Biography – Andrew S. Fastow

Total Page：16

File Type：pdf, Size：1020Kb

Biography – Andrew S. Fastow Despite today’s more regulated and enlightened business environment, we continue to witness “Enron-esque” failures of corporate governance. Enron’s former CFO will make observations about how the ambiguity and complexity of laws and regulations breeds opportunity for problematic decisions and will discuss what questions corporate directors, management, attorneys, and accountants should ask in order to ensure that their companies not only follow the rules, but uphold the principles behind them. Mr. Fastow was the Chief Financial Officer of Enron Corp. from 1998 – 2001. In 2004, he pled guilty to two counts of securities fraud, and was sentenced to six years in federal prison. He completed his sentence in 2011, and now lives with his family in Houston, Texas. Mr. Fastow currently provides litigation support at a law firm, and he consults with Directors, attorneys, and hedge funds on how best to identify potentially critical finance, accounting, compensation, and cultural issues. Mr. Fastow received a BA in Economics and Chinese from Tufts University and an MBA in Finance from the Kellogg Graduate School of Management at Northwestern University. Prior to joining Enron, he was a Senior Director in the Asset Securitization Group at Continental Bank N.A. Since his release from prison, Mr. Fastow has been a guest lecturer at universities and corporations, and at conferences for management, corporate directors, attorneys, accountants, and certified fraud examiners. Mr. Fastow was recently keynote speaker at the United Nations’ Principles of Responsible Management Education Conference, the FBI’s Advanced Financial Crimes Seminar, the Association of Certified Fraud Examiners Annual Conference, the American Accounting Association Annual Conference, and the Financial Times’ Outstanding Directors Conference. Contact information: Andrew Fastow - [email protected] .

Copy Link

Recommended publications

The Enron Fraud and Scandal and What It Means to Business Today
The Impact of the Crooked “E” The Enron Fraud and Scandal And What It Means to Business Today Ed Ferrara MIS5208 – Project 1 – Examples of Corporate Fraud [email protected] Agenda § Facts About Enron – Company History § The Players – The Executives § Enron – So Many Dimensions of Fraud § A Chronology of Enron’s Collapse § The Aftermath § What It Means § References § Appendix A – Other perpetrators The Enron Players – The Executives Ken Lay – Enron Chairman and CEO David Duncan – Andersen Partner – Enron Convicted on 29 criminal counts including Partner responsible for Enron. Fired for failure to conspiracy, securities and wire fraud. Dies in exercise “due professional care and the necessary Aspen Colorado on July 5 2006 while awaiting skepticism”. Pled guilty to obstruction of justice – sentencing for his convictions.1 later rescinded plea, and struck deal with SEC.4 Jeffrey SkillinG – Enron CEO Sherron Watkins – Enron VP Internal Audit Convicted for fraud, conspiracy, insider trading and Watkins, who has never been charged with insider lying to auditors in the largest corporate fraud in trading, sold almost $50,000 in stock after her history. More than 4,000 Enron employees lost August 2001 meeting with Lay — and before Enron their jobs, many lost their life savings, when Enron shares became worthless months later. “No,” she declared bankruptcy in 2001. Investors lost billions told prosecutor John Hueston when he asked her if of dollars.2 her stock sales were proper. “I had more information than the marketplace did.”5 Andrew Fastow Charged with 78 counts of fraud due to his role in Theft using off-balance sheet entities that did business (Misappropriation) with Enron.
