15 Episode results for "Jeff Skilling"

Encore: Enron | A Sense of Urgency | 1

American Scandal

50:10 min | 3 months ago

Encore: Enron | A Sense of Urgency | 1

"To listen to american scandal one week early and ad free join wondering plus in the wondering app download. The wondering happened your apple or google play mobile app store today in two thousand one. The world was shocked by the story of enron. It was a titan of america's economy dealing in everything from electricity to paper to communications technology yet. The company faced a major scandal involving its finances when the truth about enron finally emerged. Thousands of lives were shattered. Today we're still grappling with questions about the power of big business and whether corporate america needs tougher rules with those conversations in the public spotlight. We've decided to re air our series on enron. We hope you enjoy it on. Tuesday august fourteenth. Two thousand one. The restaurant on smith street in houston is jam-packed with the lunch crowd sherron. Watkins looks around. She recognizes most of the faces of her coworkers at enron and. They seem oblivious. Walk ins has seen the numbers and she knows what they mean. The ship has hit the iceberg. It's sinking and there aren't enough lifeboats. She pushes her plate away having lost her appetite her friend. Cathy looks concerned. Sharon what's up you fairly touch your salad and expecting us back in fifteen. Can't keep the boss waiting. Walk ins. trust. Kathy lynn. A former enron vp. Now at the subsidiary. Ljm and she's a friend so watkins lowers for voice and leans across the table. Yeah about andy. Since june he's had me reviewing assets boring stuff but he's trying to figure out how to get some cash flowing in within the next couple of years. But here's the problem. We have these assets fiji hanover new power. All hedged with this financial entity called raptor to she'll losses right least the appearance of losses. Bow no raptors floral. We have several of them. So yeah i'm unfamiliar with the rapids. Well familiar with the fact that they lose hundreds of millions of dollars a year. Because i wasn't until i looked into it. Enron energy services sent two guys my office. They stood at a whiteboard and broke it down. Turns out these raptors lose money every day so to keep them afloat. Enron stuffing them with hundreds of millions of enron stock. Look sharon complex transaction yes but no if those raptors go bankrupt it could trigger huge losses for the l. jam division. I looked at last year. Statements guess what enron actually lost a half billion dollars but because those losses are hidden in the rappers no one knows not the stock analysts not the investors and cheeses fisting gets out sharing. It's okay all right. First of all the accountants arthur andersen they signed off. You've got kidding me. Yeah and even if the rappers do go bankrupt. And he doesn't care. He doesn't mean anything to l. gm he's structured the deal so he can pull all of his money out first. Sharon's head is spinning kathy. It matters to enron ljm and the raptors might not have anything risk but enron sure does and whoever else invested in these things any created if the raptors go bankrupt which they probably will all the money will be gone but lynn just shrugs the walk seated firmly in her chair. She feels like she's falling. She just told lynn her friend. That she's uncovered the worst accounting fraud. She's ever seen in. Linda shrugged as watkins looks around. Everyone's on their phone talking at once. All the people from enron and one by one the column drains from their faces then reaches for her own. She recognizes the number answers. Hello oh my god. What i sharon now yeah runaway then hangs up and swallows. Hard walk in leans forward. What is what happened jeff. he just resigned. Walk and stares back jeff. Skilling the ceo of enron one of the most famous corporate executives in history is abruptly done with the company. He helped build. he must know what walk ins house. And at that moment watkins realizes there can be no more rationalizations. No more procrastination. Her company is corrupt sinking fast. It's time for her to get out. American scandal is sponsored by clovio. Attention ecommerce founders entrepreneurs side hustlers marketers and growth hackers. If you're working round the clock to build your dream ecommerce business. You need an e commerce marketing platform that works just as hard as you do. That means unique. Clave you with clovio. You'll delight customers and drive revenue at the same time with personalized email. Sms marketing campaigns. That you can design and send in minutes plus building. A marketing campaign is drag and drop easy. You can get started with your first campaign in under an hour and easily build from there with clave ios best-performing templates to get started with a free trial of you. Visit clovio dot com slash. Listen that's k. L. a. v. i. Yo dot com slash list. American scandal is sponsored by priceline. It seems remarkable to say it but travel might be back and to celebrate. Priceline is having a huge sale. The freedom sale. I think of what that freedom could mean. A wise mount holyoke allah to maine's mount katahdin anywhere other than home. You can always get incredible deals on travel at priceline. Everyone knows that but right now there are even more deals plus get an instant twenty dollar discount on your flight hotel and rental car with coupon code freedom. Twenty only at priceline during the freedom sale of priceline every trip is an even bigger deal from wondering. I'm lindsey graham and this is american scandal in the nineteen ninety s and early two thousands enron was like no corporation on earth. It called itself. The world's leading energy company and few dared to disagree enron specialized and delivering natural gas electricity paper and communications technology. It posted earnings at a rate of twenty percent annually and generated profits of over one hundred dollars. Fortune hailed as america's most innovative company. Six years in a row. And ron was the pride of houston texas the ultimate corporate success story and for a decade a radiant affirmation of the american dream it was founded in nineteen eighty five when the nebraska based energy company internorth merged with houston natural gas corporation in those days. Enron's mission was ambitious but straightforward. It aimed to be the premier natural gas pipeline in america. It's chairman and ceo. Kenneth lay considered himself one of the country's leading visionaries and energy and his vision included deregulation. Luckily