Revisiting Enron: The Investigation

By Ben Dell’Orto, IAC Student Intern Fall 2018

Sometimes the town is big enough for both of [them]. Sometimes more.

When Enron ultimately declared bankruptcy after its unethical accounting processes became public knowledge, several government agencies became involved in investigating.

The FBI, IRS, SEC, and DOJ (that’s right, lot’s of three letter groups) joined together to form the Enron Task Force. The group included an “elite” group of prosecutors who were placed in charge of complex financial inquiries. Given that Enron’s accounting was so complex the company was able to fool outsiders for years, there was a difficult web for the team to untangle.

The prosecutors began by interviewing low-level employees to gain information on the larger players. They also took unusual, aggressive steps such as charging the wife of one Enron executive with tax fraud to gain leverage on her husband.

It largely worked.

The task force was able to indict nearly all the company’s executives, with most of them finding themselves behind bars. Taking a look at the SEC’s sheer number of filings and charges related to Enron demonstrates the scale of the investigations. Charges for executives included fraud, insider trading, and other sanctions. Many of the executives had to disgorge their ill-gotten gains, meaning turning that money over to the federal government to be provided to their victims.

Ultimately, however, many of the trials related individual schemes within the Enron Scandal did not go the right way for the prosecutors, whether in the initial trial or on appeal, prompting some harsh criticism from some observers. However, as we’ll focus on one specific high-profile trial where the executive is now in jail.