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

failing to eliminate additional hundreds of millions of dollars of phony profits as Enron, Andersen,
Vinson & Elkins and the banks were still trying to keep Enron afloat and trying to conceal how
extensive the fraud had really been.
387. Notwithstanding the write-offs and restated revelations of 10/01-11/01, the Enron
Defendants, JP Morgan and CitiGroup believed that they could limit their legal exposure for
participation in the scheme if they could effectuate a sale of Enron to another company. So, in 10/01
to 11/01, as the Enron scheme began to unravel and Enron reported a huge 3rdQ 01 loss and restated
its 97-01 financial results, JP Morgan and CitiGroup worked hand-in-hand with Enron to desperately
try to save Enron in the hope that by arranging a salvation merger with Dynegy (for which JP
Morgan and CitiGroup would each be paid approximately $45 million in fees) they could prevent
the insolvency of Enron and the inevitable investigations and revelations that would follow such
insolvency.
388. On 11/14/01, Enron executives Lay, Whalley, McMahon and Causey held a
conference call for analysts and stated:
• Enron had made some very bad investments. Investments such as Azurix, India
and Brazil had performed poorly. Because of these investments, Enron became
over- leveraged. Enron entered into related-party transactions that produced
various conflicts of interest.
• Enron's core business was still the best franchise in the industry.
• Enron remained optimistic that actions to prevent insolvency substantially
answered Enron's credit and liquidity questions. Enron's current transaction
levels, while lower than the recent averages, have remained strong.
389. In late 11/01, as JP Morgan and CitiGroup were desperately trying to arrange the sale
of Enron to Dynegy so they could split a $90 million fee and so Enron would not go bankrupt, which
they knew would lead to suits over, and investigations into, their prior deals with Enron – which they
knew would be highly embarrassing and could expose them to liability to third parties and
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