Friday, December 2, 2011

This Day in History: Dec 2, 2001: Enron files for bankruptcy

On this day in 2001, the Enron Corporation files for Chapter 11 bankruptcy protection in a New York court, sparking one of the largest corporate scandals in U.S. history.
An energy-trading company based in Houston, Texas, Enron was formed in 1985 as the merger of two gas companies, Houston Natural Gas and Internorth. Under chairman and CEO Kenneth Lay, Enron rose as high as number seven on Fortune magazine's list of the top 500 U.S. companies. In 2000, the company employed 21,000 people and posted revenue of $111 billion. Over the next year, however, Enron's stock price began a dramatic slide, dropping from $90.75 in August 2000 to $0.26 by closing on November 30, 2001.
As prices fell, Lay sold large amounts of his Enron stock, while simultaneously encouraging Enron employees to buy more shares and assuring them that the company was on the rebound. Employees saw their retirement savings accounts wiped out as Enron's stock price continued to plummet. After another energy company, Dynegy, canceled a planned $8.4 billion buy-out in late November, Enron filed for bankruptcy. By the end of the year, Enron's collapse had cost investors billions of dollars, wiped out some 5,600 jobs and liquidated almost $2.1 billion in pension plans.

Over the next several years, the name "Enron" became synonymous with large-scale corporate fraud and corruption, as an investigation by the Securities and Exchange Commission and the U.S. Justice Department revealed that Enron had inflated its earnings by hiding debts and losses in subsidiary partnerships. The government subsequently accused Lay and Jeffrey K. Skilling, who served as Enron's CEO from February to August 2001, of conspiring to cover up their company's financial weaknesses from investors. The investigation also brought down accounting giant Arthur Anderson, whose auditors were found guilty of deliberately destroying documents incriminating to Enron.

In July 2004, a Houston court indicted Skilling on 35 counts including fraud, conspiracy and insider trading. Lay was charged with 11 similar crimes. The trial began on January 30, 2006, in Houston. A number of former Enron employees appeared on the stand, including Andrew Fastow, Enron's ex-CFO, who early on pleaded guilty to two counts of conspiracy and agreed to testify against his former bosses. Over the course of the trial, the defiant Skilling--who unloaded almost $60 million worth of Enron stock shortly after his resignation but refused to admit he knew of the company's impending collapse--emerged as the figure many identified most personally with the scandal. In May 2006, Skilling was convicted of 19 of 35 counts, while Lay was found guilty on 10 counts of fraud and conspiracy. When Lay died from heart disease just two months later, a Houston judge vacated the counts against him. That October, the 52-year-old Skilling was sentenced to more than 24 years in prison.

 Also on This Day

American Revolution
Philadelphia nurse overhears British plans to attack Washington, 1777
Legend has it that on the night of December 2, 1777, Philadelphia housewife and nurse Lydia Darragh single-handedly saves the lives of General George Washington and his Continental Army when she overhears the British planning a surprise attack on Washington's army for the following day. During the occupation of Philadelphia, British General William Howe stationed his headquarters across the street from the Darragh home, and when Howe's headquarters proved too small to hold meetings, he commandeered a large upstairs room in the Darraghs' house. Although uncorroborated, family legend holds that Mrs. Darragh would eavesdrop and take notes on the British meetings from an adjoining room and would conceal the notes by sewing them into her coat before passing them onto American troops stationed outside the city. On the evening of December 2, 1777, Darragh overheard the British commanders planning a surprise attack on Washington's army at Whitemarsh, Pennsylvania, for December 4 and 5. Using a cover story that she needed to buy flour from a nearby mill just outside the British line, Darragh passed the information to American Lieutenant Colonel Thomas Craig the following day. The British marched towards Whitemarsh on the evening of December 4, 1777, and were surprised to find General Washington and the Continental Army waiting for them. After three inconclusive days of skirmishing, General Howe chose to return his troops to Philadelphia. It is said that members of the Central Intelligence Agency still tell the story of Lydia Darragh, one of the first spies in American history.
Toyota's first hydrogen fuel-cell vehicles arrive in California, 2002
Civil War
Confederate General Gracie killed at Petersburg, 1864
Cold War
Castro declares himself a Marxist-Leninist, 1961
Kennedy cousin rape trial begins, 1991
Dam collapses in France, killing 412, 1959
General Interest
Napoleon crowned emperor, 1804
Monroe Doctrine declared, 1823
John Brown hanged, 1859
In Charles Town, Virginia, militant abolitionist John Brown is executed on charges of treason, murder, and insurrection. Brown, born in Connecticut in 1800, first became militant during the mid-1850s, when as a leader of the Free State forces in Kansas he fought pro-slavery settlers in the sharply divided U.S. territory. Achieving only moderate success in his fight against slavery on the Kansas frontier, and committing atrocities in the process, Brown settled on a more ambitious plan in 1859. With a group of racially mixed followers, Brown set out to Harpers Ferry in present-day West Virginia, intending to seize the Federal arsenal of weapons and retreat to the Appalachian Mountains of Maryland and Virginia, where they would establish an abolitionist republic of liberated slaves and abolitionist whites. Their republic hoped to form a guerrilla army to fight slaveholders and ignite slave insurrections, and its population would grow exponentially with the influx of liberated and fugitive slaves. At Harpers Ferry on October 16, Brown's well-trained unit was initially successful, capturing key points in the town, but Brown's plans began to deteriorate after his raiders stopped a Baltimore-bound train and then allowed it to pass through. News of the raid spread quickly, and militia companies from Maryland and Virginia arrived the next day, killing or capturing several raiders. On October 18, U.S. Marines commanded by Colonel Robert E. Lee and Lieutenant J.E.B. Stuart, both of whom were destined to become famous Civil War generals, recaptured the arsenal, taking John Brown and several other raiders alive. On November 2, Brown was sentenced to death by hanging.
On the day of his execution, 16 months before the outbreak of the Civil War, John Brown prophetically wrote, "The crimes of this guilty land will never be purged away but with blood."
McCarthy condemned by Senate, 1954
Affleck and Damon’s Good Will Hunting debuts, 1997
Coleridge joins the cavalry, 1793
The Temptations earn their final #1 hit with "Papa Was A Rolling Stone", 1972
Old West
Polk affirms Monroe Doctrine, 1845
Monroe introduces bold new foreign policy, 1823
Archie Griffin wins second consecutive Heisman Trophy, 1975
Vietnam War
Senator Mansfield pronounces American aid to South Vietnam wasted, 1962
South Vietnamese leaders order a temporary halt to the strategic hamlet program, 1963
World War I
Russia reaches armistice with the Central Powers, 1917
World War II
Fermi produces the first nuclear chain reaction, 1942

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