2. • Born April 15, 1942
Tyrone, Missouri, USA
• Died July 5, 2006
• Conviction(s) fraud, false
statement
• Penalty died before sentencing,
conviction vacated
• Status died of a heart attack
before his sentencing
• Occupation businessman
3. • Born November 25, 1953
• Conviction(s) conspiracy,
securities fraud, false
statement, insider trading
• Penalty imprisoned 24 years
and 4 months, fined $45
million
• Status in prison
• Occupation prisoner/Failed
Businessman
• SpouseRebecca Carter
4. • On October 31, 2002, Fastow was
indicted by a federal grand jury in
Houston, Texas on 78 counts
including fraud, money laundering,
and conspiracy. On January 14,
2004, he pled guilty to two counts
of wire and securities fraud, and
agreed to serve a ten-year prison
sentence. He also agreed to
become an informant and
cooperate with federal authorities
in the prosecutions of other former
Enron executives in order to
receive a reduced sentence. As of
November 2006, Fastow is Inmate
#14343-179 at the Federal
Detention Center (FDC) in
Oakdale, Louisiana, with a
projected release date of
December 17, 2011
5. • Ben Glisan Jr., a
former Enron
treasurer, was the first
man to be sent to
prison in the Enron
scandal. He pleaded
guilty to one count of
conspiracy to commit
security and wire
fraud.
6. • John Forney, a former
energy trader who
invented various
strategies such as the
"Death Star," was
indicted in December
2002, on 11 counts of
conspiracy and wire
fraud. His trial was
scheduled for October
12, 2004.
7. • Timothy Belden and
Jeffrey Richter, have
both pled guilty to
conspiring to commit
wire fraud and currently
are aiding prosecutors
in investigating this
scandal.
8. • All told, sixteen people pleaded
guilty for crimes committed at the
company, and five others,
including four former Merrill
Lynch employees, were found
guilty at trial. Eight former Enron
executives testified, the star
witness being Fastow, against
Lay and Skilling, his former
bosses. Another was Kenneth
Rice, the former chief of Enron
Corp.'s high-speed Internet unit,
who cooperated and whose
testimony helped convict Skilling
and Lay. In June 2007, he
received a 27 month sentence
9. • Lou Lung Pai (born Nanjing,
China 1946) is a Chinese-
American businessman and
former Enron executive. He was
CEO of Enron Energy Services
and Enron Xcelerator, a venture
capital division of Enron. He left
Enron with over $280 million. Pai
became the second largest land
owner in Colorado when he
purchased the 77,500 acre
Taylor Ranch, though he later
sold the property in 2005. He has
not been charged with any
criminal wrongdoing in the Enron
scandal and has exercised his
5th Amendment right in regard to
the subsequent Enron class
action lawsuit.
10.
11. • On June 15, 2002, Andersen was convicted of
obstruction of justice for shredding documents
related to its audit of Enron, resulting in the
Enron scandal. Nancy Temple (Andersen Legal
Dept.) and David Duncan (Lead Partner for the
Enron account) were cited as the responsible
managers in this scandal as they had given the
order to shred relevant documents. Since the
U.S. Securities and Exchange Commission
does not allow convicted felons to audit public
companies, the firm agreed to surrender its
licenses and its right to practice before the SEC
on August 31, 2002. This effectively ended the
company's operations.
12. • 1996
• CFO Andrew Fastow begins committing crimes by creating off-
book entities for personal enrichment. [1]
• 1997
• Andrew Fastow creates Chewco in an effort to hide debt and
inflate profits but Chewco doesn't meet requirements to keep it
off Enron's balance sheet.
• 1998
• Enron enters into several capital intensive ventures that turn
into financial disasters including a water distribution scheme
and power plants in Brazil.
• 1999
• Enron board of directors waive conflict of interest rules in order
to allow Andrew Fastow to run private companies that do
business with Enron. He creates LJM that buys poorly
performing Enron assets. In reality, LJM is used to hide debt
and inflate profits for Enron in order to prop up its stock price. It
is believed that this is the beginning of the complex and
questionable accounting practices that lead to Enron's demise
13. • 2000
• March Enron CEO Kenneth Lay allegedly files
fraudulent annual 10-K for 1999
• March 13 Jeffrey Skilling allegedly signs
fraudulent letters to Arthur Andersen LLP about
1999 financial data.