[Show full text]
Conspiracy of Fools”
Submitted version of review published in GARP Risk Review Review of “Conspiracy of Fools” Joe Pimbley Kurt Eichenwald’s Conspiracy of Fools (Broadway Books, 2005) is a spellbinding account of the rise and fall of Enron. In nearly 700 pages the reader finds answers to “what happened?” and “how did it happen?” Based on retrospective interviews with more than a hundred primary and secondary actors in this drama, the author creates multiple, parallel story lines. He jumps back and forth between these sub-plots in a manner that maintains energy and gives the reader many natural stopping points. The great strengths of Conspiracy are that it’s thorough, extremely well- written, captivating, and, finally, it rings true. The author avoids the easy, simple conclusions that all the executives are “guilty” of crimes or plain greed and that the media-lionized whistle-blower is pure of heart. We see the ultimate outcome as personal tragedies for Jeff Skilling (President) and Ken Lay (CEO) even though they are undeniably culpable. Culpability and guilt are not synonymous, however, and different readers will have widely different judgments to render on these two men. The view of Andrew Fastow is not so murky. He and a handful of his associates did indeed lie, cheat, and steal for personal gain. Fastow’s principle “contribution” to Enron was the creation of structured finance transactions to skirt accounting rules. This one-sentence description doesn’t tell the reader much. Eichenwald gives many examples to flesh out the concept. The story of “Alpine Investors” provides the simplest case. The company wished to sell the Zond Corporation, a wind-farm operator, prior to the closing of Enron’s purchase of Portland General.
[Show full text]
Opening Statement of Rick Caplan
Opening Statement of Rick Caplan Before the Senate Permanent Subcommittee on Investigations July 23, 2002 Thank you Mr. Chairman and Members of the Committee. My name is Rick Caplan. I am a Managing Director of Citigroup’s Corporate and Investment Bank and co-head of the North American Credit Derivatives Group, one of several business groups at Citi that structures transactions for sophisticated corporate clients. I began working in the derivatives business at Citibank in 1997, and I first became involved in structuring certain transactions for Enron in 1999. A prepaid swap transaction – the transaction you have invited us to talk about today – is a form of structured finance. Structured financings have been used over the past several decades by virtually all sophisticated companies as a way of raising money. Just as companies always consider the tax, legal, and accounting consequences of every transaction they enter into and attempt to structure those transactions so as to achieve the most favorable results, the same is true when companies seek to finance themselves. Often times, the most efficient and effective form of financing for a company is not a straight loan, but a structured finance transaction that, in addition to generating liquidity, can address these other business considerations. Most large public companies use many different forms of structured financing. In each instance, they choose the form of financing that best addresses their unique business and capital needs. While many structured financings have the same economic impact as a loan, they often are treated differently for accounting purposes. Such transactions are commonplace in corporate America and play an integral role in our capital markets.
[Show full text]
Enron: Where Are They Now?
University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Supervised Undergraduate Student Research Chancellor’s Honors Program Projects and Creative Work Spring 5-2004 Enron: Where Are They Now? Aaron Montgomery Vickers University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_chanhonoproj Recommended Citation Vickers, Aaron Montgomery, "Enron: Where Are They Now?" (2004). Chancellor’s Honors Program Projects. https://trace.tennessee.edu/utk_chanhonoproj/802 This is brought to you for free and open access by the Supervised Undergraduate Student Research and Creative Work at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Chancellor’s Honors Program Projects by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. Enron: Where Are They Now? Aaron Montgomery Vickers Senior Honors Project 4/30/04 Table Of Contents Introduction ....................................................................................................................... 1 The Collapse Firsthand .................................................................................................... 2 The Fastows, First to Fall ............................................ ,.................................................... 9 Jeffrey Skilling at Rock Bottom .................................................................................... 13 Conclusion ......................................................................................................................
