The ENRON scandal

 I'm sure many of you did hear about the Enron company fraud back in 2001.

We are in the middle of a huge market bubble (similar to today), everybody is exuberant and dont really care about accounting manipulations during such times. You can find more about the Enron bankrupcy and fraud on wikipedia here:

The Enron scandal, publicized in October 2001, led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit failure.

Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that – by the use of accounting loopholes, special purpose entities, and poor financial reporting – were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives misled Enron's board of directors and audit committee on high-risk accounting practices and pressured Arthur Andersen to ignore the issues.

These are complicated matters, its not the purpose of the blog here. The mechanism these gangsters used to fraud is accounting gimmicks. That's the element of interest for us.

What I find the most outrageous about these events is this:

By the time the ruling was overturned at the U.S. Supreme Court, the company had lost the majority of its customers and had ceased operating. Enron employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices.

In simple terms, people who had hard-earned money invested in this fraud lost most of it. The federals were of course late to identify the fraud and when they arrived, the facts were consumed.

The question you have, is this related to TESLA stock? There is no link between TESLA and ENRON; however I did come over a document (somewhat obscure) which questions TESLA accounting practices. It dates back to January 2020, before the COVID crises and the actual fever surounding the stock.

These are serious statements and given TESLA stock is held by many pensions funds and individual investors, it would be really painful for those people to go through an event like ENRON scandal.

I'll go over this document and give you a feedback on what I think.

In the meantime, here is the raw document:   TESLA Inc, Reality Check