Selects: How Enron Fooled the World

Summary

Podcast Summary

Stuff You Should Know: Selects – How Enron Fooled the World

Original Air Date: June 27, 2026
Hosts: Josh Clark and Chuck Bryant
Podcast: iHeartPodcasts

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Overview

This episode is an in-depth, accessible exploration of the infamous Enron scandal—one of the largest and most notorious cases of corporate fraud in American history. Hosts Josh and Chuck delve into how Enron rose from a simple natural gas pipeline operator to a financial juggernaut that ultimately collapsed, costing investors, employees, and the public billions. Throughout, they highlight the culture of greed, deregulation, financial engineering, and unchecked ambition that allowed the fraud to flourish, and the lasting effects on U.S. business and law.

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Key Discussion Points & Insights

1. Enron’s Origins and the Early Days (03:03–06:40)

• Enron Formation: Merged in 1985 from Houston Natural Gas and InterNorth, with Kenneth Lay as CEO.
• Both companies were profitable but saw little tangible benefit from the merger. The new entity posted a $14 million loss its first year (06:41).
• Political Ties: Ken Lay's close relationship with the Bush family (both H.W. and G.W.), influencing political favoritism and support (07:06).

2. Deregulation: Setting the Stage for Disaster (07:36–11:24)

• 1980s deregulation, exemplified by Reagan’s belief that “government is the problem,” opened the door for companies like Enron to take risks without oversight.
• Key Insight: Human greed and hubris inevitably undermine the theoretical benefits of deregulation.
• "When you have money, lots and lots of money, and you have humans operating systems, there are inevitably going to be greedy humans with so much hubris that they sell their souls to make money." – Chuck (09:12-09:40)

3. Transformation from Energy Company to Trading Giant (11:24–14:15)

• Consultants & Strategy Shift: Jeffrey Skilling (from McKinsey) proposes turning Enron into an energy trading company and joins as an executive.
• Enron would act as a financial intermediary, “banking” on energy and later, other commodities.
• Work Culture: Extreme, competitive “rank and yank” system—bottom 10% of employees fired yearly, fostering a cutthroat environment.

4. Aggressive, Unethical, and Often Illegal Culture (14:15–17:30)

• Macho/trader culture rewarded rule-breaking and aggression. Lay and Skilling encouraged maximizing profit above all else, even by immoral or illegal means.

5. Lobbying and Gaming Deregulation (20:16–23:49)

• Enron backed/funded sweeping energy and utility deregulation, both federally and in states; lobbied in at least 37 states.
• Overturned laws to open up untapped institutional contracts (e.g., the military), securing massive deals (21:11).

6. California Energy Crisis: Manipulation and “Legalized Theft” (22:07–27:24)

• Enron traders deliberately manipulated supply and demand in California, creating artificial shortages and blackouts (“rolling blackouts”) to spike prices.
• Tactics included moving energy across state lines and taking plants offline, sometimes nicknaming these operations (“Ricochet,” “Death Star”).
• Taped calls revealed traders joking about disaster and people’s suffering.
• "They have them on tape... saying burn, baby, burn. Because that's good for business if it knocks something offline... the most vile, reprehensible kind of stuff..." – Chuck (24:30)

7. Behind the Numbers: Growth Fueled by Fraud (27:24–37:09)

• Despite public acclaim (“Most Innovative Company” – Fortune Magazine), much of Enron’s business was losing money; leadership hid losses through accounting tricks:
  • Special Purpose Entities (SPEs): CFO Andrew Fastow created a web of shell companies to offload toxic debts from Enron’s balance sheet (31:22).
  • Mark-to-Market Accounting: Approved by the SEC, allowed Enron to count projected future earnings as present revenue, inflating balance sheets based on deals that often produced no profit (35:02–36:53).
• These tactics created a “house of cards” that expanded as long as stock prices rose.

8. Who Was Watching? Complicity Across the System (42:00–44:58)

• Wall Street analysts endorsed Enron without understanding its finances, enabled by the "stamp of approval" from venerable accounting firm Arthur Andersen, which even staffed an embedded audit team inside Enron.
• "Arthur Anderson... hired all of Enron's internal auditing staff... that's who was watching the show." – Josh (42:52)

9. The Reckoning: Exposure and Collapse (46:05–53:36)

• Journalistic and internal scrutiny (notably by Bethany McLean and Jim Chanos) raises questions; whistleblower Sherron Watkins warns Ken Lay as CEO Skilling abruptly resigns (48:29).
• Restatements and massive quarterly losses follow as the firm collapses into bankruptcy—revealing $72 billion in debt (52:47–53:36).
• Largest corporate bankruptcy in US history at the time.

10. The Fallout: Human and Financial Cost (54:06–58:08)

• Employees: 20,000 lost their jobs, often with only hours' notice; most lost their retirement savings, as 401k accounts were frozen for regular employees but not executives (55:18).
• Broader Impact: Losses cascaded to retirees, investors, local nonprofits, and economies.
• "...one employee said he had about $350,000 in stock that he ended up dumping for $1,200." – Chuck (54:44)

11. Aftermath: Accountability and Reform (58:08–61:37)

• Executives (Skilling, Lay, Fastow) indicted and convicted. Arthur Andersen dissolved.
• Legislation: Sarbanes-Oxley Act (2002) passed in direct response, tightening accounting and corporate governance rules.
• Banks and accounting firms paid billions in settlements.

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Notable Quotes & Moments

• On Deregulation:
  "The problem with deregulation in the '80s... not that there's a problem with deregulation, [but] that it was done incorrectly, like it seems to be every single time." – Josh (08:30)

• On Culture:
  "It’s just overly macho and testosterone-fueled... you would cut the throat of the guy next to you... if you could make a few extra bucks." – Chuck (14:14–14:37)

• On Enron's Deception:
  "There’s no fudging it. There’s no like, oh, this is kind of questionable. This was just fleecing all of their investors..." – Josh (29:22)

• On the Human Impact:
  "...the employees in particular and the retirees... whose pension funds were just totally evaporated... are definitely the greatest victims of all this." – Josh (56:44)

• On Accountability:
  "This is one of those rare stories that is basically black and white. It was just as wrong as it appears." – Josh (63:21)

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Timestamps for Important Segments

• Introduction and Episode Context: 02:03–03:03
• Enron Origins & Corporate Culture: 03:03–14:15
• Deregulation and Market Manipulation: 07:36–23:49
• California Energy Crisis: 22:07–27:24
• Hiding Losses and Financial Fraud: 27:24–37:09
• Collapse and Whistleblower Role: 46:05–53:36
• Human Fallout: 54:06–58:08
• Legal Consequences and Reforms: 58:08–61:37

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Memorable Moments

• Enron’s “rank and yank” firing culture and how it incentivized unethical behavior.
• Enron traders’ taped calls joking about wildfires and blackouts causing human suffering (24:30).
• The image of a ton of Arthur Andersen documents shredded in a single day (50:26).
• Skilling’s abrupt resignation as a tipping point for exposure (48:05).
• The devastating impact on ordinary employees and retirees who trusted the company with their financial futures.

