Timeline of the Enron scandal

Timeline of the Enron scandal:

1985

Kenneth Lay seizes control of Omaha-based Internorth. Internorth was a much larger, diversified energy company in Omaha, NE which had bought Lay's company, Houston Natural Gas. Through questionable means, Lay was able to get just enough director votes to win power. He swore to the employees that the company would remain in Omaha but a few months later he moved it to Houston.

1986

Under Lay there was a long succession of business failures and misteps and according to many financial analysts, the company was swimming in debt. Lay sells off several profitable operations including Northern Petrochemical, PEAK anti-freeze, EVAL resins which makes plastic food packaging possible and brought in silent partnerships in Northern Liquid Fuels, Northern Natural Resources and Northern Enginneering, Enron Oil Trading and Transport, Enron Exploration and Enron Cogeneration thus hiding burgeoning debt. Many layoffs and assets sales follow.

1987

Lou Borget of Enron Oil Trading is convicted of money laundering and fraud costing Enron shareholders about sixty-four million dollars. Mike Muckleroy, Enron Vice Chairman, later testifies in "The ENRON Movie" that Lay strongly supported and encouraged the Borget operation. Several high level Enron execs "fall on their swords" for Lay including Mick Seidl.

1988

The Socialist government of Peru seize Belnorth holdings in that country which are owned by Enron. The insurance companies that guaranteed those assets return the premiums to Lay citing questionable dealing in the country. A settlement is negotiated for far less than the insured amount.Irwin Jacobs of Minneapolis makes an arbitrage effort against ENRON. Lay seizes funds from the employee stock ownership program to buy back Jacobs stock giving Jacobs a huge profit and then freezes the ESOP for seven years denying employees access to their stock.

1989

Jeff Skilling joins Enron Corp after leaving the failed bank, First City Bank of Houston which was seized by the FDIC for insolvency.

1996

CFO Andrew Fastow constructs off-book entities in which Enron would make deals with these companies and then Enron would transfer its debt into those companies while at the same time, Andrew and other Senior execs, with their respective companies, would also be taking money out of those companies from the Enron transactions. [http://select.nytimes.com/gst/abstract.html?res=FB0B11FF34590C758CDDAB0894DA404482] [http://www.uaw.org/atissue/02/021102rouleau.html]

1997

Andrew Fastow creates Chewco in an effort to hide debt and inflate profits but Chewco doesn't meet requirements to keep it off Enron's balance sheet.

1998

Enron enters into several capital intensive ventures that turn into financial disasters including a water distribution scheme and power plants in Brazil.

1999

Enron board of directors waive conflict of interest rules in order to allow Andrew Fastow to run private companies that do business with Enron. He creates LJM that buys poorly performing Enron assets. In reality, LJM is used to hide debt and inflate profits for Enron in order to prop up its stock price. It is believed that this is the beginning of the complex and questionable accounting practices that lead to Enron's demise.

2000

*March Enron CEO Kenneth Lay allegedly files fraudulent annual 10-K for 1999

*March 13 Jeffrey Skilling allegedly signs fraudulent letters to Arthur Andersen LLP about 1999 financial data.

*August Enron CEO Kenneth Lay allegedly files fraudulent quarterly 10-Q for second quarter 2000

*November 1 Enron CEO Kenneth Lay allegedly begins selling Enron shares.

*November Enron CEO Kenneth Lay allegedly files fraudulent quarterly 10-Q for third quarter 2000

2001

*January 8 California governor Gray Davis calls Enron and other energy companies "out-of-state profiteers" during the 2000 California energy crisis.

*January 20 The inauguration of George W. Bush is attended by Enron CEO Kenneth Lay and president Jeffrey Skilling, who each make $100,000 contributions for the event.

*January 22 Jeffrey Skilling commits securities fraud by omitting bad news and lying to investors.

*January 25 Jeffrey Skilling makes false presentation to investors.

*February 5 Enron executives get bonus checks for millions of dollars.

:Arthur Andersen auditors internally question the LJM partnerships.

*February 6 Enron is named "most innovative company in America" for the sixth consecutive year by Fortune Magazine.

*February 12 Skilling is named CEO.

:Arthur Andersen tells the Enron board of directors audit committee that they have no concerns.

*February 22 Lay and other Enron officials go to the White House to meet with the Dick Cheney energy task force.

*March 5 "Fortune Magazine" publishes article, [http://money.cnn.com/2006/01/13/news/companies/enronoriginal_fortune/index.htm?postversion=2006011818 "Is ENRON Overpriced?"] written by Bethany McLean.

