Enron's History:
Enron is a company that went bust in 2007. It was an energy, commodities and services conglomerate founded by Kenneth Lay in 1985. It was created as a merger of two regional energy companies, Lay's Houston Natural Gas and InterNorth. While both companies had some similarities, they were both very different from each other.
Charges against Enron's Former CEO:
Enron's former CEO, Kenneth Lay, has been charged with conspiracy to commit securities and wire fraud, according to a statement released today by the Securities and Exchange Commission. The charges allege that Lay and other executives at Enron made false and misleading statements about the company's finances. The charges also allegedly include false and misleading statements about the company's business practices.
Former Executives' Crimes:
Four former executives have been charged. Besides Skilling and Lay, several former executives of the energy company have pleaded guilty to different crimes. Three of them were former employees of Enron. The former executives and board members are now serving prison sentences. During the trial, two executives were found guilty of conspiracy to commit securities fraud and one of them pleaded guilty to insider trading.
Enron's Collapse:
Enron was once one of the most prominent companies on Wall Street. However, its collapse marked the first of a series of high-profile corporate scandals, which led to the passage of the Sarbanes-Oxley Act. It also prompted the government to strengthen auditing practices.
Charges against Enron's Former CEO, John Lay:
The charges against Enron's former CEO, John Lay, involve fraud and other crimes. The company's executives engaged in extensive schemes to deceive the investing public and the U.S. Securities and Exchange Commission. They lied about the company's growth rate, its debt, and its cash flow.
Legal Battle for Skilling:
While Skilling is the highest-ranking former Enron official to be charged, his legal defense team is still working to fight his conviction. The former CEO was arrested in Houston, Texas, and taken to a federal courthouse there in handcuffs. His lawyer, Bruce Hiler, denied the charges against him.
Skilling's Prison Sentence:
Skilling spent 11 years in prison after the Enron collapse, which led to the loss of thousands of jobs and billions in retirement savings. His initial sentence was 24 years, but he was later reduced to 14 years. He will be released from a minimum-security prison and move into a halfway house.
Charges against Enron's ex-CFO:
The charges against Enron's ex-CFO Andrew Fastow are a significant development in the investigation of the collapse of the energy trading giant. The company's collapse wiped out billions of dollars from investors and spurred a wave of corporate accounting scandals. According to the Justice Department's task force, Fastow's plea agreement to two counts of conspiracy to commit wire and securities fraud represents a major breakthrough in the investigation.
Involvement of Merrill Lynch:
The case also involves former Merrill Lynch & Co. executives who conspired to defraud investors by passing off an Enron loan as a sale of power barges. However, the government is still seeking to forfeit $37 million in ill-gotten Enron profits that the company received.
Denial of Email Usage:
While Lay and Skilling did not use email excessively, they did use it very rarely. Both Lay and Skilling have maintained their innocence. The charges were unveiled after Skilling resigned in 2001. The Senate's Committee on Commerce Science and Transportation heard testimony from Skilling and Lay on May 16.
Involvement of Enron Board:
In addition to Fastow and Lay, the Enron board also convicted three people from the company. The top executives of the company were Andrew Skilling and Ben Glisan Jr., who was the company's assistant treasurer. He admitted conspiring to manipulate the company's books in order to skim millions of dollars. He was later released from prison after completing an alcohol treatment program. Several executives from the company were charged with insider trading.
Enron's Chief Executive and Conviction:
The Enron case involved a sweeping array of crimes. The company's former chief executive was the architect of the asset-light, market-making business model. However, Skilling resigned after six months as CEO in 2001. His conviction resulted in one of the longest prison terms among all Enron defendants. He was convicted along with Ken Lay of 19 counts. In 2013, Skilling agreed to waive the remainder of his appeals.
Fraudulent Profits:
The charges against Enron's ex-CFO and four other Enron executives involve more than $100 million in fraudulent profits. The government is trying to reclaim more than $100 million from these executives and their companies.
