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

797. Deutsche Bank also actively engaged and participated in the Enron fraudulent scheme
by helping it structure and finance the critical LJM2 SPE. In this regard, Deutsche Bank executives
were permitted to invest $10 million in LJM2 to facilitate the financing of that critical once very
lucrative vehicle to reward Deutsche Bank for its participation in the scheme and put their money
up early – on or about 12/22/99 – so LJM2 would have the cash to fund four SPEs to do deals with
Enron at year-end 99 to create huge profits for Enron so it could meet its 99 profit forecasts.
797.1 Deutsche Bank and its Bankers Trust division devised, structured and executed
hundreds of millions of dollars in fraudulent tax schemes for Enron during the Class Period. And
Deutsche Bank's false and misleading public statements concerning Enron were made with
knowledge and/or reckless disregard for the true fact that Enron's reported income was the result of
fraudulent transactions for which Deutsche Bank was responsible.
797.2 Prior to and during the Class Period, Enron's financial results were materially and
artificially inflated by fraudulent tax schemes. A joint House of Representatives and Senate
Committee found, among other things, that these fraudulent tax schemes resulted in Enron paying
no federal income tax in 96, 97, 98, 99 and 01. Enron recognized phony income of at least $651
million from tax schemes during 96-00 – approximately 20% of Enron's earnings in those years. 17
In total, these tax schemes resulted in benefits to Enron of over $2 billion from 96 forward.
797.3 Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican,
commenting upon the Report of Investigation of Enron Corporation and Related Entities Regarding
Federal Tax and Compensation Issue, and Policy Recommendations (the "Joint Committee Report"),
proclaimed that the tax and accounting scheme ought be viewed as a "shocking event in the history
of American corporate tax policy and American corporate financial accounting." Senator
17 Enron's court appointed bankruptcy examiner, Neil Batson, estimates that Enron reported
approximately $800 million in income from 95 through 9/01 as a result of fraudulent tax schemes.
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