he had friends in the white house and well heeled lobbyists on capitol hill. He wanted a free market energy business. Unconstrained by federal oversight once unshackled from regulation he felt the profit potential was enormous and then in the nineteen eighties. Deregulation became a reality and enron was off to the races expanding beyond pipelines to other unregulated energy markets. And then in nineteen ninety lay made a pivotal higher. Jeff skilling was brought in to run enron's finance division. he was cutting aggressive brilliant. Perhaps one of skilling's most brilliant maneuvers was instituting. An accounting system known as mark to market under the mark to market system enron could declare profits from deal on the very day it was signed even if it had no idea what those profits would be but the key to enron success was accounting fraud in the nineteen nineties. A feverish bull market stoked wall street expectations. Big companies push themselves to show annual returns of fifteen percent or more an enron unethical exploitative fueled by greed and little else began slowly rotting from the inside wall street did know about enron's creative accounting practices analysts and were just impressed with the prophets and thanks to its numbers manipulation and ron was on just about every analysts vilest. But when enron's earnings started defy market forces stock analysts and journalists became suspicious eventually sounding the alarm in two thousand one and ron was revealed to be a fraud. It was too late when the company tanked. It's shattered the lives of thousands of employees whose retirement accounts just vanished. Enron left wreckage from california to wall street the sheer breadth and complexity of enron's crime. Stunned the world in the aftermath of the company's bankruptcy many asked how such a massive fraud could go undetected for so long at the heart of the dark scam where enron's corrupt leaders and brokers but they had help from vast network of collaborators including outside legal and accounting companies that covered for them at the time the scale of the illegal manipulation of the american financial system was unprecedented. This is episode. One a sense of urgency. It's february nineteen ninety four and as she walks across the snow sharon watkins smiles officially and employees of enron. She's only thirty four years old and has been with the company mir four months but now she's here in aspen colorado. America's most exclusive ski town walk into a sent here alongside several of her colleagues their boss. Jeff skilling head of enron's capital and trade division sent them to represent the company at an important conference convened to help link those who run large public pension funds with big corporate money. Movers i can run. The conference was a success and at the end of each day there was plenty of time leftover to head out into the snow. Try one of the fancy local restaurants tonight walk ins. We'll do both. She approaches the meeting. Place in here's andy's unmistakable. Laugh walk ins likes anti-fast out he's a good guy. The one who hired her to manage investment portfolios fast one of those energetic and innovative finance executives in the company maybe even the country walk ins reports directly to him and his confidence. You'll be able to move up. Steadily in his department. She jogs up to the group. There's a couple of guys from enron chris bauer of pacific corporation group in california and a friendly middle aged guy. Walk ins doesn't yet recognize our explains the man's with pine creek cookhouse the restaurant they'll be eating at tonight and then upon closer inspection walk ins notices something. Everyone standing cross country skis. She's only wearing white wait winter clothes. Someone apparently forgot to tell her to gear up the hit the slopes the man from pine creek starts hanging out polls. They're going to ski to the restaurant. He makes vague gesture over his shoulder. And says it's just around the mountain and the ads that if anyone's really not up to skiing he can send for sleigh to take them instead. Fastow's look up to stain says everything enron guys don't do sleighs and more than anything. Watkins wants to be an enron one by one. The group pushes off towards the mountain walk. Ins is a little wobbly and immediately falls behind but she grits your teeth and pushes her skis forward. Watkins calls fast. Alan taylor to slow down. But they speed up within moments. They're gone she's been left behind. It's not long before. Watkins watches the sun disappear behind the trees. She should have reached the restaurant by now. Dusk is becoming night and she's alone starting to get very cold drawing more and more concerned she sees no sign of her team or the restaurant. She's lost in. The dark has gone too far to turn back but she reminds herself that it will be okay tasks to be andy will realize she's gone too long. Set off back down the trail to get her and finally light appear in the distance might building a sign that says pine creek cookhouse. She opens the door. Scans the room takes a moment process what she sees. She kicks the door shut behind her pulls off gloves angrily flings onto the floor out notices her for the first time. He's in his regular clothes. Ski in a heap at his feet. Casually chatting with mitch taylor appear to be on their second or third glass of wine. Dinner is over fast out. Gives walk into look like what's your problem. He didn't even notice she was missing. He didn't care donovan. Did walking shakes her head and ask if anyone realized that she had made it. Until just now fast. Al tells her that next time she'll just have to do a better job of keeping up. Walk ins finds a table has all been just another lesson in how things are done. When you're part of enron and raged and embarrassed. She grabs her menu and resolves and never allowed herself to get left behind again. Ken lay's executive suite at enron headquarters has a splendid view. He would never admit this to anyone. Of course but he enjoys towering over the city of houston. He earned his spot at the top of this high rise after all no one but him imagine a future in which the american energy industry was deregulated then dominated by single coming with twenty percent growth so consistent you can set your watch by labe. Leaves a person in a position of power like this should maintain an air politeness and humility at all times still in private moments. He allows himself to admit the truth. The people who call him visionary the right if industry is a ship than he's at the hell and they're still far from port and ron