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🕵️ Grifted: Success That Survives the Scam
Installment 2B – “The Greatest Scam Belief Ever Bought”
🌀 Grifted: Enron, Part Two – The Crash and the Lesson
From Installment 2A: The Energy Empire Everyone Worshipped
In Part One, we watched Enron rise like Icarus, wings of arrogance and accounting wax stretched toward Wall Street’s glowing sun. We watched it fall—faster than it rose—leaving behind lawsuits, layoffs, and losses.
Now comes the Crash: how the illusion unraveled, who was really behind the curtain, and what we missed until it was too late.
👉 If you're enjoying this kind of unfiltered, practical breakdown of the biggest corporate scams in history, hit the Subscribe button now. The Grifted series is just getting started, and I don’t want you to miss the next disaster in disguise. New deep dives, exclusive content, and subscriber-only exposés drop weekly.
💣 The Crash – How It All Unraveled
When people think of Enron’s collapse, the spotlight usually lands on Jeff Skilling, the slick strategist, or Ken Lay, the soft-spoken founder who claimed ignorance like it was a legal strategy.
But the real manipulator—the architect of deception—was Andy Fastow, Enron’s Chief Financial Officer.
Fastow wasn’t just cooking the books. He built a second set of books entirely—then billed Enron for using them.
The SPE Shell Game: LJM and Chewco
Fastow masterminded a complex network of Special Purpose Entities (SPEs), companies that allowed Enron to keep billions in debt off the balance sheet. Two of the most notorious were:
LJM (named after his wife Lea and sons Jeffrey and Matthew) – a series of partnerships where Fastow wore both hats: Enron executive and outside investor. He sold Enron’s worst assets to LJM at inflated prices, using fake profits to boost Enron’s stock.
Chewco – a dummy partnership set up to buy Enron’s stake in another SPE, JEDI. Chewco needed independent investment to qualify as “off-balance-sheet,” but Fastow faked the independence with a loan guarantee backed by Enron itself. It was Enron pretending to do business with… Enron.
These schemes weren't creative finance—they were fraud in formalwear, with spreadsheets instead of ski masks.
Fastow personally pocketed $45 million from these deals. Enron’s share price soared artificially, executives cashed out, and investors were none the wiser. Until the market blinked.
🔥 Trading Integrity for Profits: The California Energy Crisis
While Fastow juggled the books, Enron’s energy traders were torching the grid.
Led by Tim Belden and his rogue desk in Portland, these traders used schemes with cartoonish names like Death Star, Fat Boy, and Ricochet to manipulate California’s newly deregulated energy market.
How? By creating fake congestion on power lines, rerouting electricity in loops to collect fees, and withholding supply to drive up demand. One internal memo summed it up:
“Burn, baby, burn.”
They joked about grandmothers who couldn’t pay their bills. They cheered blackouts as opportunities. In one infamous tape, a trader says:
“Just cut the power, let 'em freeze to death.”
This wasn’t deregulation. It was deregulated cruelty.
While families faced rolling blackouts and $1,000 utility bills, Enron traders celebrated their commissions. The state lost billions. So did trust in privatized power.
👉 If you’re fired up about fixing what’s broken in business culture, don’t just read—lead. My upcoming book, Collaborate Better, is a field guide for building ethical, human-first teams that resist this kind of toxicity from the inside out.
🔥 Pre-order now at CollaborateBetter.us and be part of the movement to lead smarter, not scarier.
📊 Poll: Who do you think was most responsible for Enron’s collapse?
🎭 Cast Your Vote: Who played the lead role in Enron’s collapse?
💼 Jeff Skilling – Vision without integrity
🫣 Ken Lay – Willful blindness in a tailored suit
🧮 Andy Fastow – The spreadsheet sorcerer who rigged the game
🪑 The Board of Directors – Oversight in name only
🕵️♂️ Federal Regulators – Asleep at the switch while the grid burned
📦 Mid-Post Pop-Out
🎯 How This Applies to Your Org: 3 Quick Checks to Avoid the Enron Illusion
🔍 Is complexity being used as a smokescreen?
If no one can explain the business model in plain English, you’re not scaling innovation—you’re disguising risk.
Enron’s collapse wasn’t just about fraud—it was about deliberate confusion passed off as genius.💼 Is your CFO acting like a dealmaker instead of a truth-teller?
If finance is engineering partnerships no one else understands, it’s time to ask: Who benefits, and how?
Andrew Fastow made millions through side entities while Enron cheered him on.⚡ Is market manipulation dressed up as “strategy”?
If your team is celebrating loopholes, latency games, or "creative" billing methods, you’re not competing—you’re gambling with ethics.
Enron’s traders didn’t just stretch rules—they set fire to them.
✅ Bonus Rule: Don’t confuse innovation with improvisation.
If your smartest people are “making it up as they go,” they’re not visionaries. They’re liabilities in expensive suits.