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Closing Thoughts

Josh and Chuck close with a reflection on the black-and-white nature of the Enron case—there is no "other side" to this story. The episode serves as both a case study in unchecked greed and a cautionary tale about the consequences of regulatory neglect and corporate malfeasance.

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Additional Recommendations

If listeners want more, the hosts suggest watching the documentary Enron: The Smartest Guys in the Room or reading Bethany McLean’s associated book for an even deeper dive.

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“If you want to know more about Enron, go watch The Smartest Guys in the Room—definitely will leave you wanting more.” – Josh (64:19)

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Transcript

[Josh Clark]

This is an iHeart podcast.

[Chuck Bryant]

Guaranteed Human.

[Josh Clark]

I turned off news altogether.

I hate to say it, but I don't trust much of anything. It's the rage bait. It feels like it's trying to divide people.

[Chuck Bryant]

We got clear facts.

[Josh Clark]

Maybe we could calm down a little.

[Kal Penn]

NBC News brings you clear reporting.

[Chuck Bryant]

Let's meet at the Facts.

[Kal Penn]

Let's move forward from there. NBC News reporting for America.

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pets age 0 to 10 hey guys, it's me, Josh. And for this week's Select, I've chosen our 2023 episode on the Enron scandal. It's a pretty interesting episode at the very least, just because of the mind bogglingly nuts stuff that these guys did, all in the pursuit of money and personal gain. Not only did they swindle entire states, they also, as a nice cherry on top, wiped out the life savings of thousands of their own employees. It's the kind of thing that was such a big deal, it left a stain on American society as a whole, just by how cynical it made everybody about what people can get away with just in the pursuit of wealth. At any rate, I hope you enjoy this episode. It's a good one.

Welcome to Stuff youf Should Know, a production of iHeartradio.

Hey, and welcome to the podcast. I'm Josh and there's Chuck and Jerry's here. And it's stuff you should know. We mean it. You should know this stuff because this is serious corporate malfeasance that I think there's probably not an American over the age of 20 walking around who doesn't know about this somehow, some way, to some degree. I know they teach about this stuff in business school. It's been written on extensively. But I mean, I didn't understand the ins and outs of it until. Until I started researching this. And it's quite shocking. And that shocking thing that I'm talking about is the rise and fall of Enron. One of the greatest swindles in corporate American history. Maybe in corporate history, in the world. Definitely in corporate American history, for sure.

[Chuck Bryant]

I'm really glad you picked this because I didn't know all the ins and outs either because this is, you know, when I was a young, late 20s, early 30s, something didn't have a care in the world.

[Josh Clark]

Sure.

[Chuck Bryant]

And I finally watched the Smartest Guys in the Room today.

[Josh Clark]

Yeah, I saw it last night.

[Chuck Bryant]

Yeah, the documentary based on the book. And we'll get to the authors and stuff. It was Peter Elkind. And who was the co author?

[Josh Clark]

Bethany MacLean. She was the lead author even.

[Chuck Bryant]

Oh, okay. I knew she wrote the original articles in Forbes. So she co authored the book and she's in the documentary as is Elkland. And it really is worth the watch. But just want to point out that this is an overview of the Enron scandal. It's pretty clear once you start poking around that this could be like a 10 part series.

[Josh Clark]

Yeah, for sure.

[Chuck Bryant]

And there probably is a podcast series out there that covered just Enron. So there's lots of sort of ins and outs that we won't be able to touch on. But we can definitely give you the overview which was that Enron was a corporation originally it was a natural gas line pipeline operator. But they quickly. Well, not quickly, they got out of that business almost entirely when certain people were hired. And we'll sort of get to all this in a minute.

[Josh Clark]

Certain people's right.

[Chuck Bryant]

When certain people were hired that basically said, you know what, we shouldn't even be in the pipeline industry. We should invent Almost a new kind of industry which is to use energy as financial instruments. And we should become a trading company that trades natural gas and eventually paper, pulp and electricity and you name it. Like we'll get into all the things that they sort of pivoted to, but enround started. I guess we should start at the beginning when they. In 1985, when Houston Natural Gas Company merged with a company called InterNorth and they combined to form this large energy corporation in Texas, mainly natural gas. And the chief executive of HNG at the time was a man named McKinnon or Kenneth Lay, who you might have heard of.

[Josh Clark]

Yeah. And if you haven't prepared to meet Ken Lay several times across this episode, from the outset, I think Houston Natural Gas and Inner north were both profitable. But I saw that neither one of their. The companies really benefited from the merger, although it did expand their pipeline network. Really, it just protected them from a hostile takeover.

[Chuck Bryant]

Right.

[Josh Clark]

But it was just a standard gas company, you know, no big frills or anything like that. I think the first year it posted a $14 million loss. Put that in your. In your hat and smoke it later with a pin. Okay. In that the first year Enron was around, in 1985, it posted a $14 million loss. Just remember that for later. Okay?

[Chuck Bryant]

Yeah. Also something else you should put in your hat for later is the fact that Kenneth Lay, the gentleman I mentioned who was CEO of Houston Natural Gas, was also very, very tight with the Bush family. Originally the elder Bush and later on George W. As governor of Texas, big donor to their causes politically. And they ended up having a very sort of you scratch my back, I'll scratch yours kind of relationship.

[Josh Clark]

Yeah, it's. I mean, like I just started twirling around over and over again out of anger, like multiple times throughout the. The documentary, because they really go into some good details about that. But the upshot of the whole thing is George H.W. and George W. Bush would not probably have been able to help Enron out as much as they did had it not been for, of course, Ronald Reagan and. And the sweeping deregulations that that occurred in. Starting in the 80s, there was just a spirit of deregulation, which was this. Ronald Reagan said, and they quoted in the documentary, government's not the solution to our problems. Government is the problem. And there was this idea that was really huge in the 80s that if you got government out of the way, competition was going to drive innovation, was going to lower prices, was going to benefit society in myriad ways. That is not untrue the problem is when you deregulate fully and just basically say, we're checked out from now on until something really bad happens. Something bad always happens. That's the problem with deregulation in the 80s. Not that there's a problem with deregulation, that it was done incorrectly, like it seems to be every single time.

[Chuck Bryant]

Yeah, I mean, Reagan is also in the documentary, quoted as talking about the magic of the marketplace. And we've talked about this over and over on the show. And this is not an attack on conservatism, but deregulation in the marketplace and letting the free market decide things is one of the core tenets of conservatism generally. And what we've always kind of hammered home year after year is, and you said it in one way, but I'll say it in another, is it never takes into account humans are the ones that are operating these systems. And when you have money, lots and lots of money, and you have humans operating systems, there are inevitably going to be greedy humans with so much hubris that they sell their souls to make money. And that's what happens every single time. Yet it's still. Lessons are still not learned that, that there are certain kinds of humans, and they always seems to be. They always seem to be the ones in charge here of these systems. They will take advantage of them to the detriment of the little guy and the little lady. And that is 100% what happened with Enron.