[Show full text]
Sarbanes-Oxley and Corporate Greed Adria L
University of Connecticut OpenCommons@UConn Honors Scholar Theses Honors Scholar Program Spring 5-8-2011 Sarbanes-Oxley and Corporate Greed Adria L. Stigliano University of Connecticut - Storrs, [email protected] Follow this and additional works at: https://opencommons.uconn.edu/srhonors_theses Part of the Accounting Commons, and the Business Law, Public Responsibility, and Ethics Commons Recommended Citation Stigliano, Adria L., "Sarbanes-Oxley and Corporate Greed" (2011). Honors Scholar Theses. 207. https://opencommons.uconn.edu/srhonors_theses/207 Sarbanes-Oxley & Corporate Greed Adria L. Stigliano Spring 2011 Sarbanes-Oxley & Corporate Greed Adria L. Stigliano Spring 2011 Adria L. Stigliano Honors Thesis Spring 2011 Sarbanes-Oxley and Corporate Greed Sigmund Freud, the Austrian psychologist, believed that every human being is mentally born with a “clean slate”, known as Tabula rasa , where personality traits and character are built through experience and family morale. Other psychologists and neurologists believe individuals have an innate destiny to be either “good” or “bad” – a more fatalistic view on human life. Psychological theories are controversial, as it seems almost impossible to prove which theory is reality, but we find ourselves visiting these ideas when trust, ethics, reputation, and integrity are violated. The Sarbanes-Oxley Act is still a relatively new federal law set forth by the Securities Exchange Commission in 2002. Since its implementation, individuals have been wondering if Sarbanes-Oxley is effective enough and doing what it is meant to do – catch and prevent future accounting frauds and scandals. With the use of closer and stricter rules, the SOA is trying to prevent frauds with the use of a created Public Company Accounting Oversight Board.
[Show full text]
Enron: What Caused the Ethical Collapse? Introduction Kenneth Lay
Enron: What Caused the Ethical Collapse? Introduction Kenneth Lay, former chairman and chief executive officer (CEO) of Enron Corp., is quoted in Michael Novak’s book Business as a Calling: Work and the Examined Life as saying, “I was fully exposed to not only legal behavior but moral and ethical behavior and what that means from the standpoint of leading organizations and people.” In an introductory statement to the revised Enron Code of Ethics issued in July 2000, Lay wrote: “As officers and employees of Enron Corp., its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner.” Lay went on to indicate that the 64-page Enron Code of Ethics reflected policies approved by the company’s board of directors and that the company, which enjoyed a reputation for being fair and honest, was highly respected. Enron’s ethics code also specified that “An employee shall not conduct himself or herself in a manner which directly or indirectly would be detrimental to the best interests of the Company or in a manner which would bring to the employee financial gain separately derived as a direct consequence of his or her employment with the Company.” Enron’s ethics code was based on respect, integrity, communication, and excellence. These values were described as follows: Respect. We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.
[Show full text]
If the Auditors Sign Off, Does That Make It Okay?
LAWRENCE WEISS Lawrence Weiss is Professor of International Accounting at The Fletcher School of Law and Diplomacy at Tufts University, and an expert on corporate bankruptcy. If the Auditors Sign Off, Does That Make It Okay? Tuesday May 1, 2012, by Lawrence Weiss Andrew Fastow, the former chief financial officer of Enron, recently completed a six-year prison sentence for his part in the scandalous deception that hid Enron's financial troubles from investors. After I was quoted late last year in an article on the 10th anniversary of the Enron debacle , Fastow contacted me and offered to speak to the Financial Statement Accounting class I teach at Tufts University's Fletcher School of Law and Diplomacy. Last month, Fastow made good on his offer. Why did he commit fraud? Why did a bright, aspiring, stereotypical MBA cross the line and misrepresent the true financial picture of Enron? According to Fastow, greed, insecurity, ego, and corporate culture all played a part. But the key was his proclivity to rationalize his actions through a narrow application of "the rules." Fastow's message, an important one for all managers and potential managers, has two key points. First, the rules provide managers with discretion to be misleading. Second, individuals are responsible for their actions and should not justify wrongful actions simply because attorneys, accountants, or corporate boards provide approval. After his guilty plea for fraud, Fastow forfeited $23.8 million in cash and property. He has helped the Enron Trust recover over $27 billion, of which $6 billion has gone to shareholders. (And he was not compensated for his presentation to my class.) He began the presentation by admitting he committed fraud and taking full responsibility for his actions.
