Patterico's Pontifications


Convictions in Enron

Filed under: Crime,General — Patterico @ 9:55 pm

The Enron guys went down hard today. I didn’t follow the trial, but I know this: my parents followed that stock all the way down. I didn’t even know they’d owned any until it was worth about 9 cents a share. They lost tens of thousands of dollars — money they could ill afford to lose.

Ken Lay and Jeffrey Skilling can rot in prison for the rest of their lives as far as I’m concerned.

UPDATE: Commenter nosh has a valid complaint: these guys should be in custody. Where did Ken Lay and Jeffrey Skilling get $5 million each for bail? I’ll tell you where: from my parents and thousands of other people swindled by these hucksters. Throw Lay and Skilling in the slammer, take their money away, and distribute it amongst their victims. It’s called restitution, and it should start now.

24 Responses to “Convictions in Enron”

  1. Contrary to your headline, Ken Lay and Jeff Skilling have not “gone down hard” yet. Yes, they were convicted of multiple counts each, and face the probability of being sentenced to years in federal prison. But as of tonight, they are free and living in luxury, as they have for the years and years they and their attorneys have been drawing out the trial.

    Sentencing isn’t even scheduled until SEPTEMBER! And even then, I will bet that they will remain out of custody pending appeal, which would last years more. A typical convict who has stolen hundreds of dollars and has hurt a single victim, rather than looting millions and costing thousands of people their retirements and nesteggs, is remanded following a guilty verdict.

    These two crooks haven’t suffered anything really significant or impactful yet. I wonder how many servants or waiters served them their dinners tonight. They should be eating the first of many dry jail bologna sandwiches.

    nosh (d8da01)

  2. It is agreed that they should be in custody. However, I stand by my assertion that they went down hard.

    Patterico (50c3cd)

  3. Patterico, I don’t mean to be unnecessarily adversarial, but your comments are contradictory. Certainly Lay and Skilling suffered a setback with the multiple-count convictions. They certainly hoped for better, but the verdicts weren’t unexpected or surprising.

    But they and their attorneys accomplished the main objective of any day for a defendant in a criminal court: staying out of custody. They accomplished the second goal: delaying the very next hearing for FOUR MONTHS. And they kept alive the ultimate goal: staying out of custody pending appeal, which will last years, with the hope that it will all be reversed or have to start over.

    Privilege has its privileges.

    nosh (d8da01)

  4. According to LAT (so it must be true!): “Lay faces a maximum of 165 years in prison while Skilling faces a maximum of 185 years, according to Associated Press.”

    That’s kind of a lot of years, even if they get to stay out a whole ‘nother 4 months.

    I doubt they’ll be out during the whole appeal.

    Patterico (50c3cd)

  5. Don’t most people convicted of non-violent offenses get to remain free on bond while their cases are on appeal?

    One might also ask: isn’t a $5 million bond awfully high for people not deemed a flight risk and not accused of a violent crime?

    Dana (3e4784)

  6. With all due respect Patterico, we’re all responsible for our own investments. I don’t buy your “parents were swindled” one bit. If they didn’t know how to invest they should have just put their money in mutual funds. If you’re going to pick individual stocks (like I do) you better be prepared to bail when the stock breaks support.

    Tell me Patterico, did your parents read the financials before buying the stock? Even though they fudged the numbers there were more than a few red flags.

    When stock picking one should ALWAYS use discretionary money. It’s the fundamental rule.

    [You’re assuming they bought the stock. That is wrong. They inherited it. And the guys running the company, maybe you didn’t notice, just got convicted of *fraud*. — P]

    Capitalist Infidel (2f6027)

  7. There must be terrible consequences for multimillionaires who rob middle class working investors. Who will invest in the markets if their money is stolen?

    JoeS (ff0bfe)

  8. Whether it was inherited or not is of no consequence. Look, I’m not defending these scumbags, they deserve everything they’re gonna get but if it weren’t for uneducated investors they would have never been able to get away with it.

    The rule of thumb is one hour per week per individual stock to research, read, etc…That one hour would have sent up a dozen red flags.

    It’s your money, you’re responsible to invest it wisely and if you don’t you have no one to blame but yourself. As the saying goes “a fool and his money are soon parted”

    Capitalist Infidel (2f6027)

  9. Shorter Capitalist Infidel: “If you are defrauded you have no one to blame but yourself.”

    Patterico (50c3cd)

  10. If you’re an educated investor you wouldn’t have been “defrauded.” Sure, you could lose some money but you’d cut and run after the stock broke support. There are at least 5 opportunities to bail out of the stock over a 14 month period. I’m not willing to forgive the investors responsibility for watching their own money as easily as you are.

