News

Retired FBI Agent In Charge Of Enron Investigation Keeps The Case Alive

It’s a fine line between unethical behavior and criminal conduct, former special agent Michael Anderson tells students more than 16 years after the start of the Enron scandal

FBI special agent Michael Anderson headed the Enron Task Force in Houston in 2001

Remember Enron?

The giant Houston energy trading firm – the fifth largest company in the country at one point – came crumbling down in 2001 when it was revealed that it had been misstating its earnings for years.

It led to Enron shareholders losing billions of dollars in what at the time was the largest bankruptcy in history.

The company’s founder and long-time CEO Ken Lay died of a heart attack shortly before his sentencing. His number two, Jeff Skilling, is serving a 14-year prison sentence. 

The man who helped put Skilling behind bars is FBI special agent Michael Anderson. Sixteen years ago, he headed the Enron Task Force.

“I was responsible for the agents here in Houston,” he told News 88.7 in an interview. “We had roughly 10 agents here as well as four forensic accountants here that worked on the case, but there was also a group of agents in Washington, D.C., that worked together with us on the case.”

He said the biggest challenge of the investigation was identifying the fraud and then who was responsible for it.

“You see, there’s a fine line between unethical behavior and criminal conduct. It’s a very fine line,” Anderson said. “And to charge somebody with a crime or to convict someone, I have to show two things: I have to show they have criminal intent. So, proving criminal intent can sometimes be difficult. So criminal intent and then also they have to violate a criminal statute.”

Anderson opened the investigation after Enron filed for bankruptcy in December 2001. It is often called the most complex white collar crime case in FBI history and would take five years to complete.

“It was complex because of Enron’s finances, their accounting and their finances. They used very complicated financial structures,” Anderson said. “Andy Fastow, Enron’s chief financial officer, was authorized by the board of directors to actually have a side business of equity partnerships, where people would invest in those, and then those partnerships were used to buy assets from Enron, which is a huge conflict of interest. But Enron used that to move underperforming assets off their books and to meet the quarterly numbers.”

Could there be another case like Enron today?

It’s not very likely, Anderson said, because new laws make it easier to identify corporate fraud.

“But, as companies have financial difficulties, if they have unethical executives within the company, sure, it could be duplicated,” he said. “But I think it would be identified probably more quickly and maybe the loss would not be as bad.”

Anderson retired last November after nearly 30 years with the FBI. He’s still asked to talk about the Enron case about once every month, including at Sam Houston State University last month.

Anderson said it’s important to keep the lessons learned from Enron alive, especially among students.

 “I emphasize there is a fine line between unethical behavior and criminal conduct,” he said. “And I tell them it’s not easy to be honest or ethical, but it’s the right thing to do, because at some point in your career you may come across something that you know is wrong and you want to report it but you can’t for fear that you’ve done something wrong that might be discovered. So my hope is by talking to college students, by talking to the public, to look at Enron, and maybe put themselves in that position and think about what they would do.”

He said the Enron executives were arrogant and thought they were smarter than anybody else and could do no wrong.

Both Ken Lay and Jeff Skilling pleaded not guilty and Skilling continued to fight his sentence until five years ago, when he agreed to stop appealing in return for a 10-year sentence reduction.

That released the more than $40 million the court had ordered in restitution to his victims.

Skilling’s scheduled release date is next February.

Share

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters, the Houston Press Club, National Association of Real Estate Editors, and Public Radio...

More Information