is about to turn ten years old lays only fifty two and just getting started on this voyage before he packs up and heads home. There's a small bit of business to attend to. The door opens a nancy. Anders followed by james alexander. Nancy is smiling. Alexandra's not lay rises from his desk to shake his hand. Nancy exit swiftly and closes the door behind her. The two men sit down. Alexander launches into it. He's under attack. And ron spun off one of its entities global power not too long ago though enron owns fifty two percent of global power stock global power still considered independent is a publicly traded company in. Its own right and alexander. It's president was answered to the many non enron shareholders but rich kinder- enron's chief operating officer is pressuring global power to buy up poorly performing power plants from enron at prices far above market value when alexander push back. He was accused by kinder- and others at enron disloyalty. He's being asked why he refuses to be a team player. He's being told that enron global power parent company so global power needs to do what's best for enron not the other way around lay his chin resting on his fist nods sympathetically. He asks alexander. There's anymore yes. in fact there is. Alexander has heard rumors that some executives at enron or suspected of boosting the price of power projects to increase their own compensation some are even employing questionable accounting practices alexander continues but lay rapidly loses interest. Alexander's clearly man. Floundering blaming others for his own shortcomings when he's done speaking lay. Thanks him for sharing his concerns and lay promises. He'll speak to kinder- alexander beams with relief. The two men shake hands once more and alexander sees himself out lay suspects. This is the last time he'll ever see alexander as he's already made his decision alexander can go. He's unworthy of global power once he's out lay will find those global power who were truly loyal to enron and transfer them to enron capital and trade management. A sort of investment bank better known as e c t because c t is run by visionary like lay himself the talented intelligent irreplaceable jeff. Skilling jeff skilling is pleased to see the microphone aurigny setup he strides onto the trading floor the centerpiece of enron headquarters. The place where the real money is made. His men are hard at work buying and selling natural gas contracts. They race between hundreds of monitors closing deal setting prices. These men are the alpha's of e c t and enron in general. They've taken the calling themselves skilling i'ts skill got no problem with them gentlemen. I'm here to tell you that you've done it again. Act trading is up fifteen percent from last quarter. I may be chairman and ceo vc. T. but i want to tell you. I know i wouldn't be where i am without together. We've made enron the biggest startup in the last twenty years next to microsoft microsoft skewing chuckles. Now he's arrived at his real reason for stopping by today. But i have to confess. I've been sent by. Hr yep i know Let's just get this out of the way right. There have been some complaints. Skilling turn sues left tries not to laugh there in the corner right where. Hr said it was a large court board with headshots. various women at enron. He can tell the photos of intact than retact again and again skilling points to the photos so please someone what the hell is this. That's a very highly sophisticated rankling system called the potty. Okay boys but the hottie boards got come down seriously do me favor clean up a couple of things around get. Hr off my back. Okay right lecture over. Get back to making money skilling steps away from the mic and has for the elevators his skilling is going to help him achieve the only thing in this life skilling really wants the ceo chair when. Ken lay retires. Its december nineteen ninety-five and sharon walk in sits behind her desk and stretches. She's about to walk out to tell the young accounting associates that he can head home when he staggers through the doorway cradling stack documents as if it's a severed limb. He's in shock. Walk ins asked what happened. The associated overseas the interest rate books on the trading desk. He hedges the interest rate risk. So that ec trading position stays well balanced between losses and gains usually. The cash flow doesn't vary from day to day but today's different today. They're seventy million dollars missing from his rate book. Walk ins isn't ready to panic. She picks up the phone and calls the head of accounting her about the missing seventy million dollars. They count and tells walk ins not to worry sounding like an affable customer service rep and ron is doing just a little fine tuning and correcting of its books. The company made more money during the fiscal year than it actually needed. So it decided to move seventy million into next year's earnings book for now in early nineteen ninety-six the money will simply flow back into the young accountants. Records walk ins. Thanks the head of accounting for the explanation hangs up somewhat wilder and she explained to the young man what she was just. He's relieved watkins's disturbed. What the head of accounting just explained to her is earnings manipulation not really illegal but frowned upon and hidden from investors but enron didn't get to be where it is by being like the rest of the business world walk ins has to remind herself this from time to time though lately she's been doing it more. It's the summer of nineteen ninety-six. Jeff skilling is ready to put his fist through the wall. He has a huge problem. He can't figure out how to fix. He's the smartest guy in the company. So if he can't figure this out they might be screwed. The second smartest guy the company his second in command andy fastow was also at a loss. Skilling's calls fast. I'll walk ins and other account experts to a conference room for an all hands meeting. The issue is this the e. c. t. traders bet wrong on the price of gas and now enron is one hundred ninety million dollars short of its earnings targets. That's a problem because enron never misses its earnings targets skilling stares directly into the eyes of each person in the room make no mistake there in the same boat. He's in. They traded their way into this mess. The question is whether they can trade their way out of it. The group agrees though that. That's not an option. So it's time to get innovative one executive whose name skilling can't even remember looks timidly to his left and right skilling tells me to speak up if he has