Examine our Enron archive

Jay Gould and the Gold Market
The pioneer of declaring bankruptcy as a strategic move, railroad tycoon Jay Gould (1836-1892) was notorious as the most unethical of the robber barons of the 19th century. Gould, among those satirized by Mark Twain in The Gilded Age, was also infamous for his failed attempt to corner the gold market in 1869. With fellow tycoon/crook Jim Fisk, Gould used their social connections to President Ulysses S. Grant — who included Grant's brother-in-law and an assistant Secretary of the Treasury — to halt the sale of gold by the government, resulting in skyrocketing prices and plummeting stocks. After realizing the situation, Grant approved the sale of $4 million in gold on September 24, which became known as Black Friday. The premium over face value of a gold double eagle fell from 62 percent to 35 percent, and investors, though not Gould and Fisk, were ruined.

Charles Ponzi and the Original Pyramid Scheme
Charles Ponzi (1882-1949) earned the rare distinction of giving his name to a specific type of fraud. Promulgator of the original pyramid scheme, in 1919 Ponzi pooled money from an initial set of investors by promising to increase it by 50 percent in 45 days. The first investors' enthusiasm brought in a second set of investors, whose money was paid off the original backers. The second wave of investors were paid off with money from new investors, and so on, until a Boston newspaper exposed his scheme. Ponzi, who was jailed and then deported to his native Italy, seems to have had a way with names: His enterprise was called the Securities and Exchange Co.

Teapot Dome
In 1921, under President Warren G. Harding, three strategic oil reserves set up for the benefit of the Department of the Navy were transferred to the Department of the Interior at the behest of Interior Secretary Albert B. Fall. The following year, Fall leased two oil fields without competitive bidding: Wyoming's Teapot Dome, to Harry F. Sinclair's Mammoth Oil Co., and California's Elk Hills, to Edward L. Doheny's Pan American Petroleum Co. A Senate investigation led by Montana's Thomas J. Walsh found that Fall — whose standard of living noticeably improved after the lease deals — had received interest-free "loans" from Sinclair, Doheny, and others totaling about $400,000. The investigation led to criminal prosecutions, and Fall was convicted of accepting bribes, a charge for which he was sentenced to a year in prison and fined $100,000. The oil fields were restored to the U.S. government through a Supreme Court decision in 1927.

Samuel Insull and the Holding Company
After a long career as a legitimate electrical utilities and railroad/streetcar entrepreneur, by 1930 Samuel Insull (1859-1938) had assembled a $2 billion utility holding company. (In an act memorialized by Orson Welles' Citizen Kane, he also built the Chicago Lyric Opera for his wife, an untalented opera singer.) When the Great Depression set in, however, Insull's company was revealed to be a house of cards dependent upon highly leveraged borrowing and constant transfers of stock and money among the companies. Insull was unable to cover his loans, and, as his companies toppled and bankers demanded control, investors lost some $700 million, the biggest U.S. corporate failure until the Savings and Loan crisis of the 1980s. In 1934, after 19 months of dodging U.S. authorities overseas, Insull was extradited from Greece and tried on charges of mail fraud, bankruptcy, and embezzlement. He was found not guilty on all counts.

Savings and Loans
After increasing deregulation beginning in 1980, by the end of that decade more than 1,000 American savings-and-loan institutions failed from an array of causes including rising interest rates, fluctuation in real estate values, lack of regulatory oversight, mismanagement, and, in many cases, fraud. In a push to take advantage of high interest rates and a booming real estate market, institutions lent more than they should have to risky ventures, often in areas in which the lenders had no competence and frequently aggravated by fraud and insider abuse. The wave of failures created lossed totalling approximately $150 billion — most of which was covered by the U.S. government, which helped lead to the massive federal budget deficits of the early 1990s.

Credit Lyonnais
France's biggest state-owned bank began aggressively expanding in 1988 under new chief executive officer Jean-Yves Haberer, who wanted to transform Credit Lyonnais into a rival to Germany's Deutsche Bank. Credit Lyonnais went on a spending spree, buying other banks and investing in a slew of companies that were either of poor investment quality or embroiled in scandal, including the Swiss SASEA Holdings and Hollywood's MGM Studios. During France's economic slump of the early 1990s, the bank began hemorrhaging money and nearly went bankrupt in 1993, at which point Haberer was replaced. It took three government bail-outs totaling $20 billion to save Credit Lyonnais from collapse; the bank was privatized in 1999 and bought by Credit Agricole in 2002.

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