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New York State Investigations of Trump and Related

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Re: New York State Investigations of Trump and Related

#226

Post by zekeb »

Fiascoist wrote: Sun Mar 28, 2021 7:55 am Ken Lay was convicted, but died before sentencing. There were others such as Andrew Fastow, Rick Causey and Michael Kopper, who did prison time. Lots of appeals out of this mess, which, of course, continued the saga for years. Inn the end, it is amazing how long a corporation can be used as a personal piggy bank by SOmany people before there are any consequences.
I believe that Ken Lay had an appeal pending at the time of his death. For this reason I think that he was considered to be not guilty. I remember when Enron was based in Omaha. The locals had a fit when Ken moved headquarters to Texas.
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Re: New York State Investigations of Trump and Related

#227

Post by Chilidog »

Arthur Anderson, a major accounting firm was another causality of that mess.

I had friends who were CPAs there.

One day they had a nice job, working at a prestigious company, the next day, they were scrambling around the office looking for empty cardboard boxes to take their personal stuff home. (The entire staff was let go at once)
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Re: New York State Investigations of Trump and Related

#228

Post by jcolvin2 »

Chilidog wrote: Sun Mar 28, 2021 8:27 am Arthur Anderson, a major accounting firm was another causality of that mess.

I had friends who were CPAs there.

One day they had a nice job, working at a prestigious company, the next day, they were scrambling around the office looking for empty cardboard boxes to take their personal stuff home. (The entire staff was let go at once)
The federal government indicted the accounting firm, not just individual accountants. The indictment functioned as a death penalty because it eliminated the CPA firm’s ability to do audit work. The DOJ knew this would happen.
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Re: New York State Investigations of Trump and Related

#229

Post by jcolvin2 »

zekeb wrote: Sun Mar 28, 2021 8:05 am I believe that Ken Lay had an appeal pending at the time of his death. For this reason I think that he was considered to be not guilty. I remember when Enron was based in Omaha. The locals had a fit when Ken moved headquarters to Texas.
When someone dies before a conviction is final (i.e., exhausted all appeals), the conviction is said to have ‘abated’ and the case is dismissed. From a legal standpoint, it is not like Lay was acquitted; it is more like he was never charged.
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Re: New York State Investigations of Trump and Related

#230

Post by Chilidog »

jcolvin2 wrote: Sun Mar 28, 2021 11:14 am
Chilidog wrote: Sun Mar 28, 2021 8:27 am Arthur Anderson, a major accounting firm was another causality of that mess.

I had friends who were CPAs there.

One day they had a nice job, working at a prestigious company, the next day, they were scrambling around the office looking for empty cardboard boxes to take their personal stuff home. (The entire staff was let go at once)
The federal government indicted the accounting firm, not just individual accountants. The indictment functioned as a death penalty because it eliminated the CPA firm’s ability to do audit work. The DOJ knew this would happen.
Yeah. The couple I knew that worked there were mid level accounting staff. The shenanigans were above their pay grade. They had a rough year afterwards but came out OK in the end.
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Re: New York State Investigations of Trump and Related

#231

Post by pipistrelle »

Chilidog wrote: Sun Mar 28, 2021 8:27 am Arthur Anderson, a major accounting firm was another causality of that mess.

I had friends who were CPAs there.

One day they had a nice job, working at a prestigious company, the next day, they were scrambling around the office looking for empty cardboard boxes to take their personal stuff home. (The entire staff was let go at once)
A friend was angry about the wrongdoing and glad the firm dissolved. I suggested he remember that there were thousands of staffers who had nothing to do with any of it who were suddenly unemployed for no fault of theirs. It's easy to forget that human element and to sweep a broad brush of blame.
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Re: New York State Investigations of Trump and Related

#232

Post by noblepa »

When the Enron/Arthur Anderson affair happened, I was working for Ernst & Whinney, a competitor of AA.

AA's problem stemmed from the fact that they signed off on the audit of Enron, a publicly traded company.