• August Enron CEO Kenneth Lay allegedly files
fraudulent quarterly 10-Q for second quarter
2000
• November 1 Enron CEO Kenneth Lay
allegedly begins selling Enron shares.
• November Enron CEO Kenneth Lay allegedly
files fraudulent quarterly 10-Q for third quarter
2000
15. • January 8 California governor Gray Davis calls Enron and
other energy companies "out-of-state profiteers" during the
2000 California energy crisis.
• January 20 The inauguration of George W. Bush is attended by
Enron CEO Kenneth Lay and president Jeffrey Skilling, who
each make $100,000 contributions for the event.
• January 22 Jeffrey Skilling commits securities fraud by omitting
bad news and lying to investors.
• January 25 Jeffrey Skilling makes false presentation to
investors.
• February 5 Enron executives get bonus checks for millions of
dollars.
– Arthur Andersen auditors internally question the LJM partnerships.
• February 6 Enron is named "most innovative company in
America" for the sixth consecutive year by Fortune Magazine.
• February 12 Skilling is named CEO.
– Arthur Andersen tells the Enron board of directors audit committee that
they have no concerns.
• February 22 Lay and other Enron officials go to the White
House to meet with the Dick Cheney energy task force.
16. March 5 Fortune Magazine publishes article, "Is ENRON
Overpriced?" written by Bethany McLean.
March 7 Lay and other Enron officials meet with the energy task
force of Vice President Dick Cheney.
March 8 Enron lawyer Jordan Mintz sends a memorandum
questioning the LJM partnerships to Enron chief risk officer
Richard Buy and chief accounting officer Richard Causey.
March 26 To cover problems in the Raptor partnerships, Enron
repurchases Chewco's investment in JEDI for $35 million, netting
Enron executive Michael Kopper over $10 million.
April 17 Enron announces a first quarter profit of $536 million.
– Lay and other Enron officials meet with Vice President Dick Cheney.
May 5 Enron's stock price closes below $59.78, a critical point for
one of the partnerships.
May 17 The energy task force issues its report, which endorses
some of Enron's proposals.
May 18 Chief executive of Enron Xcelerator Lou Pai sells 1.1
million Enron shares over the next 21 days.
May 22 Jordan Mintz sends a memorandum to Jeffrey Skilling for
his sign-off on LJM paperwork
17. June 6 Enron general counsel Jim Derrick sells 160,000 Enron
shares over the next ten days.
June 12 Skilling jokes about the California electricity crisis at a
Las Vegas conference.
June 21 Skilling is hit in the face with a pie during a visit to
California.
July 13 Chief executive of Enron Broadband Services Ken Rice
sells 386,000 Enron shares.
July 23 Enron's stock price closes below $47, a critical point for
the Raptor partnerships.
July 27 Director Robert Belfer sells 100,000 Enron shares.
August 7 Officials from a German Enron subsidiary meet with
the Dick Cheney energy task force.
August 14 Citing "personal reasons," Skilling resigns as CEO.
Lay replaces him, stating "Absolutely no accounting issue, no
trading issue, no reserve issue, no previously unknown problem
issues" are involved.
August 15 Sherron Watkins, a vice president for corporate
development, puts a one-page letter in Lay's suggestion box,
questioning Enron's accounting practices.
18. • August 16 Lay discusses Skilling's departure with employees.
• August 20 Watkins phones a former co-worker at Arthur
Andersen about her worries.
– Lay exercises 25,000 share options at $20.78 ($519,000 total value); the
stock closes at $36.25. One of Lay's lawyers states later that some of the
stock was used to repay an Enron line of credit.
• August 21 Lay emails employees, stating "one of my highest
priorities is to restore investor confidence in Enron. This should
result in a significantly higher stock price."
– He exercises 68,620 share options at $21.56 ($1,479,477 total value);
the stock closes at $36.88. One of Lay's lawyers states later that Lay
never sold the shares, which are now practically worthless.
– David B. Duncan, the lead partner on the Enron account for Arthur
Andersen, meets with three other AA officials to discuss the Watkins call.