[Josh Clark]

Yeah. And I don't know if it's always like they're not taking into account human greed. I think most of the people who are powerful enough to deregulate federal energy regulations really care. In a lot of cases, they know that they're going to make a boatload of money by the time the thing really kind of blows up sometime down the line. I think it could be either one. But there was a big sea change in 1984, a big change to regulation. The Federal Energy Regulatory Commission said, hey, you can now buy and sell gas, natural gas, from any seller anywhere in the United States. You don't have to just buy and sell within your state. And that opened up an entirely new market. And all of a sudden you can make a lot more money moving this stuff around. But like you said, they figured out at Enron you could make even more money by selling this stuff as commodities and trading on, like, futures and turning them into financial instruments. Not actual, just natural gas or oil or electricity, but the concepts of them, the right to sell that or buy that sometime down the road. That changed absolutely everything.

[Chuck Bryant]

Yeah. And this is when things, when you get into finance like this, my. It's not that my eyeballs glaze over. It just becomes almost, and I say almost not real because it is kind of not real. It becomes a form of gambling in a way. And that's very much what happened at Enron in a lot of ways. And you'll kind of see here and there throughout the episode. But they as a company after that 84 decision, made a very fateful decision of their own in 1989, just a few years later when they got a consulting firm on board, McKinsey Co. In particular a consultant for that company named Jeffrey Skilling to create what they called a gas bank. Which was basically like I said earlier, like, hey, why don't we just be an intermediary between buying and selling of gas? And it was going so well that two short years later Skilling left there and went to work full time at Enron.

[Josh Clark]

That's an ongoing theme.

[Chuck Bryant]

Oh, sure. And eventually working his way up to the CEO of that company.

[Josh Clark]

Yes. So he was, he. But for the most part he was the right hand man, but essentially co CEO with Ken Lay who I think took him on as a protege. And Jeffrey Skilling was the one who said, let's set up this market. And he also transformed the company's culture. One of the things he came up with was the idea that every year they should review and rate every employee and the bottom 10% of employees should be fired. So every year he was planning on firing 10% of their workforce. So about 2,000 people every year. And the reason he was doing this is because he's saying we can do better, we can hire the best and the brightest. We'll replace those people with much better people and then the ones who are doing really well now will get moved to the back and we'll just constantly be improving on the people that we're hiring. It makes sense in a really Machiavellian kind of way, but it's also psychotic as well.

[Chuck Bryant]

Yeah. And the way I understood it from the documentary, it wasn't just like regular upper management reviews of the people that report to them, but it was all the employees rating one another like within their department, isn't that right?

[Josh Clark]

Yeah, that's what I took it as too.

[Chuck Bryant]

So, I mean, you don't have to like be a soothsayer to see where that heads when. And it certainly creates competition if that's what they're all about with, you know, the sort of the charter of the company creating more competition by deregulating. They sort of did the same thing within the ranks and created a very. I mean, I've seen it described everywhere as. It's just overly macho and testosterone fueled.

[Josh Clark]

Yeah.

[Chuck Bryant]

It seems like the traders there were hired and kept on, that were especially aggressive. And there are interviews in the documentary about. About some of these men who were traders that were like, you would cut the throat of the guy next to you on the trading floor, your fellow employee, if you felt like you could make a few extra bucks.

[Josh Clark]

Yeah. And that was very much encouraged not just by Jeffrey Skilling, but Ken Lay had a history of, at the very least, turning a blind eye, if not actively encouraging people to break the law, do immoral stuff that may or may not have been legal, all in the interest of maximizing profits. Like, if you were making money and you got in trouble, you didn't get fired because you made money for the company. That's all that mattered, was making money for the company. So in that sense, Jeffrey Skilling was a really great protege for Ken Lay, but he was like Ken Lay on steroids. And I get the impression Ken Lay is always. Or back in the day, he was a master at presenting this really laid back, almost detached Persona. But if you watch the documentary and you read about him, you really get the impression that he knew exactly what outcome was 10 steps down the road by just nudging this thing over here, nudging that thing over there, all with plausible deniability, but at the same time, presiding over this incredibly complex, complicated, mass, masterful machination that was all dedicated to the service of making money by whatever means possible.

[Chuck Bryant]

Yeah. And Lay, I mean, the reason the documentary is called the Smartest Guys in the Room is because I think unequivocally, everyone would admit that Ken Lay and Jeffrey Skilling. And we should introduce you to a young recruit named Andrew Fastow, who is a key player eventually becoming the CFO and was up to all kinds of shenanigans. But these were brilliant guys with amazing ideas. And a lot of the ideas that they had for this company were really good and ahead of their time, but they had the notion that you should be able to trade and make money off of great ideas and not necessarily the results of those great ideas, because time and time again, as you'll see as we tell this story, these ideas were not making actual money, maybe because some of them were ahead of their time, but that didn't matter because they had ways, very creative ways to hide those debts and losses. And that's the whole sort of Fall of Enron is wrapped up in that statement. But these are all really, really smart guys and they were really, really good at making money. And maybe we should take a break there. It's a nice little setup. All right, and we'll come back and talk a little bit more about their lobby to deregulate and then some of the early shenanigans right after this.

[Kal Penn]

Hey everyone, it's Kal Penn. I'm the host of Irsay The Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook project, Hail Mary Massive sci fi adventure about survival and science and what happens when you wake up alone, very far from Earth.

[Ray Porter]

I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections. And it's like, okay, yo, yo, yo, is this indulgent? And I really thought about it. I was like, no. At this point it would kind of be betraying the trust the author and the listener have in telling this story if I don't go through it. But there's places in this book that that deeply, emotionally affected me and I left it on the mic. That's great because it served the story. People will say like, oh my God, I cried at the end. It's like, yeah, dude, me too.

[Kal Penn]

Listen to Irsay the Audible and I Heart Audiobook Club on the iHeartRadio app or wherever you get your podcasts.

[Josh Clark]

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[Josh Clark]

Okay, so after about six years after that big deregulation from FERC that said you can buy gas and sell it wherever in the country, that opened up a huge market, there was another watershed deregulation that reversed an act that went back to 1935, the Public Utilities Holding Company Act. Puka Love that one. That said if you are generating and selling electricity, you are a local utility and we are going to regulate you like you are providing the lifeblood of America because they are electrical utilities provide the lifeblood of America and have since long before 1935. And in 1990, they managed to get that reversed. And now all of a sudden, anybody could buy an electric utility. And Enron definitely jumped on that.

