FRAUD CASE ANALYSIS: ENRON CORPORATION
Enron company was formed in 1985 at that time it was seventh largest company of America (U.S) which deal in natural gas. it has approximately 20,000 employees. Within passage of time its capacity of generating profit increasing. In 1994 the corporation made its first electricity trade which would turn into one of Enron’s biggest profit centers in the next years. Its annual revenues rose from about $9 billion in 1995 to over $100 billion in 2000. At the end of 2001 it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud. According to Thomas (2002), the drop of Enron 's stock price from $90 per share in mid-2000
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First of all company used “mark to market” technique in order to earn high profit and increase its stock price. Actually, this technique is used by brokerage and trading companies. This method requires that once a long-term contract was signed, the amount of which the asset theoretically will sell on the future market is reported on the current financial statement .According to this concept company showed its estimated income as current income. In this way its stock prices also increases but this is not actually happened. It was just wrong technique which shows over balances of …show more content…
some highlights when this scandal’s head exposed 30million dollar of self dealing by chief financial officer, 700 million dollar of net earning disappeared ,1.2 billion dollar shareholder equity disappeared. After a long process Andrew Fastow the president Enron finance executive has been sentenced to six years in jail. Fastow ashamed of fraud and money laundering in 2004 and also became the chief whiteness in the trial against Jeffrey Skilling and Ken Lay. His evidence helped to prove Lay (who attack) and Skilling, who was sentenced to 24 years in jail. In May 2006, the latter was found guilty on 19 counts of conspiracy, fraud and inside trading over Enron scandal. Skilling was found to have orchestrated a series of deals and financial scheme which later lead to loses as they hide debts from investors. Michael Kopper, former executive at Enron, was sentenced to 37 months in jail. Kopper pleaded guilty in 2002 to wire fraud and money
In 1988, at the age of 21, Minkow began serving his prison sentence for several counts of securities fraud, racketeering, money laundering, embezzlement, mail fraud, tax evasion and bank fraud. Minkow was later placed on a five year probation period and made to pay $26 million for damages. During the time that Minkow was sentenced, the U.S. District Court Judge, Dickran Tevrizian, stated that Minkow was, “a man without a conscience.” The Securities Exchange Commission later banned Barry Minkow from ever becoming an officer or director of a public company ever again. (Parloff,
The Corinthian Colleges Debacle: Holding For Profit Colleges Accountable The Corinthian Colleges Debacle unveiled many areas of non-compliance, not only by the for profit private postsecondary education institutions, but also by the control agencies at the state and federal level. The closure of the Corinthian Colleges revealed the inefficiency of the states to provide oversight and enforcement to mandate compliance based on their authority as outlined in existing state laws. The Corinthian Colleges is just one of many for profit private postsecondary education institutions that have faced or will be facing closures. We’ll provide background on what happened that lead to the closures, the impact this has had on student loans, and what factors have
The business world wasn’t the only thing corrupt but the railroads were too. With the railroad industry growing the companies knew they could charge huge rate and gain a large profit. Congressmen were paid off to be quite about the scandal and kept it to themselves. The railroads raised the stocks and were given to well-liked companies.
Enron Analysis Enron is a great play which presents a dry story about business in a colorful and cartoonish way and impressed me with a variety of elements, including video, music, choreography, and dance. This is a play depicts the spectacular collapse of a Texan energy giant-Enron. As an audience, I witnessed how a business empire was built on shadows, accruing debts of 38 billion dollars and finally going bust in this two hours and thirty minutes play. In the following passage, I will describe, analyze, and interpret this play both about its script, including characters and plots, and its production, such as the videos, stage props and customs.
The AIG Scandal 2005 started when AIG management was issuing a press release describing its third quarter earnings in 2000 to the public. The report showed that the premium of AIG was significantly increasing, while its loss reserves was decreasing by $59 million. However, according to many industry analysts, along with the positive earnings, AIG in fact should show an increase in its loss reserves as well. This caused the investors of AIG suspected that AIG was drawing down its loss reserves to boost its profits. The suspicious of the investors has unfortunately led to the falling of AIG stock price from $99.60 to $93.30 on New York Stock Exchange (NYSE).