📜 The Lesson – What We Should’ve Seen (and How to Protect Ourselves Next Time)
Enron’s downfall wasn’t just an accounting scandal. It was a culture crisis. Everyone was “making a market,” but no one was minding the store.
Here’s what we missed—and what to look for next time:
🚩 1. When the CFO Makes Money on the Side, Start Asking Questions
Fastow didn’t just cook Enron’s books—he charged the company to use his kitchen. If a finance executive is enriching themselves through complex side structures, assume they’re laundering more than money—they’re laundering risk, reputation, and reality.
🧠 Employees didn’t need a crystal ball—they just had to follow the money. Fastow’s involvement in the LJM partnerships was not hidden. Senior staff expressed discomfort, public filings disclosed his dual roles, and insiders like Sherron Watkins sounded the alarm. When your CFO’s side gig is profiting from deals with your company, it’s not just conflict of interest—it’s a blueprint for betrayal.
🚩 2. If You Can’t Understand the Business Model, They Probably Don’t Want You To
Enron rebranded complexity as genius. But obfuscation isn’t innovation. If the business model can’t be explained without a whiteboard, a physics degree, and interpretive dance—something’s up.
🧠 Enron’s broadband and trading strategies were wrapped in buzzwords and bafflement. They booked future profits like present wins, dodged basic questions from Wall Street, and bullied anyone who asked for clarity. If you have to suspend disbelief to believe the model—it’s not business. It’s theater.
🚩 3. Incentives Shape Behavior—Even Sociopathic Ones
Enron rewarded risk without boundaries. Traders were praised for pushing limits. Executives were paid in stock options. The culture said: “Make money or move on.” That incentive structure created the crash.
🧠 Enron’s internal mantra was simple: close the deal, hit the number, get the bonus. The traders took it literally—manipulating California’s energy market to trigger blackouts and price spikes, all while joking about it on recorded calls. Meanwhile, executives like Fastow and Skilling were swimming in stock options, incentivized not to build value—but to inflate it. When short-term gains are rewarded without guardrails, ethical collapse becomes inevitable. Incentives don’t just nudge behavior—they sculpt it.
🛡 How to Protect Yourself (And Your Organization)
Scrutinize Conflicts of Interest – Don’t let foxes build the henhouse and invoice the chickens.
Push for Radical Transparency – Real businesses don’t need 900-page filings to justify profit. The truth is usually simple.
Listen to the Whistleblowers – Sherron Watkins saw the crash coming. Most organizations have a Sherron. Whether or not they’re heard makes the difference.
Poll: ⚙️ Organizational Culture Polls
📊 What’s the biggest red flag in your own company culture?
🔀 Overcomplicated Business Models – Strategy meetings need subtitles.
🧑🎤 Charismatic Leaders with No Accountability – All swagger, no substance.
🕵️♂️ Lack of Transparency in Finances – The numbers are there... somewhere.
📈 “Growth at All Costs” Mentality – Burnout is just part of the business plan.
🧠 “Don’t Ask Questions” Energy – Curiosity is quietly punished, compliance is quietly rewarded.
👤 BONUS: The Lou Pai Paradox
One man left the building before the fire alarms sounded—and cashed out with over $250 million. Lou Pai, the elusive Enron executive who quietly resigned months before the collapse, is a mystery wrapped in stock options and horse ranches.
How did he leave with a fortune while others were left with pink slips and empty pensions?
That’s a story too strange (and too spicy) for the public feed.
💥 Subscribers Only: The Enigma of Lou Pai
→ Available exclusively for our Grifted Insiders. You’ll never look at strip clubs and shareholder meetings the same way again.
👉 Grifted: The Lou Pai Paradox
📊 Grift-o-Meter™
Enron Scandal Scorecard
✨ Final Takeaway
Enron wasn’t an isolated “bad apple.” It was a corrupt orchard cultivated by unchecked ambition, complexity worship, and a C-suite that learned to profit from opacity.
They didn’t fail because they lost money.
They failed because they built a system where truth had no value.
So next time you see a company soaring on vibes and valuation but dodging transparency? Ask yourself:
“Is this the next Enron?”
And if you don’t like the answer—
start digging.
🔍 Next week on Grifted:
Bear Stearns – When One Bank Sneezed and the Economy Caught Pneumonia
Next Blog In This Seven Part Series: Bear Stearns: When One Bank Sneezed and the Economy Caught Pneumonia
They leveraged toxic assets like they couldn’t lose.
Spoiler: They could.
We’ll break down the myths of short-term confidence, leverage addiction, and the mirage of “too big to fail.”
👉 Subscribe now so you don’t miss it—and bring a respirator.
We're diving straight into the financial contagion.
🧨 WorldCom? Quiet collapse.
Enron? Public implosion.
Next up: Bear Stearns—when one sneeze infected the whole economy.
But first:
Who do you think TRULY orchestrated Enron’s fall?
The poll’s live. The story’s here. The discussion’s open.
💥 Grifted Vol. 2B — Let’s talk.
#TooBigToFail #Grifted