Monday, March 7, 2011

Enron, Moms Mabley, Modern Thieves, and the Fraudulent Nature of Corporate Capitalism

The Hippie and the Snake

Everything I ever wanted to know about the Enron scandal I learned from Moms Mabley.

By Patricia Calloway

One of my greatest childhood pleasures was to secretly hang out at the top of the staircase in my family’s home and listen to my parents listen to dir, uh, party records.

Redd Foxx was a big favorite of my dad’s, so was Pigmeat Markham, Slappy White, Flip Wilson, Nipsey Russell, Godfrey Cambridge, Dick Gregory and of course, Richard Pryor. Their acts ran the gamut from vaudeville (Pigmeat would sometimes appear in blackface) to personal observation (Redd Foxx), social commentary (Nipsey Russell and Slappy White), to political commentary and black consciousness (Godfrey Cambridge, Dick Gregory and Richard Pryor).

These kings of comedy played in our living room late weekend nights after we all had been sent to bed like good little children and with good reason; things could get a little raw in there. My father turned the volume up a notch on particularly raunchy jokes; he and my mother would howl with laughter and wouldn’t stop, even when my father had to get up and turn the LP over to hear the rest of the record.

In the midst of all this kingly raunch and bawdiness was Moms Mabley.

Jackie “Moms” Mabley is the undisputed queen of comedy and the only girl who could stand with those guys and hold up her end of the deal. Moms told dirty jokes in a very funny way; she was hardly ever vulgar, in fact some of her funniest jokes were ones in which she was the butt:

They sent for me to come down to Washington in an airplane ... Sure enough, no sooner I got on the plane they strapped me down. The stewardess come by. I say, "Honey, my ears is all stopped up." Ohh, I was so sick!

She say, "Here's some chewing gum." I chewed that.

“That ain't unstopped 'em”, I said, "Do something for me, honey, I'm dyin'."

She said, "Drop your jaws." And I misunderstood her.

They grounded me in Baltimore!

That Moms, what a card.

This past summer as I followed the appeal of former Enron CEO Jeff Skilling's appeal of his 24 year prison sentence for wire fraud, I couldn't help but think of Moms and all she'd taught me and how much the drama surrounding the appeal resembled a Pigmeat Markham routine.

On June 24, 2010 the U.S. Supreme Court handed down its decision on whether to uphold part of Skilling's appeal of his conviction on 19 of 28 wire fraud counts based on an issue of venue. He felt he did not have a shot in hell at a fair trial in the town he basically murdered and that the judge should have known this; he claims that Enron's disintegration brought on a number of whiplash effects that may gotten him wrongly convicted.

A paltry 15 of 283 prospective jurors answered in a questionnaire they had no connections to Enron. This is because Jeffy and the Smashgrabbers involved as many Houstonites as possible in their fuckery, namely Enron employees.

The employees were sweet talked into buying Enron stock with their own salaries and pensions and once the jig was up Enron blocked them from selling that stock and saving themselves. Meanwhile Skilling and others at the top leapt from the roof wearing parachutes made from these retirement and pension funds.

In a 6 to 3 vote Skilling’s challenge on venue was rejected; it was the other half of his appeal that I was interested in--the court had to decide whether Skilling sought to achieve “private gain” rather than advance his employer's interest and if not, whether the fraud statute is unconstitutionally vague.

From 1941 to 1987 wire and mail fraud was defined by law as schemes to defraud victims of not only money and property but also intangible property and “honest services”. In 1987 the US Supreme Court ruled that mail and wire fraud strictly pertained to cases where the victim was defrauded of tangible property, including money. In 1988 Congress enacted a law that narrowed the definition of mail and wire fraud to schemes to defraud victims of intangible property and “honest services”; tangible property and money was kicked out.

Skilling claims he never sought to defraud Enron of his (intangible) honest services to the company or to benefit financially from his pyramid scheme, no, he was trying to save the company--kind of like the guy who kills three people while attempting suicide. That half of Skilling’s appeal was remanded to the lower court to be decided again.

