Enron Corp. - University of California | Office of The President

unable to locate an independent outside investor to quickly buy the 50% interest in JEDI, Barclays
financed Chewco's purchase of the JEDI interest with debt, not equity. Thus, Chewco/JEDI was
not a valid SPE meeting the requirements for non-consolidation. Notwithstanding, Enron did
not consolidate Chewco/JEDI into Enron's financial statements during 97-01 and used
Chewco/JEDI to generate false profits from 97 through 01.
23. In 99, Enron, Vinson & Elkins, Andersen and certain of Enron's bankers, created and
then entered into numerous business transactions with two LJM partnerships which Enron and
Enron's CFO Fastow controlled. Over the next few years, defendants engaged in a series of
transactions – which were, in fact, manipulative devices – between Enron and the LJM
partnerships and LJM SPEs which resulted in Enron inflating its reported financial results by
more than a billion dollars – at the same time enriching Fastow and his friends and several of
Enron's bankers who were allowed to invest in the LJM2 partnership – by tens of millions of
dollars. The reason for establishing these partnerships was that they would permit Enron to
accomplish transactions it could not otherwise accomplish with an independent entity, by
providing Enron with a buyer of assets that Enron wanted to sell. The LJM1 and LJM2
transactions were structured, reviewed and approved by Andersen, Vinson & Elkins, the Enron
Defendants and certain of Enron's bankers, which also helped create and finance the LJM
partnerships and these transactions.
24. One of the primary manipulative devices used to falsify Enron's financial results
during the Class Period was LJM2, which was formed in 10/99 and secretly controlled by Enron and
used to help create numerous SPEs (including the "Raptors") which defendants used to engage in
transactions to artificially inflate Enron's profits while concealing billions of dollars in debt that
should have been included on Enron's balance sheet. Defendants knew that because LJM2 was going
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