The AICPA's official position on audits is that the auditor (in this case AA) is not required to root out fraud. They do have an ethical responsibility to report fraud, if they find it. The financial statements that are published in a company's annual report and reported to the SEC, and which are signed off on by the auditors, are prepared by the company management, not the auditors. The auditors simply certify that the reports conform to "Generally Accepted Accounting Principles".

I believe that what got Enron caught was actually something that is (or at least was) perfectly legal. If a company has large, long term debts, they can pledge assets to pay those debts and then take both the liability and the asset off of the books. Enron pledged Enron stock to cover some very large debts. The problem was that Enron stock dropped in value significantly, to the point that the stock was no longer worth enough to cover the debts. Suddenly those debts re-appeared on the company's balance sheets. That got investigators looking, and they found the shenanigans of manipulating energy prices that ultimately got them convicted.

As I understand it, AA really did nothing wrong. They were not complicit in the fraud. They just failed to uncover it. Ken Lay, et al were good at covering their tracks until everything started going south. AA could not survive the hit to their reputation and folded.

AA's consulting practice had previously become the semi-autonomous Anderson Consulting. That organization survived, and they are still around today.
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Re: New York State Investigations of Trump and Related

#233

Post by Gregg »

Suranis wrote: Sat Mar 27, 2021 11:42 am I'm not sure anyone went to Jail over Enron, certainly not anywhere near enough people.
Skilling went to jail, Lay died while appealing, Fastow went to jail (I have always believed that he misled everyone and is the chief villian of the whole thing) and Causey went to jail.

Enron was a very special interest of mine for a time.

I agree, they could have filled another bus full people, but there are some that I can't say they broke the law, but they basically gamed the numbers and built a "legend" about themselves in the company built largely on lies and the infamous "series of accounting scandals". Among these, the first one that comes to mind is Rebecca Mark, who never built a business that made a dime of legitimate profit and never missed a chance to claim credit for someone else's work. My other unlikable person is Sherron Watkins who knew all about the funny accounting and kept her mouth shut until she saw it was inevitable it was coming out, when Cliff Baxter shot himself. Lou Pai probably did something illegal but better people than me have yet to find out what, regardless, he bailed before the scandal to own about half of Colorado and had a fight with an Indian nation over water rights on a mountain they had been drawing for a thousand years until he put up a fence.
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Re: New York State Investigations of Trump and Related

#234

Post by Gregg »

Lou Pai gets extra credit for extreme creative use of the "Hookers and Blow" fund because he actually turned in expense reports that listed hookers and blow.
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Re: New York State Investigations of Trump and Related

#235

Post by Frater I*I »

Gregg wrote: Sun Mar 28, 2021 12:36 pm Lou Pai gets extra credit for extreme creative use of the "Hookers and Blow" fund because he actually turned in expense reports that listed hookers and blow.
Well, at least he was honest :shrug:
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He's got the answers to ease my curiosity, He dreamed a god up and called it Christianity"

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Re: New York State Investigations of Trump and Related

#236

Post by Phoenix520 »

AA saved my brother from the Loma Prieta earthquake. He’d just graduated with a degree in accounting, from UCSF, working for AA. An auditor working in Stockton called in sick so they send my bro for two days. If he hadn’t been out of town he’d have been on the Embarcadero Fwy in rush hour traffic when it hit.

That was his wake up call. He didn’t want to die accounting.

The very next day he quite AA, enrolled in a sound engineering course and went to work at Skywalker Ranch, instead.
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Re: New York State Investigations of Trump and Related

#237

Post by chancery »

noblepa wrote: Sun Mar 28, 2021 12:10 pm
I believe that what got Enron caught was actually something that is (or at least was) perfectly legal. If a company has large, long term debts, they can pledge assets to pay those debts and then take both the liability and the asset off of the books.
"Assets" is doing a lot of work there.
Enron pledged Enron stock to cover some very large debts. The problem was that Enron stock dropped in value significantly ...
Knock me over with a feather, who could have anticipated that?
As I understand it, AA really did nothing wrong.
Disclaimers: (i) I'm not an accountant; (ii) although I once did some deep dives into the Enron/AA scandal, that was nearly two decades ago; (iii) it's been nearly as long since I've had to do any thinking at all about accounting issues.