    Capitalist Infidel (2f6027)

  11. Based on your extensive knowledge of the inquiries my parents made and the facts of their particular situation, one cannot possibly disagree with you. I have a new word for people who lost money on Enron, based on your compelling argument. Others call them victims. I call them “chumps.”

    You’ve made your point already. Enough.

    Patterico (50c3cd)

  12. Actually “chumps” is much closer than “victim.”

    If my bluntness can make just one person take a look at their own finances it’s well worth it. Over the 11 years I’ve been trading/investing I’ve seen far too many people needlessly lose their shirts not only on the likes of Enron but Kmart, airline stocks, junk bonds, penny stocks, and the like. For anyone out there reading this don’t have more than 20% of disposable income or 10% of your retirement in any one stock.

    And that concludes this public service announcement from Captalist Infidel. 🙂

    Capitalist Infidel (2f6027)

  13. Some further thoughts over at

    Lesley (9f37aa)

  14. dang Houston’s Clear Thinkers (won’t take the link sorry)

    Lesley (9f37aa)

  15. Around the Enron building, Ken Lay was always a nice guy. If he heard your name he remembered it. Skilling was just the opposite. We all bought into Lay’s vision until Skilling came in. It’s a shame to see that good first vision and a nice guy get corrupted. I was there for day one of Enron. Fortunately, I left before the end. Of the two, I think Skilling did the most damage. They both deserve prison.
    To Cap Inf,
    Many employees wanted to sell their stock kept in company accounts but were unable to because the system was “locked out” for 2 months. What words of wisdom do you have for empoyee investors?

    Bill Maron (ee2ae1)

  16. There is a certain type of criminal (“wise guy”) who rationalizes his misbehavior by claiming only “chumps” obey the rules and expect others to do likewise. Capitalist Infidel’s attitude seems disturbingly similar.

    Furthermore he is factually wrong. First you don’t have to lose all your money to be “defrauded”.

    Additionally the claim that only uneducated investors were fooled by the fraudulent accounting is nonsense. Many professional investors were fooled. Maybe you can point out “red flags” in hindsight but it is a lot harder to identify them in advance without also eliminating many perfectly good investments.

    That said, there is a human tendency to exaggerate your losses in cases like this. To make up some numbers, suppose you inherited 1000 shares of Enron at 10 before the fraud started. Suppose you kept all the shares as fraud puffed the share price up to 80 before it crashed to 0. It is natural to think of your loss as $80000 (the decline in value from the peak) but this is unrealistic. Suppose with honest mangement (which devoted its efforts to fixing problems rather than hiding them from the shareholders) the stock price would have slowly risen to 15. Then a more reasonable estimate of your loss from the fraud would be $15000. I don’t know about Patterico’s parents but a lot of the employee losses were exaggerated in this way.

    James B. Shearer (fc887e)

  17. If my bluntness can make just one person take a look at their own finances it’s well worth it. Over the 11 years I’ve been trading/investing I’ve seen far too many people needlessly lose their shirts not only on the likes of Enron but Kmart, airline stocks, junk bonds, penny stocks, and the like. For anyone out there reading this don’t have more than 20% of disposable income or 10% of your retirement in any one stock.

    There’s a difference between 1) warning people to watch their portfolios, which is good advice, and 2) saying that when someone has suffered a severe financial due to fraud by the company, that they have no one to blame but themselves. Which is being plain rude, as well as wrong.

    It’s like telling an old white lady who foolishly walks down a gang-infested Compton street on a Saturday night and gets robbed: you have “no one to blame but yourself” or to say “I don’t buy that you were ‘robbed.'” Well, yeah, she was robbed, and she has the robbers to blame. It wasn’t wise to go where she went, when she went there, but that doesn’t make it completely 100% her “fault,” and anyone who says it *was* all her fault is just being a prick.

    Patterico (50c3cd)

  18. The real problem I have with Lay & Skilling is their whole “I didn’t know” defense. It’s like a ship captain leaving port with a hole in the side of the boat, then claiming that “they didn’t know” and asking to be absolved of responsibility. Balls.

    It was their duty to know, and either they failed that duty or were complicit. I don’t much care which. Too many people lost too much money for them to walk away. Take all their money and lock them up for a long time. It won’t make anyone whole, but it will serve notice to other executives that this crap won’t be tolerated.

    Kevin Murphy (3408de)

  19. Bill

    I remember hearing about the two month lockout. In that case the employees were just…..well…..screwed. Diversification is the key. If your investments are spread out then the one holding in Enron won’t be too painful. Even as a trader I know I’m fallable so I have the bulk of my money in 3 different funds while I trade my discretionary money.