Here come de judge, indeed

Moms Mabley’s “The Hippie and the Snake”

A hippie was walking down a country road in the winter when he came upon a nearly frozen snake lying in the road. It had turned blue and it called out to the hippie for help. The hippie was no sucker, however.

“No, maaaan, you’re gonna bite me, maaaan”, the hippie said.

“No, no, I won’t bite you”, said the snake. “I’m sssso cold. Pleasssse help me. Take me inssside, let me get warm. Then I’ll be on my way.” The snake was frozen straight like a stick so the hippie took pity upon him and put him inside his jacket.

“Just don’t bite me, maaaan”. The hippie took the snake to his pad where he put him in front of the fire to thaw. Once the snake thawed out he coiled himself up and struck the hippie.

“Ow, maaaan! Why’d you bite me, maaaan? I’m gonna die, maaaan!”

“Why are you sssurprisssed?”, asked the snake.

“I took care of you, maaan. I let you get warm. I thought we were cool”.

“You knew what I was when you picked me up”, the snake said.


Jeff Skilling came to Enron proper after working as an analyst for First City Bank of Houston which was owned by Enron. Just before the bank failed, Skilling quit his job and landed at McKinsey & Company, a global management consulting firm.

What McKinsey & Company does is teach corporations how to screw people. They also jinx the people who hire them with bad advice, bankruptcies, financial collapse and scandal. The “m” in McKinsey really should stand for malacosa.

McKinsey & Company’s advice put both Swissair and Kmart into bankruptcy; AT&T lost billions and got swallowed up by SBC Communications after McKinsey told them that cellphones were a niche market and wouldn’t last (even though their Bell Labs invented cellphones). Britain’s Railtrack railway system went straight to hell and collapsed after McKinsey advised them to take the money they were using to maintain their infrastructure and pay it out to shareholders; a chain of terrible rail accidents and lawsuits followed.

The Louisiana State Attorney General is suing them; it appears that they instructed several insurance companies on how to undervalue Hurricane Katrina policies using “deny, delay and defend” tactics to avoid paying life, home, auto and business claims.

And they’re accused of advising both State Farm and Allstate Auto Insurance companies on how to avoid paying soft tissue injury claims, making State Farm a bad neighbor and Allstate’s hands kind of clammy.

So when Kenneth Lay picked Skilling up and put him in charge at Enron in 1995 it wasn’t like he didn’t already know about the chaos, disaster and recklessness that followed this man.

Brrrr, Stickup, Hahaha Stickup!

“I was walking down 126th Street on my way to work. Met a fella. He said, ’Moms, I hate this, I really hate this, but, Moms, gimme some money! I ain't got no home. I ain't got no family, no children, no wife! My mother, my father are dead! Moms, gimme some money! I ain't got nowhere to eat, I ain't got nowhere to sleep. I ain't got nothin', Moms--but this gun’”.

Under Skilling, Enron’s stock value went up 90 percent in five years. Employees were paid in stock, basically, so money didn't circulate much. Skilling kept them all in line by posting stock prices to a lighted screen inside elevators so when they rode up to their deaths, uh, cubicles in the morning they could see how much “money” their “money” was “making”.

Skilling picked up Andrew Fastow and made him Enron’s CFO; he helped him to perfect the art of hiding debt by taking it off the books and tucking it away in “special purpose entities” giving Enron the look of high profitability; loans looked like assets. When lenders discovered the ruse, they called in their notes. Employees panicked and tried to cash out but were blocked. The price of natural gas and electricity went bust, Enron couldn’t pay its debts and its stock prices crashed.

Enron posted a third quarter loss of $619 billion dollars; $1 billion was stockholder’s equity. Skilling quit his job and Lay was back in the Enron hot seat trying to act like his ass wasn’t burning.

Watching the Lights

“[When your child get a little older], old enough to go to school you throw that child out in to the streets by itself, talkin’ bout “Go ahead to school baby, be careful, watch the lights”. Damn the lights, watch the cars, the lights ain’t never killed nobody!”

Twenty thousand Enron employees, working people with children and mortgages and cars and medical bills and taxes and utility bills and grocery bills and tuition payments were left in financial ruin. A good number of them were age 50 and up and had been with Internorth, the company Enron was created from by merger, for decades. Enron left them unemployed and just about penniless. They had been watching the lights and not the cars; if they had, they'd have seen Ken Lay behind the wheel.