[Show full text]
Status of Charges Against Former Enron Executives
Status of Charges Against Former Enron Executives Accounting What They Did Wrong Legal Status Scandal Kenneth Lay Former Enron CEO and Chairman of the On May 25, 2006, Lay was found guilty on six Board, he is accused of participating in charges that relate to Enron fraud, including widespread schemes to mislead government conspiracy to commit wire fraud, perpetrating wire regulators and investors about the company’s and bank fraud, and making false and misleading earnings, and of insider trading. Between statements to employees at a company meeting, 1998 and 2001, Lay received $300 million as well as to banks, securities analysts and from the sale of Enron stock, netting more corporate credit-rating agencies. Lay faces a than $219 million in profit, and was paid more maximum of 45 years in prison. And Lay will also than $19 million in salary and bonuses. face an additional hefty term in prison (maximum 120 years) for his conviction on four other bank fraud counts that relate to his personal banking. Sentencing is scheduled for the week of Sept. 11. Jeffrey Former Enron CEO, he is accused of On May 25, 2006, Skilling was found guilty on 19 Skilling participating in widespread schemes to counts of conspiracy, fraud, false statements and mislead government regulators and investors insider trading. He was found not guilty on nine about the company’s earnings, and of insider counts of insider trading. Skilling faces a trading. Between 1998 and 2001, Skilling maximum of 185 years in prison. Sentencing is received $200 million from the sale of Enron scheduled for the week of Sept.
[Show full text]
The Lesson from Enron Case - Moral and Managerial Responsibilities
See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/306091392 The Lesson from Enron Case - Moral and Managerial Responsibilities Article · August 2016 CITATION READS 1 27,811 1 author: Seied Beniamin Hosseini Aligarh Muslim University 29 PUBLICATIONS 26 CITATIONS SEE PROFILE Some of the authors of this publication are also working on these related projects: Strategies for Growth and Sustainability: A study of SMEs in India View project All content following this page was uploaded by Seied Beniamin Hosseini on 04 September 2016. The user has requested enhancement of the downloaded file. z Available online at http://www.journalcra.com INTERNATIONAL JOURNAL OF CURRENT RESEARCH International Journal of Current Research Vol. 8, Issue, 08, pp.37451-37460, August, 2016 ISSN: 0975-833X RESEARCH ARTICLE THE LESSON FROM ENRON CASE - MORAL AND MANAGERIAL RESPONSIBILITIES 1,*Seied Beniamin Hosseini and 2Dr. Mahesh, R. 1PG Student in MBA, B.N. Bahadur Institute of Management Sciences (BIMS), University of Mysore, Mysore Karnataka, India 2Associate Professor, B.N. Bahadur Institute of Management Sciences (BIMS), University of Mysore Mysore Karnataka, India ARTICLE INFO ABSTRACT Article History: The Enron scandal, give out in October 2001, Enron Top officials abused their privileges and power, manipulated information put their own interests above those of their employees and the public and Received 19th May, 2016 Received in revised form failed to exercise proper oversight or shoulder responsibility for ethical failings which eventually led 15th June, 2016 to the bankruptcy of an American energy company based in Houston, Texas, and the dissolution of Accepted 17th July, 2016 Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world.
[Show full text]
Fraud Rationalizations and the Guilty Mind
‘I didn’t intend to deceive anyone’ © iStock/Thinkstock FRAUD RATIONALIZATIONS AND THE GUILTY MIND Fraud perpetrators often use a variety of excuses to alleviate the culpability of their mental states because they know they can’t be convicted unless prosecutors can prove their criminal acts were accompanied by a guilty state of mind known as mens rea. By Frank S. Perri, J.D., CFE, CPA; and Edyta M. Mieczkowska, CFE, CAMS Fraud rationalizations and the guilty mind At the end of a five-year investigation, the FBI discovered that Enron Corpora- tion — an American energy, commodities I don’t think and services company based in Houston, I’m a fool, Texas — used a variety of deceptive and but I think I fraudulent accounting practices to cover was fooled ... its financial reporting fraud. Corporate I can’t take officers created the illusion that Enron responsibility was making profits in the billions, and its for the crimi- stock soared. Between 1996 and 2000, En- nal conduct of ron reported an increase in revenue from someone inside $13.3 billion to $100.8 billion. However, the company. the company was actually losing money. Enron executives, who used insider - Kenneth Lay information to trade millions of dollars in Enron stock, knew the company was hiding losses in offshore accounts. Inves- tors were oblivious. CFO Andrew Fastow and some subordinates created off-book companies to manipulate transactions that Houston, April 4: Former Enron chairman Kenneth Lay during the midday break of provided himself with hundreds of mil- his fraud and conspiracy trial April 4, 2006, in Houston, Texas.
