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

of the SPEs Enron did business with (and partnerships controlled by them), which debt Enron had
assured investors was "non-recourse" to Enron would, in fact, become Enron's obligation.
56. In a 6/01 meeting between an Enron manager and two CS First Boston managing
directors, the CS First Boston people made statements showing they had knowledge about the
nature and extent of Enron's off-balance sheet exposure. During discussions about structuring an
off-balance-sheet partnership, the CS First Boston people commented to the Enron manager, "How
can you guys keep doing this?" – referring to Enron's repeated statements to the market that its stock
was undervalued. The CS First Boston people said that even at $40 per share, Enron's stock was
still overvalued in their view and added, "Do employees actually believe it's worth what
management is saying?" At the time, Enron's stock was trading at around $48.50. The CS First
Boston people said "you guys are at a critical price point right now" and referenced the Raptor
deal and said that if Enron's stock continued to fall, that would cause Raptor to unwind and the
debt balance to come due. The CS First Boston people asked the Enron manager, "Do you know
how much off-balance sheet debt you [Enron] have?" When the Enron executive said he thought
it was around one to two billion dollars, the CS First Boston people said, "Try eight to 12 billion."
They added that if Enron's stock hits $20 a share, things were going to come falling down and
"you guys are gonna be fucked." This knowledge did not stop CS First Boston, however, from
issuing a report on 8/14/01 rating Enron a "Strong Buy" with a price target of $84!
57. Faced with this impending catastrophe on 7/13/01, Skilling told Lay that he was going
to quit because he knew that the Enron house of cards was crumbling. To conceal the horrible
problems at Enron that were the true reason Skilling quit, in the ensuing weeks, Lay, Skilling and
other top Enron insiders concocted a story that Skilling's resignation would be presented as being
for "personal reasons," so as to try to conceal the true reasons and limit the damage to Enron's stock
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