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Enron

In: Business and Management

Submitted By trikenya
Words 331
Pages 2
Trikenya Wilson
Professor Warburton
June 18, 2011
Eco 360 – White Collar Crime – Homework #1

The elements of white collar crime that gave rise to the enactments of the statutes were bank fraud, making false statements to banks and auditors, securities fraud, wire fraud, money laundering, conspiracy, and insider trading. Enron’s accounting practices Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. This provided ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses. These entities made Enron look more profitable than it actually was, and created a dangerous spiral, in which each quarter, corporate officers would have to perform more and more contorted financial deception to create the illusion of billions in profits while the company was actually losing money. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. Executives officers of Enron created off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation for which he worked and its stockholders. As a result of this conduct, section 401 (a) of the Sox Act requires disclosure in a public company’s annual and quarterly reports of all off-balance sheet transactions such as changes in financial conditions, results of operations, liquidity, capital expenditures, capital resources and significant components of revenue or expenses. To address the SPE’s the

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