an idea. The executive proposes e. c. t. tribe fair value accounting skilling's intrigued. What's that basically. The executive explains enron reevaluate some of its key assets. Then the company claims these assets will bring in huge money in the months and years to come fair value could more than make up for the current losses skilling lauzon. It's a similar principle to mark to market perfectly reasonable perfectly legal wall. Street's stays happy. And more importantly for skilling. Ken lay stays happy. Skilling looks around and sees a lot of smiles and nods. Sharon walking looks unimpressed. But who cares. Andy looks to be fully on board. And that's good enough skilling. But they're not done yet. Fair value can only work. If enron's accounting firm arthur andersen proofs skilling orders walk ins to call them immediately and asked for permission to deploy the new fair value strategy the ball is now in the accountants court if they approve a fair value and run. It saved if they don't it's school is out and your chance at a summer. Getaway is finally here planning a trip to all disneyworld. You've got to know about undercover tourist. Undercover tourist is an authorized seller of discount. Walt disney world resort tickets and hotels and they offer the exact same tickets to theme parks. You know and love for less. 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Hire a plumber to fix your leaky faucet or a handyman. To hang your curtains you can even higher a proud organizer messy closet. Yep there are people in your city who specialize in that. I actually just downloaded the thumb tack up. And i could feel my apartment. Breathe a sigh of relief. Hellofresh paint and an ac unit that actually works on the thumb tack app. You can compare. Prices read reviews and chat with pros directly when you found the right person. You can book them with just a tap. All of those annoying projects will just disappear. Maybe it is a little magic download them tack and start your next project today. A week has passed since the all hands on. Deck meeting with jeff skilling sharon walk and still can't believe that it actually worked arthur andersen said fair value is fair game and just like that one hundred ninety million dollars in losses was erased an indisputable triumph for enron. Everybody wins walk ins. Phone rings is fast out secretary. She sounds concern when she tells walk. Ins that fast out wants to see her as walk ins walks down the hallway to fast sales office. She has a sickening feeling like being called to the principal's office so she can't fathom what she did wrong and he looks up when she enters. He's frowning sit down. Sharon she can tell right away he's angry. Sharon's been brought to my attention. That you up. I'm sorry. I don't understand you don't you don't remember the other day when the guys from arthur andersen were hearing you said quote you guys are really going to let us get away with his fair value stuff. When are you going to grow some balls. You don't remember that. Watkins actually goals what she says. Next comes out fast andy. I didn't mean anything by it. I was just watching the chops. You know joe. Everyone knew it was a joke. It was it was just just shut. The he holds his hands up for her to stop fast shakes. His head looks down massages his temples. It's as if the sound of her voice alone gives me a headache. Walk ins as floor. Fastow's never spoken to her this way this you manage investments right. Well it's not your place to question or make fun of new accounting practices. Don't give a shit whether you're joking not to stick to what you know. Keep your mouth closed clear clear. Yeah i'm sorry don't happen again. Without another word. He turns back to his computer and starts typing. She heads back to her office. Walk ins feels shaken. She's convinced he's made a serious career. Misstep she'll have to figure out some way to make up for ken. Lay's private jet is in the hangar gleaming. just the way he likes it. He's headed to washington for some policy. Discussions plane stairs are lowered waiting for him. Jeff skilling stands outside the plane looking irritated. He's not scheduled to go on this trip. So seen skilling lay wonders what could possibly be wrong skilling doesn't hesitate to tell him he tells lay he knows rich kinder's resigning leaving the coo position open. That's correct late explains kinder- wanted lays job and grew tired of waiting for lane to retire. Lay doesn't say though z. Was all too happy to see. Kinder- leave after he learned kinder- was sleeping with nancy. Mcneil lays assistant turned enron vp. That's unacceptable nancy's absolute loyalty to lay was now compromised. Kinder- had been a hero once. He gave the whole company what everyone referred to as a sense of urgency with a simple phrase kinder- defined enron's high stakes succeed at all costs culture. Late trusted him above anyone else. But that was the past now. Kinder- housego skilling gets down to brass tacks. He tells lay that he's made a lot of money for enron and his time has come either lay agrees to promote him to see. Oh immediately or skilling leaves. The company lay looks at his watch. He's less than ten minutes from wheels up. And you can't afford drag this out. He also can't afford to lose skilling or the disastrous optics of two top executives leaving in the same month lay decides on the spot to give skilling what he wants skilling smiles and eagerly plumps lays hand overjoyed lay nods then makes his way up the stairs his g one hundred jet as the plane pulls onto the tarmac. Lay as confident. He's made the correct choice. yes he has. Dramatically increased the power and influence of jeff skilling with an enron. But that's a good thing. Skewing aggressive sometimes crude. What effective use the hammer lays the velvet gloved hand that holds it in the spring of nineteen ninety-six rebecca. Mark fields unstoppable. She's the commanding presence in this conference. Room and several the board member smile her in admiration at forty two. Marcus indisputably the top woman in the company. C. e. o. of enron international. She's very proud of that fact. The guys bulk up in the gym and scream at each other to display their power mark. Scream to of course and she gets deals done. She also wears short skirts and ensures that her hair and makeup are always magazine cover ready. There's an element of performance in what she does. But this is all one big game anyway. She's a star player. Mark knows that some call her a living legend and others call her a walking publicity stunt. She doesn't care as long as they all remember to call