[Chuck Bryant]

Yeah, for sure. Their lobby was strong, to put it mildly. They hired lobbyists to lobby different states. And those states, as no surprise, ended up getting millions of dollars flowing back toward Enron. I think they hired lobbyists for at least 37 states. They also helped overturn a law in 1988 that said the military has to buy power from local utilities. And they said, no, let's open that back up. And pretty soon Enron got a $25 million contract for supplying electricity to Fort Hamilton and Brooklyn. And these are just, I mean, 25 million ends up being peanuts in the grand scheme. But these are just examples as they sort of ramped up to their schemes, of how they deregulated or lobbied to get things deregulated such that it was allowed to happen, Right?

[Josh Clark]

And one of the things, one of the schemes that got the attention of the entire country in 2000, 2001, was an electrical scheme in California. California had undergone its own electrical deregulation, power deregulation. But it had adopted this weird patchwork compromise law or set of laws that just had loopholes you could drive a truck through that just really created all sorts of legal gray areas. And so rather than just kind of like here, they're biting around the edges, seeing what they could do. Instead, the energy traders at Enron started figuring out how to move energy out of the state. Wait for the state to be like, hey, we need some energy and move it back at incredibly inflated prices. They would purposefully take electrical utilities that they owned offline to generate more demand, a spike in demand, and so they could raise prices again. And they actually basically crippled California. I think I saw that California had a couple dozen blackouts in six months after that deregulation, after Enron started coming in and messing with stuff. Whereas the six months before deregulation they had had one blackout. So if you watch the documentary and you listen, you know, you read some other sources about it, this was an entirely fabricated, a scarcity of electricity. There was plenty of it. Enron just figured out that they could kind of pull this lever and that lever and charge way more by creating this, this fake scarcity.

[Chuck Bryant]

Yeah, and by pulling a lever, like literally sometimes they called up a power company, a power plant and said pull the lever to the off position. And they, they have them on tape. You know, they play this in the documentary. Well, they called one in Las Vegas and said, hey man, can you take this thing offline for a few hours and just make something up? Because a rolling blackout meant big money. All of a sudden California again was buying their own energy back at a higher rate. And Governor Gray Davis the time, and this is, you know, I'm not like giving some full throated endorsement to any effectiveness of Gray Davis as a governor because I really don't know, but he definitely was sort of left holding a bag and scratching his head like, what's going on here? Like we've got plenty of energy. And it just, all through the documentary people are saying like, this just isn't adding up in California. And some of those tapes that they play of these traders, like there was that, that natural wildfire that broke out that jeopardized one of the pipelines. And these guys are on, you know, on tape on the phone with each other saying burn, baby, burn. Because that's good for business if it knocks something offline and is, you know, make laughing at like, you know, old grandmas like sweating in the summer heat because they can't get air conditioning, like the most vile, reprehensible kind of stuff in the name of making the almighty mighty dollar that you could imagine.

[Josh Clark]

What's also interesting is they don't really go into detail about it, but it's, it appears to have also been a coup to get rid of Gray Davis and replace him with Arnold Schwarzenegger. Because Ken Lay held a meeting at the Peninsula Hotel in Los Angeles and he invited Arnold Schwarzenegger. This was long before Arnold Schwarzenegger was known to have had, like, real political aspirations. He wasn't governor yet, wasn't running for governor over a problem that Enron created. It was like that level of. In addition to also just making billions and billions of dollars by strangling the state, they also managed to replace the executive of the state as well, to somebody who is much more friendly to them.

[Chuck Bryant]

Yeah. And get rid of. And of course, they didn't, like, knock them off or anything, but in California, you can. You can have a recall. It seems to come up every, I don't know, 12 years or so where Californians aren't happy with the governor. And so if a recall vote passes, you can have a. Have just an election out of nowhere and replace that governor while this is going on. You know, Ken Lay stands on a stage and says, we're making money in spite of California, not because of California. So just lying through their teeth on stage to their shareholders. And, you know, all these little schemes had little nicknames. The one where they got energy out of California just to make them buy it back was called Ricochet. There was one called Death Star. And they're on tape, like, joking about, like, hey, let's have a nice friendly name for this one, like Death Star. So they're just. They're playing games with people's livelihood, essentially, and lives.

[Josh Clark]

You can make a case as well, for sure. So three of those traders pled guilty. Jeffrey Richter, John Forney and Timothy Belden were three of those traders who manipulated California's energy market, costing the state between 40 and 45 billion dollars, in retrospect of unnecessary electrical prices and costs.

[Chuck Bryant]

All right, so Enron is doing great. They're making a lot of money. And we should point out, this is just, you know, Ricochet was just one little scheme. They had all sorts of schemes along the way to. Well, we'll get to those between 96, though, and 2001. Like, as far as the stock market world was concerned, Enron was a darling fortune named them, I think, six years straight, America's most innovative company every single year in a row. But what was going on behind the scenes is these ideas and these investments and schemes that they had. You know, some of them made money, but a lot of them didn't make any money at all. And they just became really, really good at hiding that fact.

[Josh Clark]

Yes, that was the whole thing. Like they were very innovative. They were ahead of their time in a lot of ways. Like they got into building broadband high speed Internet access in like 2000 or 2001, something like that. And this was, I looked it up. It wasn't until 2007 that half of all US Internet users had broadband. So this was way ahead of its time. And then also they also got into the video on demand market. They tried to partner with Blockbuster and these things were basically like the progenitor of Zoom and Netflix. But these guys were trying this in 2000, 2001. So it's visionary. The problem is they were ahead of their time. The infrastructure wasn't there. I think the customer base even wasn't there. So there's stuff that they were doing, wasn't making money, which is not bad in and of itself. What was bad was when they were covering it up. And the schemes that they used to cover it up are so involved and complex, but also so fascinating that they would, they would have the audacity to do this because there's no, there's no fudging it. There's no like, oh, this is kind of questionable. This was just fleecing all of their investors, all of their employees, fleecing the entire world. There was a handful of executives at Enron who were fleecing the entire world to the tune of tens and tens and tens of billions of dollars every year in revenue that apparently didn't actually exist.

[Chuck Bryant]

Yeah, it's pretty clear that at a certain point they lost their way and that they weren't as concerned about being a company that made money. And the only thing that mattered was that as a corporation was that they kept their stock price high because that's where all the money was. They had as long as they could keep that stock price high and keep shareholders, especially their employees, encouraging their employees to get paid in company stock. Use every penny of your paycheck that you can to buy this company stock. Enron stock was soaring. It was doing really, really well. And all the while it was called pump and dump. They would drive up the value of their stock and then the upper echelon. And you see this time and time again in the corporate world, the CEOs and the CFOs and the upper management are the one who then sell off their stock and walk away with, you know, some of them, hundreds of millions of dollars. And you know, some of the schemes that you talked about was they found ways to move debt around. We mentioned Fastile was one of their hires and he was hired, I think his late 20s, early 30s, and quickly rose up the ranks to CFO. And he started a company called LSM, which stood for Leah, Jeffrey and Matthew, which are named after his wife and kids, sort of ironically. It was like such a sweet tribute to them. And the only purpose of this company was to have all kinds of sort of little sub companies that would absorb the debt and where they could move debt around from Enron to make it invisible to the shareholders.

