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

(a) Enron management controlled LJM2 and therefore, in accordance with
accounting rules, the investment should have been consolidated (but was not);
(b) Enron had at least $17 billion in assets and associated liabilities carried off
balance sheet and as such, Andersen should have thoroughly investigated the business purpose and
substantive reasons for accounting for as much as 33% of Enron's total assets on an "off-balance
sheet" basis;
(c) Enron made a practice of maintaining control in its off-balance-sheet
investments despite the fact that accounting rules required consolidation if Enron maintained control;
(d) Enron finance executives and insiders received tens of millions of dollars in
management fees and quick profits;
(e) Enron assets were purportedly sold to LJM, but then quickly repurchased
within a very short period producing a gain, despite the fact that the value of the assets had declined;
and
investments.
(f) Enron's use of its own shares as security for supposed hedges of other Enron
950. Defendants David Duncan, Cash, Stewart and Neuhausen and others were heavily
involved in the structuring of the entity, the decisions to allow Enron to improperly account for the
LJM2 entity, and were aware of Bass's disagreement with the LJM2 accounting beginning in 00.
(3) Andersen's Knowledge of Improper Accounting for the Raptors
951. Andersen also permitted Enron to improperly account for notes received for stock
issued, which manipulation is described in 445-446, 477-484. Andersen billed Enron at least
$335,000 (1,675 hours at $200 per hour) in 00 alone for its work on the Raptor deals (which
ultimately resulted in a $1 billion reduction in shareholders' equity when Enron and Andersen's
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