her what she truly is boss. Sometimes though when you're a boss you have to take a little heat like this afternoon. Jeff skilling added again. He's extra full of himself after getting promoted to see oh. He openly despises mark. Never misses an opportunity to undermine her. She's just finished a presentation showing that enron international is stronger than ever it successfully expanding by securing deals every month to deliver power all over the globe lay peers pleased as do the other top enron execs of the conference table skilling scoffs. None of. It's good enough for him when it's his turn to speak you practically screams telling everyone that marks work doesn't matter. He says she's trying to make money. The old way building massive power plants and pipelines. She's out of touch holding the company back and ronnie's focus on the future and the future is energy trading mark defense herself her financials or unimpeachable. She's not just bettering enron's bottomline. She's bettering society by energy to power starve. Nations flustered skilling. Insist there's no way marks upcoming projects would deliver the promise returns. He wants to rerun her projection models himself only then. Will the board see the truth calmly. Mark looks at lay who looks back at her admiringly. She informed skilling lay and kinder- prior to his departure entrusted marked run and run global power and pipelines. Mark has her own bookkeepers and skilling has no role in her division skilling stammers and spawners. But then goes quiet. Mark allows herself victorious. Smirk mark knows it. Skilling wouldn't be going after her so hard if he didn't see her as a threat and mark is a threat she's his only real competition for ceo the whole company and that's why skilling wants her out of the way but mark is a fighter nips killing wants to bring her down he's going to have to try a little harder in january nineteen ninety eight. It's another miserable winter day in houston and a miserable day for sherron watkins two. It was two years ago that andy fastow was screaming at her for making accounting jokes and walking since redeems herself many times over after she helped evaluate a massive metals trading unit acquisition the higher-ups at enron including fastow started treating her with real respect for the last few months. She's been building up to a greatest achievement yet and then just like that. It all fell apart. Walk ins had a plan plan. That would get her promoted to at least an enron vp as vp. She get paid more. Her value to the company would be unquestioned to become vp. She needed to go out into the world look for a potentially massive deal and close it herself and after much work she found such deal. Kobe mining company in new mexico needed alone to improve and expand. Its compromise and ron would not only deliver the money but sell kobe power. So it's mine could be run more efficiently in return. Kobe would sell enron the copper. It produced at a discount giving enron's metals and mining trading unit. A major boost. Watkins did all the legwork got enron and kobe to agree to the terms. The only thing left is to make it official kobe's executives arrived in houston last night to sign contracts in person then this morning seven. Am watkins got a call from jeff skilling. She picked up the phone and steels herself for what she knew was going to be bad. News skilling told her enron was pulling out of the deal because stock analysts. Don't like the looks of it. They worry enron is diversifying too fast jumping into side. Businesses doesn't know enough about skilling tells watkins to break the news to the cobra guys then hangs up. Watkins feels a sense of frustration. Sadness worse than any. She's ever felt in her professional life. The men from kobe. Jeff ward enrich mcnealy or waiting at the four seasons downtown expecting walk ins to show up any minute with a final papers for them to sign. The hotel is ten blocks from enron headquarters walk ins decides the walk there from her office on the way. She tries to think of how she's going to explain this. When she arrives at ward mcneely's hotel suite. her face says it all ward immediately rennes. He asks is enron backing out and walk ins. Knots ward sweeps his across the table sending a metal tissue dispenser flying. He asked watkins if she understands that she's just destroyed. His company mcnealy reminds walk into kobe. Had been fending off a hostile takeover by rival mining group. Enron was supposed to step in and save them and ron made a promise now. There's no way he award can hold onto cobra and it's too late to secure another partner. Walk ins feels tears coming. But she doesn't let them fall. She needed this to work ward. Mcnealy needed this to work. But all she can do is apologize. Ward sucks in his rage and his entered. You can just help ken. Lay and jeff skilling. They're the most unethical people i've ever met. Honestly i don't see how you can stay here and work at this company on the walk back to enron offices wards words reverberate and walk ins head. Maybe it's time to look for employment elsewhere but then grimace. She can't afford to leave now. Every job interview will contain the same question. How does you work at enron for four years without making. Vp walk ins were looked by. She's too unambitious or on imaginative to be worthy of promotion to make the decision once she gets a promotion. Then she'll look for another job. But i she has to find another deal soon. Hey i'm mike corey. The host of wonder show against the odds in our next season. I'm telling an amazing true story about american sailors who wreck their ship off the coast of africa in eighteen fifteen. They're captured by a nomadic tribe to escape. They will need to cross the largest hot desert in the world to reach civilization. They will battle against blistering heat. Inhumane conditions hunger and thirst their heroic fight to get home. We'll have a much greater impact than just on their own lives. It will influence future president and change the course of american history in ways. That are still felt today. This is the true story of the men who made it. And it's one that you don't wanna miss. Subscribe to against the odds on apple podcasts. Amazon music the wondering app or wherever. You're listening right now any fast. Al can never tell what ken lay is thinking man's sphinx classic old school mid western time. Not like fast fast hours a fast talking jersey heart on the sleeve kind of guy fast our skilling or done breaking it down they have just told ken lay about. Ljm there awaiting his response. Ljm is extensively an