[Josh Clark]

Right.

[Chuck Bryant]

So they could prove on a balance sheet that you had this money coming in in the way of, you know, people investing in the company, but then you're hiding the losses and so everyone thinks you're doing great.

[Josh Clark]

So the way that I saw it explained, Investopedia actually has a couple of really good articles about this that are just wonky enough to, like, understand it, but also not so wonky that you're just like, I have no idea what I'm reading. And the way they put it was basically, if Enron had like a good example is they built a power station in India that was a huge loss, it was just a generally bad idea. And they sunk billions and millions of dollars into this power station. And without realizing any money whatsoever, I think they abandoned it before it even came online. They would take this and sell it to one of these special purpose vehicles or special purpose entities, which was a tangentially related company that the company Enron was not on the hook to pay off its debts for. Right. And they would take that, and then that special purpose vehicle would go out and try to sell it, sell that terrible toxic asset. And they would use Enron stock as the collateral. Right. And because Enron stock was just through the roof, everybody was saying, sure, we'll give you a loan, sure, we'll give you some money for that terrible idea of a power plant that you abandoned because you're backing it up with Enron stock. And as long as the time that that stock came due was far enough away, and as long as Enron stock kept going up, this house of cards could be held together. But that's not at all how it worked. The upshot of it is that they could take toxic assets, move them off of their books to these special purpose entities, and then they would take the money that these special purpose entities would go borrow against, like that, that toxic asset, and they would count that on their books as revenue. So they were hiding debt, boosting their revenues to just ridiculous heights for stuff that just should not have been counted as revenue.

[Chuck Bryant]

Yeah. And just to be clear, they didn't invent the special purpose entity. And an SPE is not some evil creation in and of itself. It's an entity that a lot of corporations and businesses use where it's just. It sort of like has a very narrow purpose in that they create this thing when they might use it to purchase an asset or to move an asset. So the company as a whole may not be on the hook if anything goes wrong. It sort of mitigates risk. So it's not some evil purpose in and of itself. But they were manipulating these such and starting all of these things under Fastile's guidance with his LSM sort of sub corporation and eventually LSM2, I think that they were making. I think they hit $90 in August of 2000, market cap of the whole company at 70 billion, which made it the seventh largest publicly traded company in the world at that point.

[Josh Clark]

Yeah, so that's a market cap of 70 billion. Remember in 1985, its first year, it posted losses of 14 million. Within 15 years they posted revenue of $100 billion. Revenues $100 billion in 15 in. Yeah. In sales in 15 years. That's what happened to that company when they brought Jeffrey Skilling on board. Jeffrey Skilling brought Andrew Fastow on board. And people just started going nuts, making money any way they could.

[Chuck Bryant]

Yeah. The other thing we should mention too is another sort of slick trick is that Skilling's idea and they got approval. And I wasn't clear how or where this approval comes from, but to use something called Mark to Market accounting, which is basically when you can. Where you can rate the financial health of your company based on. Not theorized, but just on future earnings, basically. And not necessarily what they're worth that day. So anticipated future value instead of its purchase costs. Did you get how that they were approved? Because it seemed like they were all like super psyched that they got approval for Mark to Market Accounting.

[Josh Clark]

Yeah, that would have been the sec, the securities and securities Exchange Commission, who would have given that approval. And just like a special purpose entity, Mark to Market Accounting is. It's totally legitimate. It's recognized as generally accepted accounting principle. But there's a lot of room for temptation to just basically say this deal with Blockbuster, we haven't made a penny off of it, but we can cite the future earnings from it now, now that we booked this deal. And I think it'll probably be worth a billion dollars. Just a total guess. And you're not supposed to do it like that. You're supposed to do it much more realistically and legitimately. But they had enough leeway that they were able to take Mark to market accounting and use it to their. To their benefit in that way. And in doing that, they pumped up their. Their revenues through the roof. Like, the deal would just be inked. They wouldn't have seen a penny from it, and they would add it to their balance sheets as revenue.

[Chuck Bryant]

Yeah, it would become part of the ledger before, like, a real penny was made.

[Josh Clark]

Exactly. And sometimes the pennies weren't made. And if the pennies weren't made, don't forget, those debts would be moved to a special purpose entity. So they wouldn't have these toxic assets on their books, even though they very much owned and were indebted for these toxic assets still.

[Chuck Bryant]

Yeah, I mean, like I said, these were brilliant people and, like, they had all their bases covered, except for the fact that we all know that a house of cards will eventually fall. It's that hubris thing that just blinds people into thinking that it will always. Like, when that kind of money is rolling in. I think it blinds certain people so much that they don't understand a. Who it's hurting at the time, or they don't care, or they think it's always gonna be rolling in like this, or they think, hey, I'm gonna get mine now. Because there were people in Enron, I mean, we'll talk about a whistleblower that eventually sort of came out and journalists who were poking around, but there were people that started looking at this company, the darling of Wall street, and saying, something's not right here. Like, something's not adding up. Like, you can't even explain how your cash flows through your business in a way that makes any kind of coherent sense. And anytime they were confronted with this, Skilling and his cronies would. They would get very haughty about it and just be like, well, what do you mean we can't explain that? Like, sure we can. It's really easy.

[Josh Clark]

You just can't understand it.

[Chuck Bryant]

Yeah, you just can't understand it, right? Oh, it makes your blood boil.

[Josh Clark]

Let's take a break and then we'll come back and talk about the downfall. How about that?

[Chuck Bryant]

Yeah, the downfall.

[Kal Penn]

Hey, everyone, it's Kal Penn. I'm the host of Irsay the Audible and I Heart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook project Hail Mary, massive sci fi adventure about survival and science and what happens when you wake up alone, very far from Earth.

[Ray Porter]

I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections. And it's like, okay, yo yo, yo. Is this indulgent? And I really thought about it. I was like, no. At this point, it would kind of be betraying the trust the author and the listener have in telling this story if I don't go through it. But there's places in this book that deeply, emotionally affected me and I left it on the mic. That's great because it served the story. People will say like, oh my God, I cried at the end. It's like, yeah, dude, me too.

[Kal Penn]

Listen to Irsay, the Audible and iHeart audiobook club on the iHeartradio app or wherever you get your podcasts.

[Josh Clark]

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[Josh Clark]

Okay Chuck, so one question that people might be asking is how were these guys allowed to use this accounting and get away with it? Why were people even investing in buying shares of this company when it was just so fraudulent? And just ridiculously fraudulent too. Not even subtly fraudulent. And the answer is the company was such a Wall street darling that financial analysts would not understand what they were hearing on these earnings reports but would still give it a stamp of like buy. The other thing that really, really helped was the banks. Wall street banks were very much complicit in this as well. And then the thing that helped the most was Arthur Anderson. The venerable 80 plus year old accounting firm.

[Chuck Bryant]

The oldest one in the country.

