there would be a lot of accounts not being sighned off.

Of course, GAAP aren't rules set in stone. The real key is the egregious nature of Enron's fraud. I was looking for, but did not find, at least one conversation between Enron and Andersen which ended up in Enron doing something Andersen falt out did not approve, yet signed off on it anyway. I did find an example where Enron got Andersen to remove an auditor who pushed back on some of Enron's accounting.

 

[Luke T.]

Update:

Video shows Lay, Skilling in Enron's better days

Jurors watched a videotape of a meeting Skilling led in February 2001 after he succeeded founder Lay as Enron's chief executive.

During the nearly hour long video, both Lay and Skilling unveiled Enron's vision to be the world's leading company -- not just the top energy company. Both used words like “outstanding,'' “awesome performance,'' amid applause from employees.

Houston-based Enron filed for bankruptcy protection in December of 2001 after its stock collapsed.

Lay, Skilling Linked With Effort to Hit Expectations

Federal prosecutors on Wednesday sought to portray former top Enron Corp. executives Kenneth L. Lay and Jeffrey K. Skilling as deeply involved in day-to-day company operations and obsessed with hitting Wall Street earnings expectations, no matter the cost.

To make their points, prosecutors called as their first witness Mark Koenig, head of investor relations at Enron under Lay and Skilling. Koenig described fevered efforts by Skilling, Lay and other Enron executives to meet or beat Wall Street earnings forecasts. And he tried to undermine defense claims that Lay, the public face of Enron, was not involved in accounting issues at the center of the case.

 

[Tricky]

Looks like it's all up for Ken Lay. No, there aren't any official results, and this isn't even about his jury trial (the jury's still out on that one). This is about the trial before judge only about violating banking regulations. Guess what his defense is? He didn't know he was breaking the law. Seriously. That's it.

Former Enron Chairman Ken Lay told a federal judge Monday that he repeatedly violated the banking regulations he's accused of flouting but he didn't realize he was doing it at the time.

Now that might win some points in a jury trial, but to hope that a judge will forget that "ignorance is no excuse" is beyond credibility. He had access to all kinds of financial advisers, but decided not to use them and just inadvertently flouted the law not once, but four times. Of course, this one is not the biggie and even if convicted he won't have to pay much.

The four banking charges carry a 30-year penalty each. But experts said that since the banks were fully repaid by Lay, the reality is that if found guilty, he could be sentenced to something more like six months in prison, a sentence eligible for probation. The sentencing guidelines drastically reduce penalties based on how much was actually lost in white-collar cases.

That's right. It's not so bad to get caught with your hand in the cookie jar provided you put the cookie back. Man, the more I see of this sleazebag, the more I want him to do hard time with a cell mate that calls him Ben Dover for short.

 

[Luke T.]

If you really want to get heated up, read The Smartest Guys In The Room. There are a whole lot of characters in there I feel should be in prison. The entire Enron trading team, for starters.

 

[Tricky]

If you really want to get heated up, read The Smartest Guys In The Room. There are a whole lot of characters in there I feel should be in prison. The entire Enron trading team, for starters.

The thing that gets me the most is that Enron would have gotten away scott free if they hadn't been quite so greedy. And it is not like other companies aren't using a lot of the same tricks with a shade more restraint. WorldCom was a bigger bankruptcy than Enron, but the furor over Enron and Ken Lay's close personal friendship with Dubya assured that they wouldn't be front-page news for long. Has "buisness ethics" become an oxymoron?

 

[Luke T.]

The thing that gets me the most is that Enron would have gotten away scott free if they hadn't been quite so greedy. And it is not like other companies aren't using a lot of the same tricks with a shade more restraint. WorldCom was a bigger bankruptcy than Enron, but the furor over Enron and Ken Lay's close personal friendship with Dubya assured that they wouldn't be front-page news for long. Has "buisness ethics" become an oxymoron?

Actually, Ken Lay had no friendship with Dubya. In fact, according to the book, Dubya did not like Lay.

You are right about the greed. Enron screwed the pooch. California was the first to try deregulation of the energy industry. If Enron had played their cards right, instead of taking advantage of the gaping loopholes CA left open for exploitation, they could have made a good case for the rest of the states to deregulate, and they would have made many, many more billions honestly than they did by crookery in CA.

