CRIME IN THE SUITES
A Look Back at
the Enron Case
12/13/06
 |
|
Investigators
emerged from a 2002 search of
Enron headquarters in Houston
with more than 500 boxes of evidence.
|
|
When Enron declared bankruptcy in December
2001 and took with it the nest eggs of thousands
of employees and stockholders, the FBI field
office in Houston assigned two agents to investigate.
Within weeks, the number of agents and support
staff assigned to the case grew to 45, many
hand-picked from field offices around the
country for their expertise in traversing
even the most circuitous paper trails.
The
case would become the largest and most complex
white-collar investigation in FBI history
and spawn a unique investigative task force
of prosecutors, agents and analysts in Houston
and Washington, D.C., each uniquely skilled
at drilling deep into balance sheets and following
the money. Their job: to learn how company
officials perpetrated fraud on such a grand
scale, build a strong criminal case, and hold
accountable those responsible.
The
five-year investigation led to jury convictions
of top Enron officials who enriched themselves
by cheating investors with sham accounting,
and guilty pleas from some 16 others who were
in on it. Being a major case, it was administered
at the highest levels of the FBI and the Department
of Justice, as well as the Securities and
Exchange Commission. In Houston, Supervisory
Special Agent (SSA) Michael E. Anderson, chief
of his office's economic crimes squad, led
the investigation on the ground. He describes
how agents assembled the case:
 |
|
An
FBI storage facility contains
seized evidence, including bank
and brokerage account records
that were critical in seizing
assets and supporting insider
trading charges against executives.
|
|
-
In January 2002, agents executed a consent
search of Enron's 50-story corporate headquarters
building. The search lasted nine days as
investigators unearthed critical documents
and emerged with over 500 boxes of evidence.
At the same time, agents conducted more
than 100 interviews that helped identify
fresh leads for investigators.
-
In
February 2002, Enron's board of directors
issued findings from its own internal investigation—the
Powers Report, named for William Powers
Jr., head of the special investigation committee
that wrote it—that said Enron executives
reaped millions by violating basic accounting
principles. "That was a gold mine,"
SSA Anderson said.
Agents
conducted over 1,800 interviews in the
U.S. and overseas.
-
-
-
Financial analysts combed through hundreds
of bank and brokerage accounts to track
fraudulent purchases, which proved critical
in securing restraining orders, seizing
more than $168 million in assets and supporting
insider trading charges.
What
emerged was a mosaic of inter-related schemes—some
hardly more than smoke and mirrors—that
toppled a company that once boasted annual
revenues over $150 billion. Enron ripped off
California, selling energy to the state's
strapped utilities at over-inflated rates.
Officials overstated the company's fledgling
Broadband venture, hitching the company's
stock price to the star of the still-nascent
Internet bubble. The company overvalued its
international assets by billions to generate
cash flow and manipulated its quarterly earnings
statements to keep Wall Street happy and its
stock price afloat.
SSA
Anderson said it was the thousands of victims,
hard-working employees who lost their pensions,
and the desire to hold accountable those responsible
for the failure of Enron, that motivated agents,
analysts, and others on the Enron Task Force
to press ahead on the massive case.
"They
lost their retirements, their health insurance,
their livelihoods. That kept everyone interested
in pressing forward in spite of the huge personal
sacrifices inherent in working a major case
for over five years," Anderson says.
"If it's some consolation to them, the
people that were responsible for this fraud
were punished for it."
Resources:
- More
White-Collar Crimes Stories
- Regional
Computer Forensics Laboratory Program
|
|
|