    Of course we expect everyone to follow the rules but that doesn’t mean you, as an investor should not continue to be vigilant. My point of being “defrauded” was that if you’re educated you can and will cut those losses before too much damage is done. As far as the red flags goes please click on the link in the comment I made above and you’ll see the last 14 months or so of the chart of Enron. As you’ll see there were 5 distinct opportunities to bail after support was broken and the stock “bounced.” That’s called technical analysis and with less than an hours worth of studying you too can read a chart and understand support and resistance. I could explain it in detail as how you see it as it happens but it would bore the snot out of everyone here. As for “fooling the professionals” do you really believe that? A good “professional” would have bailed early, a bad “professional” might have gotten caught up in the “go go nineties.”


    I guess I was being “rude” but I don’t think I was wrong. As stock guru Jim Cramer says, it doesn’t matter where a stock was it only matters where it’s going. And your analogy is……..well…….just silly. I mean, with logic like that who can argue?

    Capitalist Infidel (2f6027)

  20. Capitalist Infidel, I’m certainly not expert on investing, but I think that there were too many smart investors who were burned by Enron for your story to make sense. I personally know of a company which made a lot of money off of the stock market most of the time, but lost about one million dollars due to Enron’s fraud. If that savvy company lost all that money, I don’t see how you can expect most investors to see it coming – especially since they were “cooking the books.”

    More importantly, to add insult to injury to someone’s grandparents that way is outright cold blooded. As Pat said, “Enough.”

    Psyberian (dd13d6)

  21. Psyberian

    Let me get this straight. When I’m responded to I’m not to defend myself? Just want to make sure that you’re not for the free exchange of ideas.

    Oh, and the fact that you don’t think the elderly are capable of making solid financial decisions…….well……..that’s your own bigotry that you’ll have to deal with.

    Capitalist Infidel (2f6027)

  22. @capitalist infidel:
    technical analysis is all b.s. it will lead you to the correct conclusion roughly 50% of the time. any chance you could give us the username and password on your brokerage account so we could review your greatest hits? i laugh at people who post like they’re smarter than warren buffet, because i know that in actual fact, they’re less significant in the overall scheme of things than a skidmark on warren buffet’s boxer shorts.

    assistant devil's advocate (8cdbb5)

  23. And your analogy is……..well…….just silly. I mean, with logic like that who can argue?

    Evidently not you. Let me hold your hand and walk you through the analogy.

    In each case, a person does something foolish that puts them in a position where a bad person can do something immoral and evil to take advantage of them.

    In each case, it would have been better for the person not to put themselves in that position. But in each case, the moral blame falls exclusively on the evildoer, not the victim.

    You instead put the blame entirely upon the victim for putting themselves in that position, to the point where you deny any responsibility whatever on the part of the evildoer (“It’s your money, you’re responsible to invest it wisely and if you don’t you have no one to blame but yourself.”)

    I assume you would tell the old lady:

    Lady, I don’t buy that you were “robbed.” It’s your life and you had the responsibility not to go to a dangerous part of town at night. If you were smart like me, Capitalist Infidel, bad things like this would not happen to you. Here is a map of Compton, showing 5 separate opportunities for you to get out of danger. You have no one to blame but yourself.”

    The analogy is right on point. It was pretty obvious without my explanation, but with my explanation I think even my six-year-old daughter could follow it.

    If you can’t follow this analogy now, you have no one to blame but yourself.

    Patterico (50c3cd)

  24. Capitalist Infidel, in order for you to regain your intellectual respect on this board, please display your consistency in your position by taking the following pledges:

    1. “As re Patterico earlier, if I am ever a victim of a crime, violent or non-violent, I pledge never to get the police involved or seek justice in the court system. After all, I should have seen the attack coming in any and all circumstances.”

    2. “If The Big One ever occurs and my biggest investment– my home– is split into innumerable irreparable pieces, I pledge to never call FEMA or claim any type of insurance to cover this loss. After all, I should have known by studying advanced geological and geothermal information before its purchase that my home was at risk in this area for its utter destruction.”

    3. “If I am ever discriminated against at work or fired for discriminatory or blatantly unfair reasons, I pledge never to seek any type of legal or other restitution, or even seek unemployment benefits. After all, I should have known simply from working with these people that they were the kind of individuals who would discriminate, behave in an unfair and immoral fashion, and/or adopt abusive behaviors.”

    4. “If I or any of my loved ones are ever hurt, maimed or killed by terrorists, I pledge never to file charges or support any type of civil, criminal, or military retribution. After all, I should have known that simply by living in the greedy, imperialist United States, whose record of crimes against humanity is legion, I was painting a giant red target on my chest, inviting terrorists to attack me and my family who obviously were partially at fault for the US’ sins simply by being born in this country.”

    Steve in Lakewood CA (883223)

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