*March 7 Lay and other Enron officials meet with the energy task force of Vice President Dick Cheney.

*March 8 Enron lawyer Jordan Mintz sends a memorandum questioning the LJM partnerships to Enron chief risk officer Richard Buy and chief accounting officer Richard Causey.

*March 26 To cover problems in the Raptor partnerships, Enron repurchases Chewco's investment in JEDI for $35 million, netting Enron executive Michael Kopper over $10 million.

*April 17 Enron announces a first quarter profit of $536 million.

:Lay and other Enron officials meet with Vice President Dick Cheney.

*May 5 Enron's stock price closes below $59.78, a critical point for one of the partnerships.

*May 17 The energy task force issues its report, which endorses some of Enron's proposals.

*May 18 Chief executive of Enron Xcelerator Lou Pai sells 1.1 million Enron shares over the next 21 days.

*May 22 Jordan Mintz sends a memorandum to Jeffrey Skilling for his sign-off on LJM paperwork.

*June 6 Enron general counsel Jim Derrick sells 160,000 Enron shares over the next ten days.

*June 12 Skilling jokes about the California electricity crisis at a Las Vegas conference.

*June 21 Skilling is hit in the face with a pie during a visit to California.

*July 13 Chief executive of Enron Broadband Services Ken Rice sells 386,000 Enron shares.

*July 23 Enron's stock price closes below $47, a critical point for the Raptor partnerships.

*July 27 Director Robert Belfer sells 100,000 Enron shares.

*August 7 Officials from a German Enron subsidiary meet with the Dick Cheney energy task force.

*August 14 Citing "personal reasons," Skilling resigns as CEO. Lay replaces him, stating "Absolutely no accounting issue, no trading issue, no reserve issue, no previously unknown problem issues" are involved.

*August 15 Sherron Watkins, a vice president for corporate development, puts a one-page letter in Lay's suggestion box, questioning Enron's accounting practices.

*August 16 Lay discusses Skilling's departure with employees.

*August 20 Watkins phones a former co-worker at Arthur Andersen about her worries.

:Lay exercises 25,000 share options at $20.78 ($519,000 total value); the stock closes at $36.25. One of Lay's lawyers states later that some of the stock was used to repay an Enron line of credit.

*August 21 Lay emails employees, stating "one of my highest priorities is to restore investor confidence in Enron. This should result in a significantly higher stock price."

:He exercises 68,620 share options at $21.56 ($1,479,477 total value); the stock closes at $36.88. One of Lay's lawyers states later that Lay never sold the shares, which are now practically worthless.

:David B. Duncan, the lead partner on the Enron account for Arthur Andersen, meets with three other AA officials to discuss the Watkins call. A memo states they "agreed to consult our firm's legal adviser about what actions to take."

*August 22 Watkins meets with Lay, giving him a seven-page letter stating that Enron may be an "elaborate accounting hoax," and advises him not to involve Vinson & Elkins, Enron's law firm, because of potential conflicts of interest.

:V&E is asked if an inquiry is necessary, but told not to bother "second-guessing the accounting advice and treatment."

*September 17 Jeffrey Skilling sells 500,000 Enron shares.

*September 21 Director Robert Belfer sells 109,000 Enron shares.

*September 26 Lay tells employees that Enron's accounting practices are "legal and totally appropriate," that Enron stock is "an incredible bargain," that he and other executives have bought Enron stock in the last two months, and that "the third quarter is looking great" in an online forum.

*October 9 Arthur Andersen hires the Davis Polk & Wardwell law firm to prepare a defense for the company.

*October 10 Enron officials discuss energy policy with staff of Vice President Dick Cheney.

*October 12 An Arthur Andersen lawyer in Chicago, Nancy Temple, emails an Andersen partner in Houston, Texas, Michael Odom, reminding him of the Andersen document retention and destruction policy. He forwards the email to a co-worker.

*October 15 Vinson & Elkins deliver a report which states that Arthur Andersen approved of Enron's accounting procedures, and that Enron did nothing wrong.

*October 16 Enron announces a third quarter loss of $618 million.

*October 17 To correct an accounting error on the Raptor partnerships devised by CFO Andrew Fastow, Enron's assets (shareholder equity) are reduced by $1.01 billion.

:The Enron 401(k) retirement plan is frozen for administrative changes.

*October 22 Enron announces that the U.S. Securities and Exchange Commission (SEC) has begun an inquiry into Enron's accounting practices with its partnerships.