[Show full text]
United States District Court Southern District of New York
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK SILVERCREEK MANAGEMENT, INC., et al., Plaintiffs, 02-CV-8881 (JPO) -v- OPINION AND ORDER CITIGROUP, INC., et al., Defendants. J. PAUL OETKEN, District Judge: Plaintiffs, a group of investment funds known as “Silvercreek,” brought this action against Defendants, a set of financial institutions, for conduct relating to the issuance of debt securities by Enron Corporation (“Enron”).1 Plaintiffs assert claims under New York state tort law and under federal and Texas securities laws. Defendants Credit Suisse, Deutsche Bank, and Merrill Lynch each move for summary judgment. (Dkt. Nos. 114–15, 121.) For the reasons that follow, the motions are granted in part and denied in part. I. Background Like many of the others to have emerged from the Enron bankruptcy, this is a case whose “facts are difficult to detail but easy to summarize.” Regents of Univ. of Cal. v. Credit Suisse 1 “Plaintiffs” refers to Silvercreek Management Inc., Pebble Limited Partnership, Silvercreek Limited Partnership, OIP Limited, and Silvercreek II Limited, all of which will also be referred to collectively as “Silvercreek.” (See Dkt. No. 10-115 (“TAC”) ¶¶ 8–13.) “Defendants” refers to the financial institution defendants presently moving for summary judgment: Credit Suisse (Credit Suisse First Boston LLC n/k/a Credit Suisse Securities (USA) LLC, Credit Suisse First Boston (USA), Inc. n/k/a Credit Suisse (USA), Inc., and Pershing LLC (f/k/a Donaldson, Lufkin & Jenrette Securities Corp.)) (Dkt. No. 114); Deutsche Bank (Deutsche Bank Alex. Brown, Inc. n/k/a Deutsche Bank Securities Inc., and Deutsche Bank AG) (Dkt.
[Show full text]
White Collar Innocence: Irrelevant in the High Stakes Risk Game
Chicago-Kent Law Review Volume 85 Issue 1 Symposium on Criminal Procedure Article 6 December 2009 White Collar Innocence: Irrelevant in the High Stakes Risk Game Ellen S. Podgor Follow this and additional works at: https://scholarship.kentlaw.iit.edu/cklawreview Part of the Criminal Procedure Commons Recommended Citation Ellen S. Podgor, White Collar Innocence: Irrelevant in the High Stakes Risk Game, 85 Chi.-Kent L. Rev. 77 (2010). Available at: https://scholarship.kentlaw.iit.edu/cklawreview/vol85/iss1/6 This Article is brought to you for free and open access by Scholarly Commons @ IIT Chicago-Kent College of Law. It has been accepted for inclusion in Chicago-Kent Law Review by an authorized editor of Scholarly Commons @ IIT Chicago-Kent College of Law. For more information, please contact [email protected], [email protected]. WHITE COLLAR INNOCENCE: IRRELEVANT IN THE HIGH STAKES RISK GAME ELLEN S. PODGOR* INTRODUCTION When one thinks of "wrongful convictions and reliability in the crimi- nal justice process" one often thinks of street crime convictions of defen- dants later proven innocent through DNA or other scientific evidence. 1 Implanting white collar crime in this ballpark seems misplaced and perhaps offensive to some. After all, could there really be innocent individuals or corporations among the affluent federal criminals who were convicted of deliberately perpetrating frauds that caused the loss of life-savings and pensions of many victims? And if there are innocent defendants in the white collar sphere, do they merit consideration? After all one envisions these individuals and entities with sufficient funds to secure top-notch rep- resentation to argue their case through the judicial process.
[Show full text]