[Josh Clark]

Yeah, that was a third party accountant to Enron, was so cozy that they actually hired all of Enron's internal auditing staff, made them Arthur Anderson staff and then opened 150 person office for Enron in Enron. In Enron's headquarters. An Arthur Anderson office in Enron's headquarters made up of former Enron auditors. That's who was watching the show. And so Arthur Andersen had such a good reputation that because they were signing off on this because the Wall street analysts are saying yeah, it's a buy, people were just like I'm buying, I'm buying. And it kept the stock price just going up and up and up because nobody was paying attention enough.

[Chuck Bryant]

Yeah, there was one person in the DoC that said that kind of crystallizes it which was like I'm paraphrasing. But he was talking about the fact that when this kind of stuff pops up in corporations like it's not like the Enrons are everywhere. There is all kinds of malfeasance for sure in the corporate world. But he basically said somewhere along the way it doesn't get this big because a legal team says you can't do this or your accountants say you can't do this or the banks say we can't get involved in this. And Enron seemed to be one of those sort of unicorns where every person along the way just zipped their mouth shut even though the numbers weren't adding up. And was complicit in this.

[Josh Clark]

Right. There was a trader that was interviewed in the documentary who said, like, it was ironic that Enron's slogan was ask why. Like, why? Why does something happen like that? Why can't we do it that way? And that this trader said, I didn't ask myself why because I didn't want to know. I suspected things were weird or awry, and I just didn't want to know because it was my job. I was making tons of money. And I think you could probably get that excuse out of just about anybody who is complicit in this, large or small. But Arthur Anderson, that was the one that really, really helped things along. And as we'll see, they didn't manage to survive the scandal.

[Chuck Bryant]

Yeah, there were. Oh, man, there was that one part of the documentary where they were talking about Fastile's, you know, shell companies, and he was in a meeting that was secretly taped. And they're basically like, well, wait a minute. It look, you're on the buying and selling sides of these transactions. And he was like, yeah, basically. But I've always got LMJ's interest at heart. And the whole time he's skimming money. And they believe that Skilling and Lay knew that. Like, hey, I'm sure that Fastile is skimming money off the top for himself, right? Who cares? Because this guy's taking care of business for us.

[Josh Clark]

Exactly. And I think he skimmed about $35 million for himself. He stole from Enron, and they looked the other way because the stuff he was doing was so unethical, so illegal, that he basically earned it, as far as they were concerned, to have his hand in the. In the cookie jar like that. So I think you kind of mentioned there were some people who were like, wait, what's going on here? One of the first people was Bethany McLean, the journalist who ended up writing the Smartest Guys in the Room.

[Chuck Bryant]

She's awesome.

[Josh Clark]

She is awesome. She started out writing a story for Fortune magazine back in March of 2001 titled, Is Enron Overpriced? And she was one of the first people to publicly say, how is Enron making its money? But she wasn't the first to hit on this. There's another guy named Jim Chanos of Kynikos Securities, I think maybe, and I think he's in the documentary. But he started shorting Enron in 2000 because he noticed very simply their cost of capital. So the cost of doing business was more than their return on investment, which automatically means that they were Not a profitable company, which totally was contradicted by all of their earnings reports and filings. And he saw this and he said, this is not right, and I'm going to start making money off of the future downfall of this company. And made hundreds and hundreds of millions of dollars shorting Enron stock starting in 2000.

[Chuck Bryant]

Yeah. The whistleblower, too, was an executive main named Sharon Watkins. And she pops up a lot in the documentary, obviously is key to the story. She didn't whistleblow while this was all going on. It was sort of after the ship started sinking. But we'll talk a little bit about how that all happened and where she ended up. But what happened in August of 2021? Skilling had replaced Lay as CEO in February of that year. And on August 14, 2021, Skilling, out of nowhere. And he had just taken the reins, you know, a handful of months before he. Skilling quits out of nowhere. He resigns. He cited personal reasons. And what was going on was the, you know, the Titanic sprung a leak and as they described in the documentary, he was one of the first rats to try and get off the sinking ship.

[Josh Clark]

Yeah. And it's like if you are a CEO of a huge company, you don't just leave like that. That is an enormous red flag. There's like a whole process and procedure for finding your replacement, grooming them, introducing them to the rest of the world. You don't just leave like that. And that was such a red flag that. That whistleblower, what's her name? Sharon Watkins.

[Chuck Bryant]

Yeah.

[Josh Clark]

She wrote an anonymous letter to Lei, basically saying, hey, there's a lot of fishy stuff going on around here. And now that Skilling suddenly departed, like, everyone's going to start having questions in this whole house of cards is going to fall. And Lei apparently didn't do much about it. And she came to Lay later on and said, I'm the person who wrote that anonymous letter and I'm really concerned about this, and ended up trying to keep it in the company because I think I get the impression that she thought it was something, especially now that Skilling was gone, that could be resolved internally. I think she really underestimated the extensiveness of the corruption and. Yeah. At the company and thought it was a few people when really it was a large cadre of people who all were complicit in this. And I get the impression that's why she didn't really blow the whistle publicly at that point. But apparently Ken Lay, once he found out that it was Sharon Watkins consulted legal counsel to figure out how to fire her legally.

[Chuck Bryant]

Yeah. The same day that skilling resigned on August 14th, the broadband division that we talked about earlier reported 137 million dollar loss analysts. And we should point out too, as far as the analysts go, they were always installing friendly analysts and only working with friendly analysts. But they finally got the clue. They dropped their ratings for the stock. The end came very, very swiftly for Enron. On October 12th, Arthur Anderson's. I mean, you still remember all the shredding jokes on late night TV that ran for months and months. Arthur Anderson's legal council said everybody shred everything. Destroy every file that you have on Enron. And in one day they shredded literally one ton of paper.

[Josh Clark]

Yeah, and that was just one day. They apparently shredded around the clock from October 22nd to November 8th. And that was just one ton. One day they shredded literal tons of documents. Just shred, shred, shred. If you were an executive at Anderson, you were probably working a late night shift shredding alongside everybody else. It was like that. And it was apparently at a time where you could legally do that and not be, you know, indicted for it. But that was not a good look. When it came out that Arthur Anderson was the, the auditors of this company were shredding tons of documents and the SEC got wind of this and they said that they're going to start investigating finally the special purpose entities that Fastow had set up. And so Enron fired Fastow that same day. And I think that was in November or late October of 2001. And right after that, on November 8, Enron said, hey everybody, do you remember all of our, all that money we said we made going back to 1997, we're going to need to restate our earnings. One of the first things they did was they reported a $618 million loss for Q3 of 2001. Q1, they posted a $406 million profit. Q2, a $404 million profit. Q3, a $618 million loss. So they finally came clean. They finally said this accounting is off. And this is how radically it's off.

[Chuck Bryant]

Yeah, I mean, that is if a company is restating their earnings for that period of time at all. Like mistakes can happen, but that's a real bad sign. They almost got a lifeline in, I guess late October of that year when they tried to merge with a company called Dynage Incorporated, and that deal fell apart. On November 28, they backed out of the deal. Dynage did. And then what is this? Four days later on December 2nd, Enron filed for the largest Chapter 11 bankruptcy in US history up to that time.

