Enron scandal

On August 14, 2001, Jeffrey Skilling, the CEO of Enron, unexpectedly announced his resignation for personal reasons, just six months after taking the role. Skilling was one of the key architects behind Enron's business model of trading energy and other commodities. His resignation raised questions and concerns about the company's stability and future, as he had been a pivotal figure. The move surprised many and preceded the financial collapse.

On October 16, 2001, Enron reported a net loss of $638 million for the third quarter and disclosed a $1.2 billion reduction to shareholders' equity. This significant financial hit was due to the company's methods of accounting for its complex network of partnerships and was one of the first signs to investors and the public that the company was in serious trouble. This announcement initiated a rapid decline in investor confidence, leading to a drastic fall in stock prices.

Enron filed for bankruptcy on December 2, 2001. This bankruptcy was the largest in U.S. history at the time and marked the collapse of a company that was once a thriving giant in the energy market. The bankruptcy was primarily due to the discovery of large accounting fraud within the company, where debts and losses were hidden from investors. Thousands of employees lost their jobs and pensions, and billions were lost by investors who held stock in Enron.

On January 9, 2002, the U.S. Department of Justice announced it had begun a criminal investigation into Enron's collapse. This investigation sought to determine whether fraud and insider trading were involved in the company's abrupt downfall. The inquiry marked the beginning of numerous legal proceedings and ultimately led to several high-profile convictions. The Department of Justice's involvement underscored the seriousness and complexity of the Enron scandal.

On February 7, 2002, Arthur Andersen LLP, Enron's accounting firm, was indicted for obstruction of justice for shredding documents related to its audit of Enron. This indictment led to Arthur Andersen's conviction, though later overturned, and marked the end of what was once one of the "Big Five" accounting firms. The firm's demise highlighted the substantial role auditors can play in corporate scandals. Over 80,000 employees lost their jobs worldwide.

Andrew Fastow, Enron's former chief financial officer, was charged and arrested on May 14, 2002, on charges of fraud, money laundering, and conspiracy. Fastow was accused of orchestrating a vast scheme to deceive investors by misrepresenting Enron's financial status through off-the-books partnerships. His arrest and subsequent guilty plea would be pivotal in unraveling the extensive financial misdeeds at Enron. Fastow's actions epitomized the systemic corruption involved.

On October 31, 2002, Michael Kopper, a former managing director at Enron, pled guilty to charges of money laundering and conspiracy. Kopper was a key associate of Andrew Fastow and helped manage several special purpose entities used to hide Enron's debt and inflate its profits. By cooperating with federal investigators, Kopper provided critical information about the financial misconduct that led to Enron's collapse. His plea deal marked one of the first major breakthroughs in the investigation.

Kenneth Lay, the former chairman and CEO of Enron, was indicted on charges of fraud and making false statements on July 7, 2004. Lay was accused of providing misleading information to the public and investors about Enron's financial health, contributing to the company's sudden collapse. His indictment was a significant moment in the Enron scandal as it highlighted top executives' involvement in the intricate web of deception that characterized the corporation's fraudulent activities.

On May 25, 2006, Jeffrey Skilling and Kenneth Lay were found guilty of conspiracy and fraud-related charges. In one of the most publicized trials of corporate misconduct, the convictions represented the culmination of years of investigation into the fraudulent activities that had led to Enron's collapse. These convictions were seen as a victory for justice against corporate greed, though Lay's conviction was vacated posthumously after his death in July 2006, pending appeals.

On January 28, 2013, Jeffrey Skilling, former CEO of Enron, agreed to a deal to reduce his prison sentence. Originally sentenced to 24 years for fraud and insider trading related to the Enron scandal, Skilling's sentence was reduced to 14 years under an agreement with federal prosecutors. The deal also allowed for more than $40 million of Skilling's fortune to be distributed to victims. This re-sentencing deal marked one of the final chapters of legal proceedings against top Enron executives.