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

y a total of $1 billion in the unaudited financial statements of Enron at March 31 and June 30,
2001."
495. In mid-9/01, Enron terminated the Raptors, paying LJM2 approximately $35 million.
The returns to LJM2 were not for a risk taken, but rather for a service provided: LJM2 lent its name
to a vehicle by which Enron could circumvent GAAP. The losses Enron incurred on its merchant
investments were not hedged in any accepted sense of that term. The losses were merely moved
from Enron's income statement to the equity section of its balance sheet. As a practical matter,
Enron was hedging with itself.
(3) Other SPEs Used by Enron to Conceal Debt
496. Enron also concealed, with the help of its lawyers and the banking defendants,
billions of dollars more in debt by using other SPEs.
(a) Firefly. Firefly was used in 98 and 99 to acquire the Elektro utility in Brazil.
See 605-606. JP Morgan had loaned approximately $1.25 billion to Enron for this purchase. This
debt would have hurt Enron's credit ratings, so Enron worked discreetly with CS First Boston to
structure the Firefly SPE, by which Enron moved $435 million in debt off its balance sheet.
(b) JV-Company. JV Co. was an SPE formed to monetize a 4thQ 99 energy
service outsourcing transaction with Owens - Illinois. JV Co. became the service provider and Enron
(EES) became the guarantor. Enron was then able to recognize $10.3 million in 4thQ earnings from
the transaction and move $24 million in capital expenditures off of its books.
(4) Osprey Trust and Marlin Trust
497. Enron also manipulated its results by treating transfers of assets to a related entity as
sales rather than as loans, including energy related projects and dark-fiber broadband. Osprey and
Marlin were structured transactions which helped Enron keep debt off its books. These deals had
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