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

797.8 The Washington Post further focused upon the Joint Committee Report's finding that
Bankers Trust had a strong motive to sell tax schemes that artificially inflated Enron's earnings. The
article stated:
William B. Boyle, a vice president for Bankers Trust -- a key partner in
Enron's tax deals -- noted in a 1997 memo that clients would pay "little, if any fee"
for a deal that produced a large reduction in actual taxes paid. But clients would be
"extremely interested" and pay "a substantial fee" for a deal that combined tax
savings with a large increase in earnings on their income statements, he said.
797.9 While some of the fraudulent tax transactions devised by Bankers Trust/Deutsche
Bank were created before the Class Period, each transaction resulted in the artificial inflation of
Enron's reported financial results during the Class Period because each transaction resulted in the
fraudulent recognition of income and purported tax savings going forward, resulting in the accrual
of benefits years after the actual transaction closed. Indeed, Bankers Trust/Deutsche Bank had an
additional motive to continue to conceal the truth (while making positive statements about the value
of Enron's publicly traded securities) because Bankers Trust was paid for creating the fraudulent tax
schemes in installments that went beyond the Class Period and because Bankers Trust knew that if
Enron filed for bankruptcy these payments (in addition to Bankers Trust's tax schemes and Enron's
financial statements) would be scrutinized and exposed as frauds. In fact, the court appointed
bankruptcy examiner, Neil Batson, has done exactly that in his second interim report.
797.10 Six of the fraudulent tax transactions involving Enron and Bankers Trust/Deutsche
Bank are detailed below and in the following chart, which also demonstrates the collective impact
of the transactions upon Enron's reported financial results:
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