All I know is that i did something illegal and it eventually lead to 40 classes at my JC (yeah yeah i know i just forfeited all my credibility saying i go to a JC).
But seriously what did that company do and why did it eat cause the California state budget defecate?
All I know is that THEY did something illegal and it eventually lead to 40 classes at my JC (yeah yeah i know i just forfeited all my credibility saying i go to a JC).
god damn it lear learn to proof read
Basically, they made it so that 1+1=3, not 2.
We’ll call it “Creative Accounting 101”.
They said they made more money and fooled everyone else. They got caught.
*made more money than they actually did
I thought that this piece by the BBC is an excellent starting point.
As I understand it, Enron and other energy companies are suspected of manipulating energy markets. Enron was accused of price-gouging California since they owned the 2,500-mile Transwestern Pipeline. This is a good description of their manipulation tricks.
AFAICT, they claimed some bogus revenues, some through circular transactions that appeared as sales but were not, really. And they hid liabilities in off ledger partnerships (claim the revenues and ignore the debts). And they aggressively hyped their stock price, which in itself is not illegal, if you do so with accurate info. That’s probably way to simple.
If you can, research a company called Seitel. They did a very similar thing on a much smaller scale.
The truly amazing thing is that the men and women behind it all were plenty smart enough to know that it had to come tumbling down eventually.
I don’t normally point out typos, but in this case I am making an exception because this is my favorite typo ever:
Shitty accounting I guess 
But I’m sure they can eventually eliminate it.
The sad thing is that’s probably not a typo at all.
The California budget deficit is projected to be about $35 billion. The Davis administration is saying that projected total amount overcharged to people in California is $9 billion. Not all of that $9 Billion was paid for by the state government I cannot find a good estimate for what the state government paid but I would think that it is at most $1 or $2 billion. Additionally Enron was only one player in the California energy market so it is not responsible for probably even 10% of that $9 billion. Enron has little to do with California’s budget woes.
The Enron scandal is almost totally about the issues of accounting and hiding of debts that Ringo has brought up. It has very little to do with the California energy crisis.
As you can imagine, this question has been bandied about extensively. Here are some good threads to read:
Oh, and IMO the best article for understanding the Enron debacle is this:
What made the Enron scandal so despicable was that the employee pension plan was heavily invested in Enron stock. The executives who knew the Company was going to crash and burn sold all their shares and cashed in all their options before the situation spun out of control. The pension plan - along with the employees - was left with little more than toilet paper.
Enron was a big corporation that went bankrupt because it was practicing poor business. That in itself was no cause for scandal.
The scandal came because: 1) Corporate executives lied about the stae of the company so they could get their own money out in time. Employees and less well connected investors lost their money; 2) There’s strong evidence that other apparently sound corporations are doing the same type of things Enron was doing, so people were scared Enron was only the opening of a much bigger financial catastrophe. These fears have eased as months have passed without any major new corporate collapses; and 3) Ken Lay, the head of Enron, was a heavy donor to George Bush and other Republican politicians. So there was speculation (none of which was ever proven) that these politicians might be involved in illegal acts.
And then there is the similar Enron accounting practices apparently being done by Microsoft, yet Bill Gates hasn’t fallen yet.