Resisting Corporate Corruption, 3rd Edition

Case 7New Counsel for Andy Fastow

My God, this place is a shambles. What have I gotten myself into here?

NOTHING IN HIS PREVIOUS LIFE HAD PREPARED JORDAN MINTZ for what he found in his first week at Global Finance. Mintz had been at Enron for four years. He was a lawyer in the Tax Department. Then, in October 2000, Andy Fastow summoned him and asked him to become general counsel for Global Finance. The opportunity to move from tax to general corporate and securities law was enticing. Global Finance was controversial but was also known as a “creative shop.” In fact, Global Finance was now one of the “places to be” at Enron. Andy Fastow had become Enron’s chief financial officer in 1998. He immediately set about making Global Finance a major player within the organization. Fastow ran a secretive shop; it was known mostly for fiendishly complex financial transactions that seemed to coincide with Enron’s hitting its quarterly earnings guidance to Wall Street analysts. For this, Fastow and Global Finance had been rewarded with handsome compensation and powerful influence with Jeff Skilling, Enron’s COO.

Mintz accepted Fastow’s offer and reported for work late in 2000. One of the first things he found in his Global Finance files concerned a deal between Enron and a special-purpose company called LJM.

Mintz had known something about LJM before he transferred offices. He knew that it was a special-purpose vehicle set up to purchase assets from Enron. He had heard that LJM was one of ...