The fraud triangle is made up by three distinguished elements. These elements in the fraud triangle consist of pressure, opportunity, and rationalization. The overall representation of the fraud triangle can be seen as the specific model to spot any type of high-risk unethical and fraudulent performances being conducted by a company, in this case Cendant Corporation. Cedant Corporations actions can be analyzed by the fraud triangle by the way that their senior management/top management decisions fell into the three categories of pressure, rationalization, and opportunity. Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image.
It is a repeated scenario in American Law. A high-risk criminal is arrested, tried, and found guilty. All for a minute crime that is not the charge they should be held responsible for. This is exactly what happened in the case of H.H. Holmes all the way back in 1895. Herman Webster Mudgett, alias Dr. H.H. Holmes, was a serial killer who terrorized Chicago in the early 1890’s.
A sad day for the family of a young woman named Wykesha Reid, evidence conducted from an ongoing investigation lead to her death from butt-injections. The suspect being charged with the Homicide of Mykesha are Jimmy Clarke and Denise Rochelle. The two suspect operate a business which provide eyelash extensions to the public. Nevertheless, up until the death of Wykesh Reid it seems their business have been performing butt-injections on the Black Market. Upon questioning Jimmy Clarke a transgender woman told detectives that.
“Chasing Madoff”, a documentary released in 2010 portrays the way the whistleblower, Harry Markopolos, uncovered Bernie Madoff’s fraud scheme and his ten-year struggle to get the SEC to investigate. The documentary begins with an introduction to Harry Markopolos and his former coworkers Frank Casey and Neil Chelo. The three men work in finance, with investment portfolios. They were aware that in the finance industry there was much talk about an investment company making their customers high returns. Casey came across some investment information from a client of Madoff and gives the information to Markopolos to look over.
Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.
1. What factors in the WorldCom case support the conclusion that CEO Bernie Ebbers Knew about the financial statement fraud? What factors support his defense that he did not know about the fraud? Bernie Ebbers Knew about the financial statement fraud because he was the one who encourage others to go into financial fraud because of the stock prices were going down, which was affecting his marginal loan. For that reason, he was trying to sell his stock, but the board of Directors lent him $341 million, along with 2% interest rate.
In this Enron Scandal ,several moral issues and values are being discussed .The moral issues is the misconduct of code of ethics by management level of a corporation , violation of code of professional ,ethical dilemma that faced by a management level when involved own interest . The first moral issues that discussed in Enron Scandal is misconduct code of ethics by management level of a corporation .In this case ,the mastermind of this scandal is the company CEO , Mr .
1.0 Introduction Business ethics refers to what is right and wrong, good and bad, harmful and beneficial regarding decisions and actions in organizational transactions (Weiss, 2009). So how to identify the unethical business practices? It is very easily. For example, which are company use child labor, produce tainted products, false advertising, infringement, polluted environment and etc.
The paper will calculate the financial ratios of company that will be interpreted with the implications of ratios. Moreover, the paper will describe the indicators of fraudulent reporting. Discussion Purpose of Income Statement It is also called profit and loss statement or income or expense statement. The main purpose of income statement is to indicate managers and investors whether the organisation was cost-effective
Background WorldCom, once known as one of the most powerful telecommunication organizations of the world, is now studied as a case of a fraudulent company that carried out unethical financial activities to cover its weakening position in the market. After some aggressive investment decisions, the company started to witness huge financial pressure. The management used various forged accounting entries to conceal its weakening position. Cynthia Cooper, Vice President Internal Audit, discovered the unethical activities and raised the issue with the management and relevant departments and received bitter responses. She carried out internal audits in her own capacity with her colleagues and compiled evidence against fraudulent activities.