That said, it's my recollection that it was only possible to say that Arthur Andersen did nothing wrong by accepting a smog of limitations, disclaimers and assumptions so dense, intricate, and unrealistic as to render its opinions useless for any purpose other than as a screen for fraud. It's as if an impressive-looking structural engineer's report require minute study to reveal that it had disclaimed any opinion about the safety of a building's major structural members.

I also recall an accounting professor friend calling AA's work indefensible in ways that astonished him.

As for the thousands of innocent professionals and staff, sure, it's extremely unfortunate, but how do you protect them in a way that doesn't render the professional role of an accounting firm illusory?

There doubtless are subtleties I've forgotten or that are outside the realm of my understanding, but that's the big picture as I remember it.
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Re: New York State Investigations of Trump and Related

#238

Post by northland10 »

chancery wrote: Sun Mar 28, 2021 1:43 pm
noblepa wrote: Sun Mar 28, 2021 12:10 pm As I understand it, AA really did nothing wrong.
Disclaimers: (i) I'm not an accountant; (ii) although I once did some deep dives into the Enron/AA scandal, that was nearly two decades ago; (iii) it's been nearly as long since I've had to do any thinking at all about accounting issues.

That said, it's my recollection that it was only possible to say that Arthur Andersen did nothing wrong by accepting a smog of limitations, disclaimers and assumptions so dense, intricate, and unrealistic as to render its opinions useless for any purpose other than as a screen for fraud. It's as if an impressive-looking structural engineer's report require minute study to reveal that it had disclaimed any opinion about the safety of a building's major structural members.

I also recall an accounting professor friend calling AA's work indefensible in ways that astonished him.

As for the thousands of innocent professionals and staff, sure, it's extremely unfortunate, but how do you protect them in a way that doesn't render the professional role of an accounting firm illusory?
Disclaimer: I also am not an accountant, I have never played on on TV, and I would never want to be one. Just ignore the fact that I spent a bunch of last week in GL data of the test environment for our new ERP. That was to understand the structure and be able to identify the differences between Finance and Fundraising (and I will not waste tie explaining them here).

I highly suspect AA failed to do their job properly, despite SCOTUS reversal of the conviction for destroying records. Even if they were clean in Enron, they were fined for poor audit practices in regards to Waste Management and Sunbeam, and probably would have been hit for Worldcom had AA not already imploded. Fool me once.

I feel for the thousands of innocent professionals and staff hurt by this, but thousands of staff are hurt by poor, reckless, and sometimes illegal management practices all of the time (Toys R' Us, Sears, WorldCom, Lehman, even Enron).
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Re: New York State Investigations of Trump and Related

#239

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Off Topic
And Enron is the poster child for why you do not heavily invest in employer stock. A lot of Enron employees owned a lot of Enron stock in their 401(k)s so not only did they lose their jobs they also lost their retirement savings.
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Re: New York State Investigations of Trump and Related

#240

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During the rah rah days of Enron here in Houston I kept asking people who worked there what the company actually did.. It was always followed by obtuse monologues with lots of corporate speak. No one ever explained it to me. When I asked again what they actually did, invariably I was told if I couldn't understand I just wasn't very smart.

That's a boatload of red flags for any company.

God only knows what the folks at AA thought they were doing, but I'm guessing they had the same kind of dialogs, and just billed their hours and got paid.
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Re: New York State Investigations of Trump and Related

#241

Post by fierceredpanda »

MN-Skeptic wrote: Sun Mar 28, 2021 2:22 pm
Off Topic
And Enron is the poster child for why you do not heavily invest in employer stock. A lot of Enron employees owned a lot of Enron stock in their 401(k)s so not only did they lose their jobs they also lost their retirement savings.
Off Topic
They were being told to do that by the company's executives. The top echelon people obsessed over the stock price, even though most of them didn't know that Andy Fastow's machinations essentially meant that the company had bet its existence that it's price would never go down. There are videos readily available from corporate meetings where executives specifically tell their employees to put 100% of their 401(k) in Enron stock.

