The partners at Arthur Andersen were having another argument about the management of the Enron account. As usual, Enron executives were throwing their weight around and trying to dictate who could be involved on their engagement. Specifically, they didn’t want Carl Bass to work on their account because he fought for the proper accounting treatment of items, not the creative ways that Enron used to enhance their financial statements.

Today the U.S. Court of Appeals for the Second Circuit upheld the conviction and prison sentence of former WorldCom CEO Bernard Ebbers. The 64-year-old defendant was convicted in 2005 of nine counts of conspiracy, securities fraud, and false SEC filings. He received a 25-year prison sentence, which all but assures that he will die in prison.

WorldCom’s demise was an $11 billion accounting fraud that included improper capitalization of operating costs, among other things. It sent WorldCom, a company with stock previously valued at $180 billion, into bankruptcy. Ebbers’s defense was that the CFO, Scott Sullivan, and his subordinates committed the fraud without his knowledge.

Ebbers’s attorney argued that the sentence was excessive and that Ebbers did not receive a fair trial because potential defense witnesses weren’t offered immunity from prosecution in exchange for their testimony. The witnesses said they would use the fifth amendment to avoid testifying.

Ebbers has been free while the appeal was pending, and is expected to be ordered to prison soon.

John Forney, an Enron energy trader, came up with an idea to skirt the trading rules in California. Enron and Portland General were considered related, so California did not allow them to deal with each other on energy trading transactions. California was worried that since they were related, business done with each other might drive up prices for consumers.

To get around the rules, Enron would create a loop by purchasing electricity in California, passing it to one of its trading companies in another state, and then selling to Portland General, who sent it to California. The electricity was marked up at each stage of the loop, so Enron earned greater profits than it should have.

Kenneth Lay and Jeffrey Skilling, both former heads of Enron Corp., were found guilty by a jury on Thursday of conspiracy to commit securities fraud and wire fraud. The trial lasted almost four months, and the jury deliberated for nearly six days.

Skilling was convicted of 19 of the 28 counts he was charged with, and Lay was convicted on all six counts against him. Lay was also convicted of two federal charges brought against him by the Federal government in a separate trial.

The collapse of Enron, one of the biggest business scandals in U.S. history, became synonymous with the word fraud.

Kathryn Ruemmler, one of the federal prosecutors active in the trial of former Enron executives Kenneth Lay and Jeffrey Skilling, told the jury in closing arguments that the defendants lied “over and over and over again” to investors and employees. She said that they used accounting fraud, misleading statements and outright lies to help keep Enron’s stock price up.

Lay and Skilling counter that no fraud occurred at Enron other than executives skimming millions through secret side deals.

Enron had banking and finance relationships with some of the largest international firms: Credit Suisse First Boston, Merrill Lynch, and Greenwich NatWest to name a few. All of the firms were interested in continuing their business relationships with Enron, as the company brought significant fees with it.

As Enron was scrambling to meet analysts’ estimates for the fourth quarter of 1999, they were looking for “creative” ways to add profits to their bottom line.

It was 1998.

As the end of the first quarter rolled around, the finance division was scrambling again. If nothing was done, Enron was going to miss its earnings projections. A little extra creativity was needed to close the gap.

Exxon Mobil is taking heat for reporting “record profits” of $8.4 billion for the first quarter of 2006. This was up 7% from the same quarter last year.

While this is a record-breaking figure dollar-wise, the media is scarcely reporting that this profit was earned on gross revenue of $88.98 billion. That makes the net profits 9.4% of revenue. Is that an unreasonable profit level?

Enron had a history of trying to elicit favorable opinions on accounting issues from Arthur Andersen. The executives were aggressive in their reporting of income and expenses, always seeming to find a way to report things in the way that had the best effect on earnings.

As a part of Enron’s merger with Portland General, the company was acquiring a supply contract worth millions. Enron had a history of reporting income as soon as a contract was signed (which is a very aggressive and maybe incorrect accounting treatment), so naturally the executives wanted to book this contract as income immediately.

Two existing companies came together to form the company that would later be known as Enron. The original companies were Houston Natural Gas (HNG) and InterNorth. The new company was called HNG/InterNorth, but constant power struggles between the two sides lead management to believe they needed one name to help unify the company.