[Josh Clark]

$65.5 billion company filed for bankruptcy. That just did not happen. If you had that kind of money, you could have a fire sale and sell off stuff for way less than you paid for it, but you could still survive. And that just goes to show you like just how fraudulent this company was. They couldn't have a fire sale and make up that kind of debt that they owed, I think was $72 billion, I think in debt that they finally were found to have owed. And at the time it was the biggest. In 2008, we saw what big really was. Lehman Brothers, for example, had $639 billion in assets when it filed for bankruptcy and went under. But at the time, Enron was like eye popping as far as bankruptcies went for corporations.

[Chuck Bryant]

Can you imagine the wave of relief that swept through Dynogy Incorporated?

[Josh Clark]

Yeah, for sure.

[Chuck Bryant]

Declare bankruptcy a few days later after they backed out.

[Josh Clark]

Yeah, that one just offhand conversation at the vending machine over a packet of Chex mix like save Dyna Gig forever. You know, this seems like a bad deal to me. Crunch Crunch, right? And Dynaji, by the way, went on to become Apple.

[Chuck Bryant]

So the fallout from this, there are a lot of victims. 20,000 employees. 20,000 employees lost their job. And how long did they have to get out? What did it say in the day?

[Josh Clark]

Like a day? I think they had the day, I

[Chuck Bryant]

think it was less than that. I feel like it was hours or something. Basically pack your s and get out of here, everybody. And like literally this huge tall building has thousands of people just leaving all day with banker's boxes with their contents of their desk in it. Like the ultimate movie trope. Every employee that had been told for years and years, hey, you gotta invest everything you can in that 401. Because Enron is. I mean, look at the stock. We're going places and that money will be safe there. They obviously lost almost everything there was the rank and file employees. There was one in the documentary that said he had about close to $350,000 in stock that he ended up dumping for $1,200. They froze the stock accounts of the rank and file while upper management was actively still cashing out.

[Josh Clark]

Yeah, that was a really scummy move. They, I'm sure, purposefully changed 401k providers in the midst of all this. And when you do that, There's a minimum 30 day freeze as you transfer assets Over, So these poor employees couldn't sell their shares, like you said, while the executives were making tens and tens of millions of dollars worth of option trades. Yeah, I mean, it's just mind boggling. That to me is probably the worst part of the whole thing.

[Chuck Bryant]

Well, and you know, tie with that, their severance package averaged about $4,500 for the average employees, while management bonuses totaled more than 55 million. And that's just bonuses. That's not cashing out stocks.

[Josh Clark]

Right.

[Chuck Bryant]

And Livia, who helped us put this together, great job on this article.

[Josh Clark]

Yeah, agreed.

[Chuck Bryant]

Pointed out something like other fallout like you never even think about, which was Enron was a very big investor and donor in local nonprofits in Houston. And all of a sudden all that money is cut off. And like the Red Cross chapter had to cut its budget from $12 million to $9 million in one year, largely because the money dried up from Enron. So the fallout was far and wide. And that's not even mentioning like we're talking about the employees who had stock in the company, like every other human being that had just stock in Enron that had nothing to do with it, lost all their money.

[Josh Clark]

Yeah, I mean, the stock price was at 90 at one point and it dropped down to I think, 40 something cents in like a year, basically. So, yeah, the employees in particular and the retirees who had already left and whose pension funds were just totally evaporated, meaning you're gonna have to go get a job as a Walmart greeter now because you can't afford anything. They are definitely the greatest victims of all this. I saw Ken lay's lawyer afterward portray Ken Lay as the greatest victim of all of it because he apparently lost a few hundred million dollars. And he, I did. He didn't say it himself, but he definitely tried to say, like, I lost so much money, there's no way I could have known what was going on. And that fell on deaf ears. And that same defense was used by Jeffrey Skilling too. I didn't know it was going on. And so what they tried to do was pin the whole thing on Andrew Fastow, who had been fired, who had skimmed 30 something million dollars himself, so had proven demonstrated he was a criminal. They made it, they tried to play like he was a rogue CFO that had done all of this under the very nose of Jeffrey Skilling and Ken Lay and that they hadn't known. And the public, Congress, the courts, juries, everybody said, you have to be kidding us.

[Chuck Bryant]

Yeah. And they were right. In the end, Fastile pleaded guilty to two counts of wire fraud and securities fraud in return for being a witness against Skilling and Lay, I think had a 10 year sentence for what was going to be a much larger sentence. Ended up serving five years and then got out in 2011 and started getting paid as a speaker to corporations about business ethics. To his credit, I guess 20 years on he came out officially and apologized for everything. Seems to really have turned the corner and learned a lesson. Although you never know what is going on in someone's heart from the outside. Arthur Andersen completely went away. The oldest accounting firm in the country never recovered, completely folded and went out of business. The Sarbanes Oxley act was enacted basically because of Enron in 2002, which was. And I remember years ago when we were working in our early days at how stuff works, there was a lot of like Sarbanes Oxley talk. Do you remember that stuff?

[Josh Clark]

Yeah, because they came up with the Frank Dodd act to, to basically undo or combat against future stuff from the 2008 financial crisis. Yeah, this was the same thing six years prior. Like Enron had such a huge effect that they passed a law that basically point for point, outlawed all the stuff that Enron had done. They did the same thing with the, the Dodd Frank actor. They tried to.

[Chuck Bryant]

And of course, you know, certain people will say Sarbanes Oxley has no real teeth anymore because they're not even funding the oversight that they promised other people. You know, the die hard free marketers will say that's actually too restrictive. We're not able to be competitive anymore because you've got all these rules now to make sure we're not defrauding people of billions of dollars.

[Josh Clark]

Right? Yeah. You're making it hard to exploit people. Come on. So there was actually convictions like, this is crazy. And one of the heartening things, Chuck, is if you watch like these congressional hearings on this, people from both sides of the aisle are grilling these guys.

[Chuck Bryant]

Oh, yeah.

[Josh Clark]

No one was apologizing to them for their, you know, their colleague from the other side of the aisle asking, you know, mean questions. Everyone was mad at these guys. The whole world hated Jeffrey Skilling and Ken Lay and Andrew Fastow.

[Chuck Bryant]

He was so smug up there, man, answering those questions in the face of all that. He was still so smug about it.

[Josh Clark]

I looked up whether he ever apologized and I could not find it. I don't think Jeffrey Skilling ever apologized. I think he went throughout his entire time in prison basically saying like he was a victim, that this was unfair, but he was Imprisoned. He was an executive that was in prison. That just does not happen lately. He was convicted of 19 counts. Fraud, conspiracy, insider trading. He got 24 years in prison and ended up serving 12, which is. I mean, yeah, that sucks.

[Chuck Bryant]

But 12 years is nothing to sneeze at.