investment fund. But more to the point it's a special purpose entity or sp. Accountants use spe's to isolate financial risk the company like enron might own an asset and that asset might be failing the. Sp exists on paper to buy that. Failing asset and taken off enron's hands and take it off enron's alan she s as can be very very useful when you want to minimize the appearance of losses. L. j. m. is not fast. I s p creation. There's djeddai jed eye to shoe co. but ljm is bigger than all those and more important and that's why fast i use the initials of his wife and sons to name it l. j. m. not star wars characters but there are some at enron that just don't get the not bold enough to comprehend the truth that in business some rules can be bent and others can be broken. And if you're smart enough. Like an andy fastow or jeff skilling then reality can be what you say. It is fast alan skilling explain. Ljm we live on paper and save enron millions. It's all anyone really needs to know. Lay says he's on board fastow smiles but now comes the tricky part fast. Al explains that actually there is a slight catch since. Ljm is technically an investment fund under fastow's control fast our need to be exempted from enron's code of ethics fast out plans to invest about a million dollars of his own money in the fund. That's not all. He also intends to collect management fees from the other investors. The problem is the code says no employees of enron may profit from a company that works with enron this provision may be waived however as long as the business in question does not adversely affect the best interests of enron fast out promises lay that algae won't hurt enron in any way. Ken lay nonce once again. He understands perfectly. We'll talk to the board about getting fast out. The exemption skilling gives fast our victorious. Look that says you did it buddy. Nineteen ninety nine has been a very good year for sharon watkins almost a year to the day after. Kobe blew up in her face. She closed a major deal in korea. Were the half billion dollars and at last. She's an enron vp. she's also a mother recently giving birth to her first child. Marian now walk ins is doing deal support. Work advising those making enron deals in the caribbean. She's at her desk. Drafting some routine contracts for weeks now. Walk ins has been deeply involved in the business of the company's latest off the balance sheet. Sp called white wing and recently sold white wing a natural gas pipeline in colombia. It's called pro migas. You went from one hundred thirty six million dollars in cash at least on paper even though white wing was officially the buyer enron put up the money itself and recorded transaction as profit for enron. Not a cost. Watkins isn't entirely comfortable with his practice. But she also knows. The enron did generate over a billion dollars in actual cash flow this year. So you could argue. It doesn't matter if a single one hundred thirty six million dollar deal isn't correctly accounted for. She's received word that enron may want to buy pro gaza back from white wing at some point in the future that way everything will end up in the right accounting column in the future. She's working on that paper now and then there's a soft rapid her office door in walks chief accounting officer ricucci. He asks watkins what she's working on. She explains that she's drafting. The white wing buyback agreements. kasey says. She can stop what she's doing right now. Walk ins asks why because no paper trail can exist with any buyback rights then causey heads back to his office walk ins has been at enron long enough to understand what just happened. Obviously if kasey is wearing a white wing paper trail that means that white wings legal status as an off-balance-sheet sp is questionable. Arthur andersen has been supportive up until now but the accounting firms telling enron it will only be pushed so far obviously enron is hiding something walking starts to think. She's got her promotion. Perhaps it's time to move on. She can't she wants to have another baby. Soon and companies don't often respond well when you request maternity leave right after the higher you so walk ins puts her day's work in the shredder. She'll stick it out just a bit longer that same night in her office. At enron global power and pipelines. Rebecca mark allows her rage and frustration to boil over. Its nearly ten pm and everyone is exhausted. Which not gonna let any of our consultants go home. Not until they deliver some answers on how to save asterix her latest and grandest venture yet. Dammit i get that as. Rex is failing when i don't get as wine. Enron conquer natural gas. It conquered natural. Gas trading is about to conquer electricity. We own as rex. Why can't it conquer water. One of her consultants tries to explain. The idea was solid. Rebecca set up as a wreck says a global water provider it makes sense but the obstacles unfortunately are just way more daunting than anyone anticipated. That's not good enough. Water is going to be the leading commodity of the twenty century. The water industry currently generates three hundred billion dollars a year. Why can't we get a piece of that. Can't afford for asterix to fail because if it does we all lose our jobs figured out. Rebecca with tried but our model simply isn't working. We tried to buy other companies. I tried to buy other companies. I went to brazil. I went to mexico. Argentina it made sense at the time but those smaller companies whether french have dominated the global water business. Since there's been a global water pisses and frankly as eric's has run out of smaller water companies to buy it. We're just we're just out of time. We have to announce that. There's no way as rex can make its fourth-quarter earnings dammit. Rebecca would flip the table if she could she breathes hard and tries to regain control. She can rage all she wants. It won't change the facts. There's no way out as rex's going down taking her career with it. he news. Who pack up gall. Rebecca mark has to smile skilling set a trap for her and she fell right into it. Skilling oversaw and ron's initial investment in as rex and he set the terms as rex has to pay enron back its investment immediately after filing its ipo. It was a typically hard bargain from skilling but martin mind she was confident as rex would generate huge profits confidence she could prove skilling and all the rest of the doubters were wrong just like she always had but this time it was different this time mark at big on herself and for the first time in her life she lost she thought skilling underestimated