:The Arthur Andersen partner in charge of the Enron account, David B. Duncan tells the audit managers to comply with the Andersen document retention policy, and observes them doing so by shredding documents.

*October 23 Lay reassures investors in a conference call, asserting there was no conflict of interest with the Raptor partnerships and that the directors on the board "continue to have the highest faith and confidence" in Fastow.

:David B. Duncan organizes a meeting of the Enron account group to speed up the document destruction, according to testimony by Arthur Andersen managing director Dorsey Lee Baskin Jr..

*October 24 Andrew Fastow is forced to leave Enron.

*October 25 Enron sends an email to all employees and to Arthur Andersen stating that all pertinent documents should be preserved.

*October 26 Lay makes phone call to Alan Greenspan, chairman of the Federal Reserve, about Enron.

:Lay meets with Dynegy chairman Charles Watson.

*October 28 Lay talks to Paul H. O'Neill, Secretary of the Treasury. O'Neill tells Peter Fisher, Treasury Under-secretary to look into Enron. Fisher talks with Enron president Greg Whalley repeatedly over the next few days. Whalley, according to Fisher, implies that he would like Fisher to ask Enron's creditors to extend its credit. Fisher doesn't.

*October 29 Lay asks Donald L. Evans, Secretary of Commerce, for help with an upcoming credit rating review by Moody's Investors Service. Evans does nothing, and Moody's downgrades Enron's rating.

*October 31 Enron announces that the SEC inquiry is now a formal investigation.

*November 8 Enron announces it overstated profits by $586 million over five years.

:Lay calls O'Neill again, comparing Enron to Long-Term Capital Management.

:The SEC subpoenas Arthur Andersen officials.

*November 9 Dynegy announces it will acquire Enron for $9 billion.

:Nancy Temple leaves a voice message for David B. Duncan ordering the preservation of all Enron documents. His assistant sends an email to other assistants to "stop the shredding".

*November 19 Enron announces the payment of a $690 million note is nearly due as a result of the descent of its credit rating.

*November 28 Dynegy retracts its acquisition offer.

*November 29 The SEC begins investigating Arthur Andersen.

*December 2 Enron files for bankruptcy.

*December 3 Enron lays off 4,000 in Houston.

*December 12 In testimony before Congress, Arthur Andersen CEO Joseph Berardino states that Enron might have violated securities laws.

2002

*January 9 The U.S. Justice Department confirms reports that it has begun a criminal investigation into Enron's bankruptcy.

*January 10 Arthur Andersen states that it destroyed Enron documents. Congressional investigators state the destruction occurred from September to November.

*January 14 Arthur Andersen releases communications documents detailing Nancy Temple's involvement in the document destruction.

*January 15 Arthur Andersen announces that it fired David B. Duncan and put three partners on administrative leave.

*January 20 On Meet the Press, Arthur Andersen CEO Joseph Berardino states the document retention policy was "not to shred documents, not to eliminate documents if you have a reasonable basis to anticipate investigation."
*January 22 Enron executive Maureen Castaneda states that Enron had been shredding documents in its Houston headquarters the previous week.

*January 24 The United States House Energy Subcommittee on Oversight and Investigations (107th Congress) questions Arthur Andersen witnesses including Nancy Temple and David Duncan.

*January 25 Former Enron executive J. Clifford Baxter found dead from apparent suicide.

*February 27 Connecticut Democrat Joseph Lieberman publicly criticized Wall Street Analysts: "It seems clear that too many analysts failed to ask 'why' before they said 'buy'"

*May 3 Enron proposes to set up a new company temporarily called OpCo Energy Company. If approved, OpCo will have Enron's core assets, including 15,000 miles of pipeline assets, 75,000 miles of distribution assets, 6,700 megawatts of generation, and 12,000 employees. [http://www.enron.com/corp/pressroom/releases/2002/ene/23-050302ReleaseLtr.html]

*July 15 Snohomish County, Washington's Public Utility District sues 11 power generating and marketing companies, including Enron, for conspiring to create artificial power shortages in 2001. Snohomish PUD also cancels a $200 million purchase contract with Enron.

*August Enron demands that Snohomish PUD pay it $122 million for cancelling its purchase contract. The PUD responds with the claim that the contract was void because Enron was involved in fraudulent business practices to drive up prices.

*August 13 FERC launches a formal investigation into potential misconduct in the power generating and marketing industry.

