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

An important part of this process consisted of

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Enron’s own management. An important part of this process consisted of retirement savings plans under which staff members’ own contributions were topped up by contributions from Enron itself. Emotional consequences are also experienced by victims of white-collar crime and all members of society exposed to this misconduct. These emotional consequences include stress from victimization, violation of trust, and damage to public morale. With regard to stress, any experience of victimization is stressful, but the experience of white-collar crime victimization is believed to be particularly stressful. Much of the stress stems from the violation of trust that comes along with white-collar crimes. What emerged from the Enron’s case was a mosaic of inter-related schemes—some hardly more than smoke and mirrors—that toppled a company that once boasted annual revenues over $150 billion. Enron ripped off California, selling energy to the state’s strapped utilities at over-inflated rates. Officials overstated the company’s fledgling Broadband venture, hitching the company’s stock price to the star of the still-nascent Internet
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WHITE COLLAR CRIME 30 bubble. The company overvalued its international assets by billions to generate cash flow and manipulated its quarterly earnings statements to keep Wall Street happy and its stock price afloat. SSA Anderson said it was the thousands of victims, hard-working employees who lost their pensions, and the desire to hold accountable those responsible for the failure of Enron, that motivated agents, analysts, and others on the Enron Task Force to press ahead on the massive case. Warning Signs In just 15 years, Enron grew from nowhere to be America’s 7th largest company, employing 21,000 staff in more than 40 countries. But the firm’s success turned out to have involved an elaborate scam. Through the use of accounting loopholes, special purpose entities and poor financial reporting, senior executives were able to hide billions in debt from failed deals and projects. Among the firm’s crimes were: manipulating the Texas power market, bribing foreign governments to win contracts abroad and manipulating the California energy market. How They Were Caught: In 2001 Bethany McLean’s article Is Enron Overpriced? questioned how Enron could maintain its high stock value, which was trading at 55 times its earnings. – she pointed out how analysts and investors did not know exactly how Enron was earning its income. McLean was first drawn to the company’s situation after an analyst suggested she view the company’s 10-K report, where she found ‘strange transactions’, ‘erratic cash flow’, and ‘huge debt’. In July 2001, Enron reported revenues of $50.1 billion, beating analysts’ estimates by 3 cents a share. However, concerns were mounting. In October Enron reported a $638 million third-quarter loss and
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WHITE COLLAR CRIME 31 disclosed a $1.2 billion reduction in the value of shareholders’ stakes, prompting the Securities and Exchange Commission to begin an inquiry into the firm’s accounts. Later that month Enron
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