her put it turns out she underestimated him now. Rebecca mark will have to stand before enron's board of directors and the entire world mitch. She failed days later. Jeff skilling what's the california sun wash over him enron stock prices soaring and rebecca. Mark has been squashed. There's just one last item for skilling to check off his end of the millennium to do list skewing strides into the california public utilities commission building to deliver his prepared remarks on deregulation utility execs. Applaud skilling describes what deregulation of the state's electricity market can do for them deregulation will lead to a free market deregulation means more competition between suppliers and deregulation skilling assures them will lead to lower prices skilling tells them if california deregulates enron can help the state safe nine billion dollars a year and with that sort of money. Let me tell you what you can buy every year skilling says you can triple the number of police in los angeles san francisco oakland and san diego and you could double the number of teachers enthusiastic. Ovation that follows tell skilling all he needs to know california will deregulate and when it does skilling will be there to make billions soon california's future will be powered by enron corporation on may twenty fourth nineteen ninety nine. Ten belden is nervously cracking his knuckles. He's young slender balding and smart in a battle of wits. Few stand a chance against him. That's probably why. Enron hired him to run its west coast trading after california deregulated electricity. There in the office emits nerf. Footballs and blaring plasma. Tv's belden hunkered down every night and boned up on california energy long all eleven hundred or so pages of it. It's mind numbing stuff but belden memorized and he did it for one reason to exploit california's arcane and poorly managed power delivery system now that he's finished studying time for little test. It's six ten. Am belen contacts california independent system operator or iso he tells them. Enron is projecting peak energy demand for the next day. It's news to them but they're happy for the heads up then. Belden goes to the states. Electricity market the california power exchange and submits bids to sell them about three thousand megawatts to help them meet the unexpected demand then weights less than an hour. Later exchange office gets back to him. They'll by the three thousand megawatts so onto face to with his bids accepted the now has to select a transmission path to deliver his three thousand megawatts to the exchange. He picks the silver peak route. Because he no can only handle fifteen megawatts at a time belden again wait for the call and gets it four hours later. It's the iso velden's absurd requests set off alarm bells. The iso rep wants to know if there's been some kind of mistake belen smiles and admits that he did it on purpose. He just wanted to see what would happen. And after clearing everything. Up with the iso rap bell and hangs up shaking his head not believing at work. Belden knows the rules. Because the line was congested. His three thousand watts couldn't be delivered. Of course that's because he deliberately overloaded line but now the i was required by law to scramble for ways to send his three thousand watts along other routes and the iso will pay any company can help alleviating the congestion he created including enron these frenzied last-minute transactions will cause the price of electricity to spike by more than seventy percent enron can then jump in and sell the state power never actually needed in the first place. At a huge profit the people running the isos byzantine system. Don't even know they're being lied to. Belden has just poisoned the isos and then sold them. The antidote tim bell knows that when state authorities figure out what he's done you'll probably get fined ten twenty grand. Maybe but that's a small price to pay for a very good job. That today made his company ten million dollars with hundreds of millions of dollars a month to come next on american scandal. Enron plays games would california and the state descends into an energy crisis. Sharon watkins strikes a faustian bargain with andy fast down and jeff skilling learns to be careful what you wish for from under this episode one of enron for american scandal. If you like our show please give us a five star rating and leave a review and be sure to tell your friends follow. American scandal on apple podcasts. Spotify amazon music the wondering for wherever. You're listening right now. Listen ad free by joining one. Plus you'll also find some links offers from our sponsors and the episodes supporting them helps us keep offering our shows for free another way. You can support the show by filling out a small survey at one. V dot com slash. Servants tell us what topics we might come next. You can also find us and me on twitter search for hashtag american scandal. Follow me at lindsay. Adrian lindsey with an a middle english way. Be sure to listen to my other. Podcast to american history tellers and business. Movers a quick note about our reenactments in most cases. We can't know exactly what was said. But all are based on historical research if you'd like to learn more about enron. We recommend the books. Power failure by meany source was sherron watkins. The smartest guys in the room by bethany mclean and peter l. kind conspiracy of fools by kurt. I can walk and twenty four days. By rebecca smith and john m schwelm. American scandal is hosted edited and executive produced by me. Lindsey graham for airship sound designed by derek music by lindsey graham. This episode is written by hannibal. Ds our senior producer and editor karen. Low executive producers are stephanie. Jen's jenny lower beckmann and her non lopez for wondering for over one hundred years. General motors was america's automaker but after the two thousand eight financial crisis the storied car company. Nearly died hi. I'm lindsey graham host of wondering show business. Movers we tell the true stories of business leaders who risked at all the critical moments that define their journey and the ideas that transformed the way we live our lives in our latest series. An hr executive named mary barra rises to become general motors. First female ceo. Just in time to save the company from ruin. But as mary fights to lead general motors into the future tragedy strikes. Listen to general motors back from the dead from business. Movers on apple podcasts. Amazon music or the wondering. Join one re plus in the wondering how to listen at free.