2003

*February 19 A grassroots movement in Portland, Oregon submits enough signatures to qualify a measure for an election to decide whether to begin the process of converting Enron subsidiary Portland General Electric (PGE) into a PUD.

*March 17 Merrill Lynch, its four former executives and the SEC agree to settle the Enron security fraud case for $80 million. It is one of the five largest penalties imposed on security-related civil cases. [http://www.nytimes.com/reuters/business/business-financial-sec-merrill.html]

*March 19 Enron Board of Directors approves to keep its three pipeline companies, Transwestern Pipeline Company, Citrus Corp., and Northern Plains Natural Gas Company, as subsidiaries of the new company temporarily called PipeCo. [http://www.enron.com/corp/pressroom/releases/2003/ene/031903releasepdf.html]

*May 9 Enron Board of Directors approves retention of most overseas power plants, pipelines, and utility businesses as subsidiaries of a new company temporarily called InternationalCo.

*June 25 FERC upholds as binding billions of dollars in long-term contracts signed by western utilities and the state of California. Enron announces the formal organization of PipeCo as CrossCountry Energy LLC.

*June 25 Enron announces formal organization of InternationalCo as Prisma Energy International Inc.

*July 11 Enron files its bankruptcy reorganization plan.

*September 10 Treasurer Ben Glisan, Jr. pleads guilty to conspiracy to commit securities fraud. He is the first Enron executive to serve prison time.

*November 5 Voters in the Portland, Oregon metro area defeat a measure that would begin the process of converting Enron subsidiary PGE into a PUD, after both local utility companies, Portland General Electric and PacifiCorp, spend $1.9 million on advertisements to defeat the measure.

*November 18 Enron announced that it was selling its subsidiary PGE to a group of investors headed by former Oregon governor Neil Goldschmidt and funded by Texas Pacific Group for $2.35 billion. Goldschmidt had been a visible opponent of the measure to convert PGE to a Public Utility District.

*December Enron subsidiary PGE agrees to pay $8.5 million to settle a case involving illegal trading practices, while admitting no wrongdoing. $1.3 million of the payment will go to the state of Oregon.

2004

* January 6 A New York judge gives his initial approval to Enron's plan for bankruptcy reorganization. Under this plan, creditors would receive $11 billion in cash and stock.
* January 14 Andrew Fastow and his wife Lea Fastow, both accept a plea agreement. Andrew Fastow will serve a ten-year prison sentence and forfeit $23.8 million. Lea Fastow, former Assistant Treasurer for Enron, will serve a five-month prison sentence and a year of supervised release, including five months of house arrest. Both provided testimony against other Enron corporate officers.
* January 22 Richard Causey was indicted on federal wire fraud and conspiracy charges for his activities at Enron between 1998 and 2002 in Houston, Texas. While prosecutors do not believe he skimmed millions of dollars from the numerous suspicious deals, he is believed to know details of many of them. Causey has pled not guilty.
* February 11 Jeffrey Skilling was arrested by the Federal Bureau of Investigation, and charged a few days later with 35 counts of fraud, insider trading, and other crimes.
* April 7 Lea Fastow withdraws her guilty plea after a federal judge rejected her plea agreement. Her trial was scheduled for June 2, 2004.
* June 24, 2004 Enron announces sale of CrossCountry Energy LLC to CCE Holdings Inc., a joint venture of Southern Union Company and GE Commercial Finance Energy Services for $2.35 billion.
* May 18 Voters in Clackamas County, Oregon defeat a measure that would begin the process of converting Enron subsidiary PGE into a PUD.
* June 14 Snohomish PUD releases audiotapes and documents providing evidence that Enron manipulated the energy market. [http://www.tdn.com/articles/2004/06/15/biz/news04.txt]
* July 7 Former Enron CEO Kenneth Lay is indicted by a United States federal grand jury on unnamed charges. Lay announces that he will surrender to authorities the following morning.
* July 12 Lea Fastow begins serving her maximum one year sentence after turning herself in at the federal detention center in downtown Houston.
* September 9 Federal bankruptcy judge Arthur Gonzalez denies Enron's request to block a lawsuit by the Pension Benefit Guaranty Corporation, seeking to take control of Enron's pension plans. The Pension Benefit Guaranty Corporation filed a lawsuit in June to force Enron to pay approximately $320 million owed to former employees under four pension plans.
* November 3 Former Enron finance director Dan Boyle and former Merrill Lynch bankers Daniel Bayly, Robert Furst, William Fuhs and James Brown are each convicted of one conspiracy count and two counts of wire fraud and face up to 15 years in prison
* December 1 GE Commercial Finance and Southern Union complete purchase of CrossCountry Energy.

