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

partnership itself – providing a $65+ million credit line to that entity that provided the debt
financing LJM2 needed to enable it to form and finance several SPEs – including the Raptors – with
which Enron engaged in manipulative devices and transactions to inflate its reported profits, while
improperly moving billions in debt off Enron's balance sheet and into the SPEs.
670. During the Class Period, JP Morgan knew that Enron was falsifying its publicly
reported financial results and that its true financial condition was much more precarious than was
publicly known. It obtained this knowledge due to its access to Enron's internal business and
financial information as Enron's lead lending bank, as well as its intimate interaction with Enron's
top officials which occurred on virtually a daily basis.
671. In late 11/01, 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 massive liability to third parties and
subordination of their creditor claims against Enron. Their scheme could not succeed without
keeping Enron's investment-grade credit rating in place until the sale to Dynegy could be completed.
So, on or about 11/8/01, Rubin, the Vice Chairman of CitiGroup and Harrison, the Chairman of JP
Morgan, called Moody's – a key rating agency – and pressured Moody's to keep Enron's investment
grade credit rating in place until JP Morgan and CitiGroup could complete the sale of Enron to
Dynegy. However, despite the efforts of Enron and JP Morgan 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-
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