How did LJM work Enron?

LJM, which stands for Lea, Jeffrey, Matthew, the names of Andrew Fastow’s wife and children, was a company created in 1999 by Enron Corporation’s CFO, Andrew Fastow, to buy Enron’s poorly performing assets and bolster Enron’s financial statements by hiding its debts.

What did Merrill Lynch but from Enron?

Finally, in June 2000, LJM2 — one of Fastow’s partnerships that conducted business deals with Enron — purchased Merrill’s interest for $7.5 million. The criminal indictment Wednesday did not name Merrill Lynch & Co. Inc., which has maintained it acted properly in the barge transaction.

What do the Raptors represent in Enron?

Enron’s raptors are a whimsical embodiment of the dummy corporations Fastow, the company’s chief financial officer, set up to mask the company’s unprofitability. In the play, they live in Fastow’s office and voraciously eat up the company’s debt.

Which bank invested in LJM?

Subcommittee investigators said Enron – struggling with a secretly crumbling balance sheet – obtained financing of $8.5 billion over nine years from Citigroup Inc. and J.P. Morgan Chase & Co., which took in hefty fees and interest payments.

Why did Enron go out of business?

Enron’s demise occurred after the revelation that much of its profit and revenue were the result of deals with special-purpose entities (limited partnerships which it controlled). This maneuver allowed many of Enron’s debts and losses to disappear from its financial statements.

How did LJM play a role in the Enron scandal?

LJM, along with Chewco, played a major role in the downfall of Enron (see Timeline of the Enron scandal) and was the primary vehicle by which Fastow and others siphoned off at least $42 million while ruining Enron. Its debt-concealing transactions with Enron effectively pushed liabilities off balance sheets and led to Enron’s perceived success.

Why did the Raptors collapse in the Enron scandal?

The Raptors would collapse if Enron stock fell below a certain point, because they were ultimately backed only by Enron stock. Accounting rules required an independent investor in order for a hedge to work, but Enron used one of their SPEs. The deals were so complex that no one could really determine what was legal and what wasn’t.

How much did Enron transfer to LJM1?

First, Enron transferred with severe locking restrictions 3.4 million shares of Enron stock worth $276 million at the time to LJM1 at a reduced price of $168 million. Then, LJM1 capitalized one of its subsidiaries, LJM Swap-Sub, with $80 million of its restricted shares and $3.75 million in cash.

Who was the CFO of Enron in 1999?

LJM, which stands for Lea, Jeffrey, Matthew, the names of Andrew Fastow’s wife and children, was a company created in 1999 by Enron ‘s CFO, Andrew Fastow, to buy Enron’s poorly performing assets and bolster Enron’s financial statements.