Essay about Enron Formed With Houston Natural Gas

Essay about Enron Formed With Houston Natural Gas

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Enron formed in 1985 when InterNorth merged with Houston Natural Gas, whose CEO Kenneth Lay would become the CEO of the newly formed Enron, who at its peak was worth 70 billion dollars. Lay held a Ph.D. in Economics. Lay was also a contributor to being granted deregulation and the ability to sell energy on the free market. It was this deregulation that caused Ken Lay to see the money he could make in energy and what ultimately caused Enron to form. This is what Ken Lay had dreamed of since he was a child, not wanting to be poor. And Enron was going to deliver this to him. After-all he had something the whole world needed (energy with a price that flowed and fluxed with the market). Combine this with his ability to create a market which allowed him to essentially drive the price himself and in 1987 two of Enron Oil’s oil traders Tom Mastroeni and Louis Borget seem to keep winning by betting if the market will rise or fall. Hmmm… I wonder why. Mastroeni and Borget are also funneling money into personal accounts by way of many dummy accounts such as M. Yass and M. Smart. When Lay learns of this he not only doesn’t fire them, he gives them more money to bet! A letter also surfaced of Lay thanking them for making him so much money. The two traders ended up betting too much and getting fired, and while Enron didn’t go bankrupt, Borget did end up spending one year in jail. This is a red flag against Ken Lay that someone should have caught. Certainly the accountant that found the information in the first place could have brought it to the attention of the government or the Federal Trade Commission? With Borget and Mastroeni out of the picture, Ken hired Jeff Skilling.

Jeffrey Skilling, who would later end up working at Enron, would not ...


... middle of paper ...


...Enron’s intentions with these deals and that had the known they would not have gone through with them. The trials began in January of 2006. Ken Lay was convicted of all six counts of security and wire fraud but “died” of heart problems in June and all counts were dropped. Skilling was found guilty of 19 of 28 counts or securities and wire fraud. He was sentenced to 24 years and 4 months in jail, no less than 20 years and a fine of 630 million dollars to the government. Four Merrill Lynch employees were found guilty at trial along with 16 other Enron employees. Fastow, who was originally the fall guy, squealed first and was given a bargain if he agreed to testify against his colleagues. He testified and only got 6 years in prison and 2 years of probation. He also had to forfeit 68 million dollars in assets. The real losers in all this were the thousands of employees.

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