I suggest reading the book The Smartest Guys in the Room or watching the terrific documentary film of the same title. Bethany McLean (one of the authors) is simply fantastic at telling stories of corporate malfeasance in a way that laypeople can understand.
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Re: New York State Investigations of Trump and Related

#242

Post by RVInit »

Kate520 wrote: Sun Mar 28, 2021 1:31 pm AA saved my brother from the Loma Prieta earthquake. He’d just graduated with a degree in accounting, from UCSF, working for AA. An auditor working in Stockton called in sick so they send my bro for two days. If he hadn’t been out of town he’d have been on the Embarcadero Fwy in rush hour traffic when it hit.

That was his wake up call. He didn’t want to die accounting.

The very next day he quite AA, enrolled in a sound engineering course and went to work at Skywalker Ranch, instead.
Wow! What a cool story. I am so glad for you and your brother that he was called away. And how inspiring to hear about his career change - taking his happiness and personal fulfillment into his own hands and making a brave decision to leave a job that was already in hand for the unknown. Thanks for sharing that! :clap:
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Re: New York State Investigations of Trump and Related

#243

Post by Gregg »

filly wrote: Sun Mar 28, 2021 3:04 pm During the rah rah days of Enron here in Houston I kept asking people who worked there what the company actually did.. It was always followed by obtuse monologues with lots of corporate speak. No one ever explained it to me. When I asked again what they actually did, invariably I was told if I couldn't understand I just wasn't very smart.

That's a boatload of red flags for any company.

God only knows what the folks at AA thought they were doing, but I'm guessing they had the same kind of dialogs, and just billed their hours and got paid.
When you talked to Enron people, you got a word salad loop of all the trendy phrases about creating synergies to generate ideas to create markets where risk could be valued and traded ad infinitum.

Every time one of the geniuses I work with try to either explain Bitcoin to me or get me to trade it I remember Enron. Sure, you trade it, you bet on it going up and down. How do you evaluate WHY it goes up or down? What economic contribution does its underlying base make? Further, those "Etoro" commercials where the smug technical analysis quant guy doesn't do any better than the hippie stoner who researches D&D levels because the hippie can see the math major and just mimics his trades are gonna be the reason I grab a real brick instead of the nerf balls and kill my beautiful 80 in TV. That, kids, is the modern day doorman telling Joe Kennedy he has a stock tip moment to say you need to sell it all.

I better quit....
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Re: New York State Investigations of Trump and Related

#244

Post by Gregg »

fierceredpanda wrote: Sun Mar 28, 2021 3:55 pm
MN-Skeptic wrote: Sun Mar 28, 2021 2:22 pm
Off Topic
And Enron is the poster child for why you do not heavily invest in employer stock. A lot of Enron employees owned a lot of Enron stock in their 401(k)s so not only did they lose their jobs they also lost their retirement savings.
Off Topic
They were being told to do that by the company's executives. The top echelon people obsessed over the stock price, even though most of them didn't know that Andy Fastow's machinations essentially meant that the company had bet its existence that it's price would never go down. There are videos readily available from corporate meetings where executives specifically tell their employees to put 100% of their 401(k) in Enron stock.

I suggest reading the book The Smartest Guys in the Room or watching the terrific documentary film of the same title. Bethany McLean (one of the authors) is simply fantastic at telling stories of corporate malfeasance in a way that laypeople can understand.
:yeahthat:

The Smartest Guys in the Room

Best book of many about Enron. Bethany McLean is now reporting on the gamestop and memestock thing. I don't remember what network I saw her on but good as always.
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Re: New York State Investigations of Trump and Related

#245

Post by northland10 »

Gregg wrote: Tue Mar 30, 2021 3:35 am ...creating synergies to generate ideas to create markets where risk could be valued and traded...
You broke my buzzword meter.

