AutoRecovery save of White Collar Crime a Form of Occupational Fraud.doc

That enron maintained sufficient equity capital and

Info icon This preview shows pages 10–12. Sign up to view the full content.

that Enron maintained sufficient equity capital and borrowing capacity to cushion the intermittent loss of cash flow from its trading activities (p. 3). Enron’s executives, mainly Lay and Skilling exploited their knowledge of the surplus or deficit in pipelines capacity and market’s supply and demand. Skilling transformed energy into financial instruments with the intent to become the primary supplier of liquidity. The ability to buy and sell natural gas derivates, positioned Enron as a dominant energy supplier in the United States becoming the major energy players in the world by the mid-1990. Therefore, based on the strategy of financial trading activity Enron produced top of the roof earnings and the firm’s stock price incentive system created the financial boom of the 1990s. On July 1997, Enron acquired Portland General Corporation (PGC) and electric utility holding company, and affiliated electric utility Portland General Electric (PGE). Enron’s acquisition was handled with a $1. 9 billion stock swap in which a) Enron issued 50.05 million shares of its stock to PGC in exchange for $ 49.6 million shares of PGC stock. Consequentially all the PGE stocks became Enron and the next intent of the executives was to build trust among the investing community promoting Enron as a new, different and innovative company. As such during a press conference, Jeff Skilling stated “I don’t want us to ever be satisfied with the stock price, it should always be higher”. With the encouragement of its own management Enron build the public trust inducing people that had
Image of page 10

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

WHITE COLLAR CRIME 11 been gas pipeline workers for decades, to keep their money in the company and trustworthy workers began to put the maximum they could into their 401K plans and saving retirement plans. According to Sutherland (1941), the violation of trust can be defined as the “most general” characteristic of white-collar crime. Victims of a street robbery didn’t trust the stranger who robbed them in the first place. Victims of a white-collar crime, in addition to the other losses incurred from the victimization, have their trust violated by the offender. There is reason to believe that the level of trust may be tied to the specific level of trust given to different types of white-collar offenders (e.g., we trust doctors and pharmacists at a certain level, but auto mechanics on another level). Researchers have used various strategies to consider how these trust violations manifest themselves in white-collar crimes. For example Sutherland (1949) defined white-collar crime as “crime committed by a person of respectability and high social status in the course of his occupation.”Spalek (2001) interviewed 25 individuals who lost some of their pension funds to a fraudulent scheme by Robert Maxwell. She focused on the degree to which victimization bred distrust. She found that many of the victims already distrusted their offender before the victimization came to light. The victims said that they felt forced or coerced into trusting the offender as part of his investment scheme. In terms of trust, they placed their trust in
Image of page 11
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.
  • Fall '13
  • white collar, Enron Corporation

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern