What the SEC unearthed was an elaborate scheme of transactions used to hide the fact Enron was millions of dollars in debt. Some of these deals had not even been conducted yet and, it is believed, it was this gambling on future energy prices which was causing the company to fiscally haemorrhage.

Yet, Enron failed to pull the plug on this scheme and instead created a network of “partnerships” to keep the debts off the ledgers. These joint-ventures would “buy” business from Enron to make it seem the firm was making money out of the transactions.

And when this plan could not stop the rising tide of debt, the company simply tried hiding the losses wherever it could but, in the end (or at least in October 2001), the curtain fell on the whole debacle; leaving behind US$15 billion in debt and 20,000 workers out of a job.

On 2 December 2001, Enron filed for bankruptcy.

The fallout from the fall of Enron was not reserved for the firm alone. Many banks had lent money to Enron; although only J.P. Morgan (owed US$900 million) and Citigroup (owed US$800 million) admitted the extent of the damage to them. Enron also proved the death knell for accounting firm Andersen, which was responsible for auditing Enron’s books. It never recovered from the affair and collapsed soon after.

The biggest stink about the whole Enron situation, however, was not how it covered up its losses. Rather, it was the actions of its top executives who allegedly funnelled funds into the accounts of their families and friends while the company was faltering and then made huge fortunes by selling off their shares before the Enron stock collapsed. It is these men and women whom the Federal authorities are out to get.

The Good, the Bad and the Ugly

Kenneth Lay: At the top of the wanted list is former Chairman and CEO Lay. He has been indicted and faces 11 charges which include wire fraud, securities fraud and bank fraud to which he has pleaded “Not Guilty”. Lay had earlier refused to testify before various committees on Capitol Hill and puts the blame on the whole debacle on former CFO Andrew Fastow. He could face 30 years in jail.

Jeff Skilling: Former CEO from January-August 2001 who resigned because he “wanted time to enjoy life”. Surrendered to the FBI in February but has pleaded “Not Guilty” on several charges of insider trading, fraud and lying on Enron’s financial statements. Skilling could face 30 years in jail.

Andrew & Lea Fastow: Former CFO Fastow pleaded guilty to fraud charges and is currently spilling the beans to the Federal Prosecutors. He has paid fines of up to US$23 million but could still face up to 10 years in jail. Wife Lea, also a former Enron employee, had originally pleaded guilty to a single charge of tax fraud as part of a plea bargain in exchange for a US$250,000 fine and five months in jail. This bargain was rejected by US District Judge David Hittner and Lea Fastow has begun serving a one year sentence at a Federal Detention Centre in Houston.

Kenneth Rice: Rice ran Enron’s broadband telecoms operations for two years and reported directly to Skilling. He has admitted to one count of securities fraud and, like Andrew Fastow, has agreed to cooperate with the prosecutors. He has been fined US$13.7 million and has agreed to pay the SEC US$1 million and another US$14.7 million in civil fraud charges. Rice may still be facing 10 years in jail maximum when he is sentenced in January.

John Forney: Former Enron Trader from its trading office in Portland, Oregon, and the Manager of its Trading Desk. Forney has pleaded guilty to one count of wire fraud. He is expected to cooperate with prosecutors but faces a maximum of five years in jail. Forney is free on a US$500,000 bail and no sentencing date has been set for his trial.

Timothy Belden: Belden was Forney’s former boss at Enron’s West Coast power trading office in Portland. He has pleaded guilty to conspiracy to commit fraud and has divulged details to prosecutors. Belden is currently awaiting sentencing.

Jeffrey Richter: Another former Trader, Richter has pleaded guilty to same charges as Belden and, like Belden, has spilled the beans to the Feds. He is currently awaiting sentencing.