Fabulized Phrases to Maximize Value, aka, Making shit up to artificially boost stock value.
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Re: New York State Investigations of Trump and Related

#246

Post by keith »

filly wrote: Sun Mar 28, 2021 3:04 pm God only knows what the folks at AA thought they were doing, but I'm guessing they had the same kind of dialogs, and just billed their hours and got paid.
I absolutly believe that is what on in the AA IT Consultancy practice hereafter known as 'Androids'. I worked on several projects where they were the main contractor. Their best skill appeared to be alienating the non contracting staff and getting them to actively fight the project. One of these projects ended in a rather messy $300+million lawsuit - and accelerated the practice being renamed 'Accenture' (but we all knew it was the same ol' Androids.
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Re: New York State Investigations of Trump and Related

#247

Post by Gregg »

keith wrote: Tue Mar 30, 2021 7:10 pm
filly wrote: Sun Mar 28, 2021 3:04 pm God only knows what the folks at AA thought they were doing, but I'm guessing they had the same kind of dialogs, and just billed their hours and got paid.
I absolutly believe that is what on in the AA IT Consultancy practice hereafter known as 'Androids'. I worked on several projects where they were the main contractor. Their best skill appeared to be alienating the non contracting staff and getting them to actively fight the project. One of these projects ended in a rather messy $300+million lawsuit - and accelerated the practice being renamed 'Accenture' (but we all knew it was the same ol' Androids.
I once came damn near feeding a McKinsey consultant into a machine for cutting metal, just to see if the arrogant little prick would tell me how he could have done it better.
I've found that upper management types, especially those that haven't spent 20 or 30 years to get where they are but got hired as part of the new wave when they make changes at the top, love to bring in consultants who don't know anything about the actual business, to teach them about the business they are supposed to be running. These "experts" come in and try to teach those of us who have been building cars since they were 6 how to build cars.
I've had a smug little asshole tell me he had an MBA so he knew how to run any business (I think someone told him I had an MBA too, and I wasn't impressed). They look at you working in a factory and automatically think you have some defect and that's why you're not somewhere air conditioned with a view.
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Re: New York State Investigations of Trump and Related

#248

Post by tek »

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My first job as an engineer was in Manufacturing.
After about 3 months on the job, I was writing up an Engineering Change Order to a process sheet, dealing with the installation of the CRT high-voltage lead in a computer terminal. I went out on the line, with the permission of the line supervisor, to ask the assemblers what they thought about my changes - and got good feedback.
Two days later I get called into the office of an engineering manager and had a new orifice installed.. "you're an engineer, you're supposed to be smarter than an assembler!"
Marched right over to the Plant Manager's office, told his admin assistant what happened, "Oh, dear. I think Joe can see you right now!"
That engineering manager got a formal reprimand.

"everyone brings something to the table" are words I've lived by. They have never let me down.
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Re: New York State Investigations of Trump and Related

#249

Post by keith »

tek wrote: Wed Mar 31, 2021 6:40 am
Off Topic
My first job as an engineer was in Manufacturing.
After about 3 months on the job, I was writing up an Engineering Change Order to a process sheet, dealing with the installation of the CRT high-voltage lead in a computer terminal. I went out on the line, with the permission of the line supervisor, to ask the assemblers what they thought about my changes - and got good feedback.
Two days later I get called into the office of an engineering manager and had a new orifice installed.. "you're an engineer, you're supposed to be smarter than an assembler!"
Marched right over to the Plant Manager's office, told his admin assistant what happened, "Oh, dear. I think Joe can see you right now!"
That engineering manager got a formal reprimand.

"everyone brings something to the table" are words I've lived by. They have never let me down.
An engineering manager is supposed to be smarter than the engineers he is managing.
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Re: New York State Investigations of Trump and Related

#250

Post by Uninformed »

I had a few interactions with Anderson Consulting, and later Accenture, suits a long time ago. Their ability to recognise how far they could exploit the lack of business knowledge of those holding the purse strings was impressive. There may have been one “successful” project that produced a feasibility study that was quietly binned. The only discernible difference between the two companies was that Accenture seemed more likely to ensure their teams included an attractive female.
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