As for other companies being guilty of similar crimes, hell yeah. Just yesterday, Fannie Mae was fined $400 million for accounting violations. From what I gather, it was the same type of thing Enron did. Earnings manipulations.

And yet, nobody at Fannie Mae is going to jail.

Bogus.

 

[Tricky]

Nailed 'em! Yee Haw!

 

[Meffy]

*big thumbs-up*

 

[Roadtoad]

About damn time. Of course, Kenny just HAD to throw in some mention of God...

Lay, who is currently facing a maximum of 165 years in jail, said he still considers himself "a very blessed man" because he has the love of his wife and family and faith in God.

"Obviously as time goes on we'll have more things to say," Lay concluded.

Okay, maybe it's me, but the man has just been found guilty of fraud. He was cooking the books and ripping people off as fast as he could lay his hands on their money. And he's going to lay claim to God on this.

And people wonder why I don't go to church anymore. Dope.

Then again, there's this:

Prosecutors said these avowals of innocence will impact sentencing.

"Personal acceptance and personal responsibility plays a very important role in sentencing," said lead prosecutor Sean Berkowitz, who declined to comment on what length of sentence he would be asking for.

"We're going to calmly and objectively look at all of the sentencing factors and work to bring a just sentence that reflects what the victims have lost and things that have happened to the community as well as what justice should be done in the individual case," he said.

Hmmm. Looks like Kenny and Jeff will be doing without their limos for a while. Better hope no one drops the soap in the shower...

(Oh, and the story is here.)

 

[Chaos]

Actually, Ken Lay had no friendship with Dubya. In fact, according to the book, Dubya did not like Lay.

You are right about the greed. Enron screwed the pooch. California was the first to try deregulation of the energy industry. If Enron had played their cards right, instead of taking advantage of the gaping loopholes CA left open for exploitation, they could have made a good case for the rest of the states to deregulate, and they would have made many, many more billions honestly than they did by crookery in CA.
*snip*

Don´t forget: making money the honest way takes business skills, not criminal energy. And I guess we both know which of the two Lay and Skilling have.

 

[Roadtoad]

Yeah, well, unfortunately, I live in California, and wound up getting screwed with everyone else.

Bastards.

The WSJ's report on the radio this morning had an attorney who deals with this sort of thing. He said Lay blew it from the start, primarily by refusing to answer questions, and copping an attitude that he was somehow above it all. This in front of a jury that had been hearing for weeks that he and Skilling were the ones who helped put the thing together and oversaw it all. Seriously! Just how stupid can you be?!?!

 

[CapelDodger]

honestly[/I] than they did by crookery in CA.

Where has it ever been demonstrated that Enron made any billions honestly? Anywhere?

 

[Roadtoad]

The point was that they could have. They could have done a great many things. At no point did they EVER make the attempt. As a result, we're now going to see even more regulation of the Electric Industry, and perhaps higher rates as a result.

 

[CapelDodger]

Don´t forget: making money the honest way takes business skills, not criminal energy. And I guess we both know which of the two Lay and Skilling have.

It wasn't criminal energy, it was ambition and self-belief coupled with a contempt for real business. These guys had amesome visions, they were unconstrained innovators in the free market, using PR, political influence and monopoly to ... turn froth into substance. Apparently. And in the world of PR, politics and monopoly the apparent is substance.

WorldCom went hands-up just afterwards. It's not the scale that matters, it's the order of events. No official WorldCom trial thread, I notice.

 

[CapelDodger]

The point was that they could have. They could have done a great many things. At no point did they EVER make the attempt. As a result, we're now going to see even more regulation of the Electric Industry, and perhaps higher rates as a result.

I've no doubt that real value could have been created by re-modelling the energy market in the US in the 80's. The existing sytem was riddled with restrictive practices, local special interests and out-dated regulation. It needed to be rationalised, and it needed market - free market - involvement to rationalise it. It needed the involvement of people that understand and have experience of the actual production and distribution of energy to actual customers. Billions would be a small slice of the benefit.

Enron steered well clear of the actual, it looked to the financial and to the "awesome vision". And, of course, political influence and cornering a market.