The Fraud of Enron

The Fraud of Enron 

 You may be wondering, how was Enron so successful as a company and how did they make so much money? But you will actually learn that Enron was far from a successful company, they were a company of Fraud. 

 Mark to Market Accounting 

 One of Enron's most efficient profit schemes was Mark to Market Accounting. Essentially what the Enron Accounting Function would do is hide their losses of business operations by reporting the projected earnings that the company was going to make, not the actual earnings. There was a deal with Blockbusters where they developed new technology that would supposedly help Blockbusters in a deal worth millions. The executives including Aurthor Anderson and Jeffrey Skillings would then open it up to the public saying how great it was going to be and with the Mark to Market Accounting they would put the projected earnings in the books. This would then lure a boatload of investers into the company because of how "great" Enron was doing. But little did the public know that these business operations sometimes weren't even making a dime, and the technology actually failed miserably with the blockbusters deal. Using this tactic, Enron's stock soured 32% in just two days at one point. This accounting method of hiding their losses was all a huge factor in keeping the bottom line of the company high. 

 Insider Trading 

 So how did they make money? By the tremendous amount of value from the stockholders and something that's called insider trading. The executives obviously knew confidential information about the company so they would illegally buy and sell stocks. Some of the big time Enron Traders that made unbelievable profits were Ken Rice who made 53 million, Ken Lee, 300 million, Jeff Skilling 200 million, and Cliff Baxter 35 million. Insider trading is illegal, because the executives know when the stick prices will rise and fall. And this was very present in Enron and you can see why it is illegal based on their profits above.

 Other Revenue

 One of the early successes for Enron was the oil gambling tactics. This is one of the most riskiest methods due to how unpredictable it was. You can even lose ten times as much money as you put in. But Enron found high success in this business. The Enron executives loved taking risks. Also, the Enron executives fired a lot of employees to maximize individual profit, a very selfish move. Another reason for this is because they had were hiding their frauds for years, so they didn't want their schemes to be figured out by the wrong people. So, we can clearly see that Enron was never really a successful company. They were successful at committing fraud. 

 Vincent Zelisko, John Malincus