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

391. Rubin's and Harrison's effort to strong-arm Moody's failed. Despite the efforts of
Enron, JP Morgan and CitiGroup to conceal Enron's true financial condition from Dynegy and get
Dynegy to agree to acquire Enron, the due diligence efforts of Dynegy and its investment bankers
uncovered that the true financial condition of Enron was far worse than had ever been disclosed
publicly to date and that Enron had been engaged in a wide-ranging falsification of its financial
statements over the several prior years. Thus, Dynegy refused to acquire Enron and Enron went
bankrupt. By 11/28/01, the charade could be continued no longer and Enron's publicly traded debt
had been downgraded to "junk" status by the rating agencies and on 12/2/01, Enron filed for
bankruptcy – the largest bankruptcy in history. Enron's common and preferred stock have become
virtually worthless and its publicly traded debt securities have suffered massive price declines,
inflicting billions of dollars of losses on purchasers of those securities.
392. As outrage over what is likely the worst financial scandal involving a public company
in the history of the United States erupted, Congress launched the most massive investigation it has
ever undertaken of a public company's financial fraud, summoning before it some of the Enron
executives and Andersen partners who were intimately involved in these matters. Nancy Temple,
a senior Andersen lawyer who directed the destruction of documents and defendants Lay, Fastow,
Buy and Causey of Enron and David Duncan, the Andersen partner in charge of the Enron account,
have all refused to testify, asserting that their testimony would incriminate them.
393. As detailed herein, the scheme to defraud Enron investors complained of was
extraordinary in its scope, duration and size. Billions of dollars in phony profits were reported.
Billions of dollars of debt was hidden. Enron shareholders' equity was overstated by billions of
dollars. This was accomplished over a multi-year period through numerous manipulative devices
and contrivances and misrepresentations to investors in Enron releases and SEC filings, including
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