[Josh Clark]

No, for sure. That's a long time to do in the clink. And then Ken Lay, he was convicted on 10 counts, but he wasn't able to be sentenced because he died of a heart attack six weeks after being convicted. And I think his conviction was vacated.

[Chuck Bryant]

Yeah. Skilling now is out and works at an oil and gas analytics startup. It seems that other people. I think. Yeah, I mentioned that Fastile was on the speaker circuit. The whistleblower. Ms. Watkins was named Times Person of the Year in 2002, and I believe is also now a paid speaker and executive in residence at Texas State University. And then there was a matter of. Because I was like, Livia didn't get to it. But I was like, well, surely there was some sort of making it right for these people who lost all this money. Right. And there were lawsuits that came out and settlements that came out. Different people ended up paying different things. I think it was a $7.2 billion settlement from Enron. I believe the banks were on the hook. I couldn't tell if the banks were on the hook for some of that or if it was a separate thing.

[Josh Clark]

I don't know. I saw that they squeezed a total of 20 billion out of Enron before they let it go.

[Chuck Bryant]

Okay.

[Josh Clark]

I don't know. But I did see the banks were definitely on the hook just for being complicit. I don't know if that was in addition, though, either.

[Chuck Bryant]

Yeah, I think. Yeah. It says right here that the bulk of the settlements, almost 7 billion of it, came from JPMorgan Chase, Citigroup, the Canadian Imperial bank of Commerce.

[Josh Clark]

Oh, yeah.

[Chuck Bryant]

Lehman Brothers chipped in. Bank of America chipped in. The Big Five auditing firm, Arthur Anderson, of course, we talked about. They chipped in, I think. Well, I don't see how they could have chipped in if they went out

[Josh Clark]

of business, but I guess they chipped in before they went out of business. All right, so, you know, if you hear this story, especially if you're used to us in our podcast, you might be like, well, guys, you didn't really get to the other side of the story. There is no other side of the story. This is one of those rare stories that is basically black and white. It was just, there's no redemption. There's no explaining it away. There's no apologizing for it. It's just. It was just as wrong as it appears. So that's why we didn't include the other side of the story in this one.

[Chuck Bryant]

Yeah, I don't think there's anyone out there who's. Who's going to bat for Enron.

[Josh Clark]

There's somebody. There's somebody. And they will leave it on our Apple reviews, right?

[Chuck Bryant]

They totally will. Enron didn't get a fair shake from these guys.

[Josh Clark]

Totally.

[Chuck Bryant]

Neither did Hitler or Satan.

[Josh Clark]

You got anything else?

[Chuck Bryant]

I got nothing else.

[Josh Clark]

Well, I don't have anything else either. If you want to know more about Enron, go watch. The smartest guys in the room definitely will leave you wanting more. And there's plenty to read about, including some great contemporary articles all over the Internet. And since I said contemporary instead of contemporaneous, it's time for listener mail.

[Chuck Bryant]

This is a little wordy, but we don't often do shout outs and tributes, but this is a really special one, so we're doing it.

[Josh Clark]

Nice.

[Chuck Bryant]

Hey, guys. This is from Gavin, recent college graduate and history enthusiast. And Gavin says, I've been listening since I was 15 over seven years now. My mom was the one who introduced me to the show and we've both been listeners ever since. I'm pretty sure she listens to every episode that you guys put out. My mom was also the person who imparted a thirst for knowledge and and learning in me as a child. I've had great many teachers in my life and I'm very thankful for them. But my mom has always been my greatest encouragement and my role model as a student and as a person. Over the past four years in college and directly after, I got really busy, moved 12 hours from home and it meant I stopped listening to podcasts, including you guys. I know. More importantly, I also lost touch with my mom. I didn't completely ghost her or anything, but I still did not reach out to her nearly as much as I wanted to or needed to. But often when I eventually would, she would ask me if I listen to stuff you should know recently and she'd have an episode to recommend because I think you'd really enjoy this one. Luckily, I now have a job where I'm having more flexible hours and over that time I picked stuff he should know back up. Re energize my love for knowledge and learn that my mom has given me, that my mom had given me years ago. All this stuff to say. You guys mean a lot to me. And my mother and I thank you for that. You've helped me stay connected to her in a way that I would not have been able to do otherwise. I'd just like to take this chance to thank my mom. I know you're listening, Mom.

[Kal Penn]

I know.

[Chuck Bryant]

We'll talk about this episode later. And thank you for encouraging me and understanding that I love you even when I'm not great at communicating it.

[Josh Clark]

Man.

[Chuck Bryant]

Boy, this one's really pulling at the heartstrings.

[Josh Clark]

Yeah.

[Chuck Bryant]

Every time I pick up a book or listen, listen to a podcast or write a paper, I think of you, Mom. And I know that I always will. I love you. And this is the only way I know how to tell you properly. Man, Gavin, you can pick up the phone and say this stuff, my friend. He says, back to you guys. You got a great show. I hope we have many more years of remaining, learning, and growing together. And that lovely, lovely sentiment is from Gavin in Fayetteville, Tennessee.

[Josh Clark]

That was amazing, Gavin. Hats up, Chuck. I totally get why you chose that shout out to be the one to break the rule.

[Chuck Bryant]

Yeah, it should have been along Mother's Day around Mother's Day, but.

[Josh Clark]

Well, we can replay it around Mother's Day for select. How about that?

[Chuck Bryant]

Instead, it's the Enron episode, right?

[Josh Clark]

If you want to be like Gavin and just be a super great person, but not request a shout out, just be a super great person. We want to hear from you. Also, while I'm thinking of it, go check out our social feeds. They used to suck. Now they're great. Also, if you want to get in touch with us, like I said, you can hit us up via [e-mail]

Stuff youf Should Know is a production of iHeartRadio. For more podcasts, my heart radio, visit the iHeartRadio app, Apple Podcast, Podcast, or wherever you listen to your favorite shows.

[Kal Penn]

Hey, everyone, it's Kel Penn. I'm inviting you to join the best sounding book club you've ever heard with my podcast, Hearsay, The Audible and iHeart Audiobook Club. Every episode, I nerd out with amazing guests and dive into the best new audiobooks available on Audible. It's the book club for your ears. Listen to Earsay, the Audible and iHeart audiobook club on the iHeartradio app or wherever you get your podcasts.

[Josh Clark]

Paramount is now the home of all your BET favorites.

[Kal Penn]

What?

[Josh Clark]

Yeah, with all new episodes of Tyler Perry's Divorce Sisters you've always liked, a

[Chuck Bryant]

little drama, plus a whole new world

[Josh Clark]

of movies like Gladiator 2. Now I will control an empire Original

[Chuck Bryant]

series like the Shy. Just make sure we protect each other in live sports like ufc.

[Josh Clark]

Welcome to the history books. New home, same family. Your BET favorites are now on Paramount plus. Subscribe now.

[Kal Penn]

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[Josh Clark]

this is an iheart podcast.

Guaranteed human.