HOUSTON – Twenty years ago, energy giant Enron was at the center of one of the largest corporate scandals in US history.
“Enron was the favorite child of Houston. That was where the best and brightest went to work,” said Defense Attorney Dan Cogdell.
Ken Lay founded Enron in 1985 and the energy company grew to one of the largest in the world. Its revenue exploded from $5 billion a year to $200 billion with 20,000 employees globally.
But in 2001, Enron fell from grace amid revelations of billions of hidden debt and inflated profits. The company filed for bankruptcy on December 2, 2001.
“You go to Enron to have a safe future but that’s no longer there,” said a former employee in 2001.
Employees seen carrying cardboard boxes lost their jobs and had just minutes to vacate the Enron building in downtown Houston. Billions of dollars in retirement and pension funds were wiped out.
“They take our 401K, our retirement, now they tell us we have no job. I mean, Merry Christmas,” said another former employee after being fired in 2001.
Enron’s shareholders and creditors also lost billions.
It sparked investigations and nearly two dozen people were convicted or pleaded guilty to federal crimes. Enron CEO Jeffrey Skilling served 14 years in prison. Founder Ken Lay died of heart disease less than two months after his conviction. Chief Financial Officer Andrew Fastow served five years.
Cogdell represented Sheila Kahanek, a former Enron accountant indicted on charges of bank and wire fraud.
“It was the only acquittal in any Enron-related matter, but she was found not guilty, frankly Cathy, because she was not guilty,” he said. “The stuff that she was alleged to have done, made secret buy-back agreements and doctored books, she just didn’t do it.”
Despite being acquitted, Cogdell said it impacted Kahanek’s life.
“People underestimate the cancer that a criminal investigation is on their lives, it just sucks your life away,” said Cogdell.
Cogdell said even 20 years later, more needs to be done to prevent corruption and fraud.
“I think there needs to be consistent and steady investigations and prosecutions of those cases or they will default to thinking they can get away with it,” he said.