Scam Classic: The Enron Implosion
I am a fan of the modern version of the Yellow Kid con criminal schemes, as recounted over at the Con Man's Blog. I am going to reprint the entire post, in an effort to get my readers to subscribe to the blog.
Legal Thriller Style Scam Classic: The Enron Implosion:
An extroverted accountant looks at your shoes while talking to you instead of his own.This is the kind of tame 'accountant joke' that Enron blew right out of the water with its scandal, the classic corporate con job of all time that pulled down its accounting firm right along with it.
Shots will ring out as shots are wont to do. Didn't Enron's Execs hear them? The infectious sludge of their financial hanky-panky was so thick it was not even cleanable with flea and tick soap. This mess came out in the wash as such a monumental assault on logical though that it put all similar legal thriller fictional plots to shame.Built entirely around deceptive accounting practices, the extent of this paper-Mache empire creation was awesome.
It included not only the shrouded concealment of debt, but the outright production of pulled-from-a-hat earnings, and the manufacture, from thin air, of cash flow. Twenty three individuals have been convicted, or pled guilty. Leading the parade were CFO, Andrew Fastow, who got 6 years in a Federal slammer, and CEO, Jeffrey Skilling, who checked in for an extended stay of 24 years, longest stretch of the bunch. (Ample time to pray for forgiveness of his sins.)
When your wild oats turn to shredded wheat, what solace do you have left? Jesus loves me; it's everybody else who thinks I'm an ass? What kind of looney bin thinking ruled the day? It's crazy.
Dummy corporations so dotted Enron's landscape that even now fraud experts, analysts, and investigators are still trying to piece together and trace just how this master Bobby Fischer-style chess game was played out. Bouncing money from one offshore entity to another, adding paper profits along the way at every turn, Fastow and Skilling created a magician's dream: A dynasty which was simply not there.
Now? Poof! Sha-zam! Gone! And, along with it, the life's savings and pension funds of employees, numbering in the 10,000s, and the disappearance of shareholders' equity holdings numbering in the 100,000s.
Is a workable falsehood more useful than a complex set of lies? Or, somewhere along the line, did the two meld? That seemed to be the case.
Principle legacy of this debacle was little more than this bewildering stretch of a (sick) joke--titled, The Enron View of Capitalism--which, as re-constructed, goes something like this:
You have 2 cows.
You sell all 3 of them to yourself through letters of credit to your brother-in-law.
You then execute a debt / equity swap to get all 4 cows back.
Next you claim a tax exempt;tion for 5 cows, and transfer the milk rights of the 6 cows via an intermediary to a Cayman Islands holding company owned by a majority shareholder who sells the rights to all 7 cows back to your listed company.
With this sale you add an option to buy an 8th cow, leaving you with 9 cows to appear on your balance sheet.
You end all of these transactions when the public buys your bull.
Will we ever see another Enron?"
(Via Con Man's Blog.)
Of course we will see another Enron, or didn't that just happen with the credit crunch based on triple AAA bonds that were actually a pile of poo.
Read More From BizOp News
May 7, 2008
Gold-Quest International Ponzi
Gold-Quest International, et al.: "SEC stops multi-million dollar Ponzi scheme."
"The Securities and Exchange Commission yesterday obtained a court order halting a $27 million fraudulent scheme involving investors in the United States and Canada.
The SEC sued Las Vegas-based Gold-Quest International and its principals, David M. Greene, age 54, John Jenkins, age 62, and Michael McGee, age 52, all residents of Las Vegas, NV, for allegedly running a Ponzi scheme and misappropriating investor funds.
The Honorable Lloyd D. George, United States District Court Judge for the District of Nevada, issued an order freezing assets and appointing a temporary receiver over Gold-Quest and its affiliates.
The SEC's complaint, filed in federal court in Las Vegas, alleges that since May 2006, the defendants have raised and misappropriated more than $27.9 million from more than 2,100 investors in the United States and Canada.
The complaint further alleges that, undisclosed to investors, the defendants paid more than $19.1 million as returns to other investors in this Ponzi scheme.
According to the SEC's complaint, Gold-Quest and its owners claim they are not subject to the jurisdiction of the United States or Canada because they are members of the Little Shell Nation Indian tribe, purportedly headquartered in North Dakota.
However, the Little Shell Nation is not in fact recognized as a sovereign tribe or nation."
(Via SEC.gov Updates: Litigation Releases.)
Little Shell Nation! That is very good. Somebody has a cruel sense of humour.