A memo states they "agreed to consult our firm's legal adviser about
what actions to take."
• August 22 Watkins meets with Lay, giving him a seven-page
letter stating that Enron may be an "elaborate accounting
hoax," and advises him not to involve Vinson & Elkins, Enron's
law firm, because of potential conflicts of interest.
– V&E is asked if an inquiry is necessary, but told not to bother "second-
guessing the accounting advice and treatment."
19. September 17 Jeffrey Skilling sells 500,000 Enron shares.
September 21 Director Robert Belfer sells 109,000 Enron
shares.
September 26 Lay tells employees that Enron's accounting
practices are "legal and totally appropriate," that Enron stock is
"an incredible bargain," that he and other executives have
bought Enron stock in the last two months, and that "the third
quarter is looking great" in an online forum.
October 9 Arthur Andersen hires the Davis Polk & Wardwell
law firm to prepare a defense for the company.
October 10 Enron officials discuss energy policy with staff of
Vice President Dick Cheney.
October 12 An Arthur Andersen lawyer in Chicago, Nancy
Temple, emails an Andersen partner in Houston, Texas,
Michael Odom, reminding him of the Andersen document
retention and destruction policy. He forwards the email to a co-
worker.
October 15 Vinson & Elkins deliver a report which states that
Arthur Andersen approved of Enron's accounting procedures,
and that Enron did nothing wrong.
20. • October 16 Enron announces a third quarter loss of $618
million.
• October 17 To correct an accounting error on the Raptor
partnerships devised by CFO Andrew Fastow, Enron's assets
(shareholder equity) are reduced by $1.01 billion.
– The Enron 401(k) retirement plan is frozen for
administrative changes.
• October 22 Enron announces that the U.S. Securities and
Exchange Commission (SEC) has begun an inquiry into
Enron's accounting practices with its partnerships.
– The Arthur Andersen partner in charge of the Enron
account, David B. Duncan tells the audit managers to
comply with the Andersen document retention policy, and
observes them doing so by shredding documents.
• October 23 Lay reassures investors in a conference call,
asserting there was no conflict of interest with the Raptor
partnerships and that the directors on the board "continue to
have the highest faith and confidence" in Fastow.
– David B. Duncan organizes a meeting of the Enron account
group to speed up the document destruction, according to
testimony by Arthur Andersen managing director Dorsey
21. • October 24 Andrew Fastow is forced to leave Enron.
• October 25 Enron sends an email to all employees and to
Arthur Andersen stating that all pertinent documents should be
preserved.
• October 26 Lay makes phone call to Alan Greenspan,
chairman of the Federal Reserve, about Enron.
– Lay meets with Dynegy chairman Chuck Watson.
• October 28 Lay talks to Paul H. O'Neill, Secretary of the
Treasury. O'Neill tells Peter Fisher, Treasury Under-secretary to
look into Enron. Fisher talks with Enron president Greg Whalley
repeatedly over the next few days. Whalley, according to
Fisher, implies that he would like Fisher to ask Enron's creditors
to extend its credit. Fisher doesn't.
• October 29 Lay asks Donald L. Evans, Secretary of
Commerce, for help with an upcoming credit rating review by
Moody's Investors Service. Evans does nothing, and Moody's
downgrades Enron's rating.
• October 31 Enron announces that the SEC inquiry is now a
formal investigation.
22. • November 8 Enron announces it overstated profits by $586
million over five years.
– Lay calls O'Neill again, comparing Enron to Long-Term Capital
Management.
– The SEC subpoenas Arthur Andersen officials.
• November 9 Dynegy announces it will acquire Enron for $9
billion.
– Nancy Temple leaves a voice message for David B. Duncan ordering the
preservation of all Enron documents. His assistant sends an email to
other assistants to "stop the shredding".
• November 19 Enron announces the payment of a $690 million
note is nearly due as a result of the descent of its credit rating.
• November 28 Dynegy retracts its acquisition offer.
• November 29 The SEC begins investigating Arthur Andersen.
• December 2 Enron files for bankruptcy.
• December 3 Enron lays off 4,000 in Houston.
• December 12 In testimony before Congress, Arthur Andersen
CEO Joseph Berardino states that Enron might have violated
securities laws.
