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

the Raptor SPEs, which would have been catastrophic and exposed the scheme. Rather than take
that loss and face these consequences, Enron, Andersen, Vinson & Elkins and certain of Enron's
banks "restructured" the Raptor vehicles by transferring more than $800 million of contracts to
receive Enron's own stock to them just before quarter-end. This was a transfer of huge value for
no consideration and was accounted for as increases to equity and to assets in violation of GAAP.
It also permitted the participants in the scheme to continue the concealment of the substantial
losses in Enron's merchant investments, keep billions of dollars of debt off Enron's balance sheet
and allowed the Enron Ponzi scheme to continue.
54. During early 01, Enron continued to report record results (certified by Andersen) and
with its lawyers and bankers made very positive statements:
• Enron's strong results reflected breakout performance in all business units. Enron
was a strong unified business.
• WEOS had strong growth and a tremendous market franchise with significant
sustainable competitive advantages.
• EBS intermediation was great. Broadband glut and lowered prices would help
Enron.
• VOD was successfully tested and launched. Proven technology created enormous
opportunities.
• All of Enron's businesses were generating high levels of earnings. Fundamentals
were improving. Enron was very optimistic. Enron was confident growth was
sustainable for years to come.
N. The Impending Collapse
55. By the Summer of 01, Enron's top insiders realized that Enron would not be able to
continue to sustain the illusion of strong profitable growth much longer and that it would have to
take large write-offs in the second half of 01 that, in turn, could result in a downgrade of Enron's
critical investment-grade credit rating – an event that they knew would mean that debt on the books
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