Lay began lobbying for federal deregulation of natural gas during the late eighties. Until then energy was tightly regulated but energy suppliers could still cover costs and make a profit. Natural gas was delivered at set prices on fixed routes. After deregulation Enron took advantage of suppliers by offering themselves as middlemen who could keep prices stable—for a cut. Eventually Enron took over a large portion of the energy trading markets yet never created a single drop of energy.

Lay contributed large amounts of money to both G.H. and Dubya Bush’s campaigns. By the time Bush was inaugurated in 2001, Enron, Lay and his buddies had contributed close to $1 million dollars to various Bush campaigns and committees. After showering money on both Democrats and Republicans it was like shooting fish in a barrel. With connections like those he was unstoppable.

The End

“They say you shouldn't say nothin' about the dead unless it's good. He's dead. Good.”

After much wrangling, fingerpointing and perjury, Lay was convicted on 10 of the

11 counts against him but died before sentencing. Just plum dropped dead while on vacation in the remote, rural hills of Colorado where nothing lives.

His conviction was vacated because, well, the guy was dead. Civil suits against his estate took a hit because claimants can’t pursue punitive damages, only compensatory damages, from a dead guy. He was cremated; George H. W. Bush attended the funeral.

Snake Junior turned informant and talked his seventy-eight indictments down to two. Fastow palmed Enron for tens of millions of dollars without their knowledge while working his magic on their books. He plead guilty to two counts of wire and securities fraud and took ten. He wore a wire and got that knocked down to six. He gets paroled in December 2011. His wife did a year on tax evasion. Fastow deposited embezzled money into his childrens' trust funds and told her they were gifts. She didn't file on them and when the IRS figured it out he didn't want to incriminate himself so he let the mother of his children take the fall and go to prison.

With his hippie dead and his snake having chewed his leg like a Doberman, Skilling is playing the lower court waiting game. He’s close to Dick Cheney but the last guy close to Cheney took a shot to the face. As it stands, he’s liable for punitive damages so unless he dies the only chance he has is to get his conviction vacated or overturned. Then he'll have limited liability and won't have to pay back anything near what is owed to the stockholders.

I Don’t Think So

“My brother is dead on account of one of them fairy lies. My grandmother and them up in North Carolina, there the boy 15 years old, they still tellin’ him “Ding dong bell, p----’s in the well” and he got drowneded like a fool when he jumped in”.

Two-thirds of the $60 million Skilling made off with from Enron went to his defense team and $45 million went to court ordered restitution; then there's the Supreme Court bill. Really expensive attorneys are preparing his case for the lower court. Where's the bottom of his well?

On the same day Skilling’s case was sent back to the lower court newspaper publisher Conrad Black’s conviction for defrauding Hollinger International a.k.a. Sun-Times Media Group was remanded on the same “honest services” argument Skilling brought before the court. The Seventh Circuit Court of Appeals in Chicago vacated two of his convictions but upheld Black's conviction on two counts of fraud and obstruction of justice; that case was sent back to the lower court where he will be re-sentenced on June 24, 2011. Meanwhile, he is hanging out in Palm Beach on $2 million bail.

On February 3, 2011, Skilling's youngest son, John Taylor “JT” Skilling, 20, was found dead in his bedroom at Chapman University in California. Although prescription meds were found near his body no one can seem to decide whether to call it accident or suicide. A comedy movie was queued up and ready to view in his computer. His friends say he would never kill himself, that he was not at all depressive and they don't know what the drugs were for. He had recently broken up with a girlfriend. There were no signs of violence.

Will Skilling make it? Who knows, but if Jeffy does he will have escaped justice and prison having paid for his cadre of millionaire attorneys with the ill-gotten gains plucked from the retirement nests of 20,000 Enron employees. If he pulls it off he really would be the smartest guy in the room.

But somehow I don't think he will be.

Patricia Calloway is a writer who paints, blogs and listens to clean dirty jokes in Detroit, Michigan