2005

* April 18 Enron Broadband trial begins.
* May 31 U.S. Supreme Court overturns former Arthur Andersen conviction.
* July 20 Jury in Enron broadband trial acquits three of five defendants. Deadlocks on most of the 164 counts. Five defendants retried in separate trials in 2006.
* December 12 U.S. District Court Judge for the Southern District of Texas Melinda Harmon approves change of plea by David Duncan after unanimous overturn by U.S Supreme Court of Arthur Andersen LLP v. United States.
* December 28 Richard Causey pleads guilty to securities fraud.

2006

* January 30 The trial of Kenneth Lay and Jeffrey Skilling.
* April 3 Portland General Electric becomes an independent, publicly traded utility with the transfer of ownership from Enron to its creditors.
* May 25 Kenneth Lay found guilty by a jury on six counts and by a judge on four other counts in a separate bench trial, and Jeffrey Skilling found guilty of 19 of 28 counts.
* July 5 Before sentencing, Kenneth Lay dies of heart attack in Aspen, Colorado at the age of 64.
* July 6 Enron settles Enron Merrill Lynch case for $29.5m
* September 7 Enron completes sale of Prisma Energy International to Ashmore Energy International Ltd. for $2.9 billion. Prisma returns shareholding in Promigas to Enron.
* September 27 Andrew Fastow's ten year prison sentence is reduced by four years. US District Judge Ken Hoyt said the 44-year-old former Enron chief financial officer had given 'exceptional' assistance to prosecutors, had pledged to help victims and had shown remorse, and his wife had gone to prison for a year.
* October 17 All of Lay's convictions are officially vacated because he died before the appeals could be heard.
* October 23 Jeffrey Skilling is sentenced to 24 years, 4 months in prison. Reports to prison on December 13, 2006 to serve his sentence.

2007

* January 3 Enron completes sale of shareholding in Promigas to Ashmore Energy International.
* January 19 Enron treasurer Ben Glisan, Jr. finishes his prison term and is released.
* February 16 The Justice Department decides not to appeal to the Supreme Court the charges thrown out by the 5th U.S. Circuit Court of Appeals against Daniel Bayly, Merrill Lynch's former head of investment banking; James A. Brown, former head of the firm's asset lease group; Robert Furst; and a fourth former Merrill executive, William Fuhs. All men were involved in the Enron scandal. [CNNMoney.com [http://money.cnn.com/2007/02/16/news/companies/enron_convictions/index.htm?section=money_email_alerts "Feds won't fight overturned convictions: Justice Department won't challenge appeals court's decision to throw out convictions of Merrill executives who helped Enron fudge its numbers, paper says."] , February 16, 2007, (last accessed April 24, 2007)]
* March 1 Enron changes corporate name to Enron Creditors Recovery Corporation, doing business as Enron Corporation.
* April 4 A judge announces that three former Merrill executives involved in the Enron scandal, Daniel Bayly, James A. Brown, and Robert Furst will be retried on the charges thrown out by the 5th U.S. Circuit Court of Appeals in 2006. The retrial is scheduled for January 2008. Former Merrill executive Fuhs charges were dismissed for lack of evidence and cannot be retried. The fifth man Dan Boyle, an Enron Executive originally sentenced to a three-year, 10-month term, remains in prison. [Juan A. Lozano [http://www.boston.com/business/articles/2007/04/04/merrill_personnel_to_be_retried_on_enron/ "Merrill personnel to be retried on Enron"] , "Associated Press", April 4, 2007]

2008

* February 22 A federal judge sentenced three British bankers (David Bermingham, Giles Darby and Gary Mulgrew) to 37 months each for fraudulent financial transactions conducted by the thief Andrew Fastow. [Kate Murphy [http://www.nytimes.com/2008/02/22/business/worldbusiness/22cnd-natwest.html "Bankers Sentenced in Enron Fraud"] , "New York Times", February 29, 2008]

External links

* [http://news.findlaw.com/wp/docs/enron/specinv020102rpt1.pdf Special Investigation Committee of Enron’s board of directors]
* [http://www.nytimes.com/ref/business/20060201_ENRON_GRAPHIC.html The Rise and Fall of Enron Timeline]
* [http://money.cnn.com/2006/07/05/news/newsmakers/lay_death/index.htm?cnn=yes Enron founder Ken Lay dies]

References