enron skilling jeff skilling priceline raptors Watkins watkins alexander Skilling ron arthur andersen enron headquarters pine creek Sharon Fastow andy fastow america houston andy
Encore: Enron | Death Spiral | 4

American Scandal

40:01 min | 3 months ago

Encore: Enron | Death Spiral | 4

"To listen to american scandal one week early and ad free join one plus in the wondering app. Download the wondering in your apple or google play mobile app store today. It's late october. Two thousand one wall street journal reporter john r. m. schweiler sits in his office at the papers los angeles bureau in shock. He stares at the screen in front of him. Rereading the text again and again m. schweiler a twenty nine year veteran of the journal covers white collar crime. Enron landed on his radar in a big way back. When jeff skilling resigned in august the press release said he did it for personal reasons but em schaller's instincts told him. There was more to the story with the help of the journals national energy reporter rebecca smith. It's a story. He's been trying to get to the bottom of ever since. Smith schweiler have yet to call enron out for doing anything illegal. It's simply too soon to tell. But each day since killings resignation has seemed to generate more and more smoke plummeting stock price. The uncovering of two mysterious financial vehicles one called. Ljm another chewco. The reporters wonder if all this smoke is leading them to a fire especially now that a true bombshell has dropped it's seven. Am m shwe grabs. The phone dials partner. Rebecca smith grabs the phone midway through the first ring. John i guess better pay up the press release. Yeah listen to this part. Andy fastow previously enron. Cfo we'll be on leave of absence from the company lay said in my continuing discussions with the financial community. It became clear to me that restoring investor confidence would require us to replace andy as cfo. 'em charlotte pauses. He just lost a bet. Smith called it days ago but amtrak. I thought it just wasn't possible in recent weeks lay had repeatedly expressed total support for fast out. Well looks like you were right. Looks like it. So what do you think's going on over there fast. I was just too big a liability. If you actually did all the things that you and i think he did. He deserves to be fired. Yeah but isn't firing him like admitting wrongdoing backing august lay said that enron was completely aware of everything that fast i was doing. Ljm cuco everything and completely supported it. Yeah he even said that enron had asked fast out to take on those partnerships. But there's this really weird line in the press release continue discussions with the financial community. Lame means when he says that could be the banks wall street. Maybe the ratings agencies are big investors probably all of them lays gotta be getting a lot of calls at the stock is free fall. Betty is hoping that sacrificing fast. Our quiet things down. Will i have no idea. The only thing i do know is that at this point. Stiffest put a whole lot of trust in anything. Enron says amazon. It looks at his watch. We'd better start making some calls. Before the editors starts screaming he hangs up then reads the press release beginning to end one more time. This could all be temporary. Maybe they're simply going through a rough patch. We'll pull out of this tailspin but schneider senses. Things will accelerate an enron will begin to spin out of control. The things could get even darker if that happens. And ron could be at the center of corporate malfeasance on a scale. Unlike anything him spoiler has ever seen. American scandal is sponsored by pay pakong new one poll research figures are a real wakeup call for businesses employees frustrated. With tech. they use at work. Nearly seventy percent said they're willing to take a pay cut for tack. That would be twice as good. Employees want to be productive but are hamstrung wasting three hours a week on tech frustrations with just one log in pay calms comprehensive technology automates hr payroll tasks in a single software reducing. 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You can get started with your first campaign in under an hour and easily build from there with claros best-performing templates to get started with a free trial of clay. You visit clave. Yo dot com slash. Listen that's k. L. a. v. i. Yo dot com slash. listen from wondering. I'm lindsey graham and this is american scam towards the end of two thousand one. It was clear that enron was in trouble. The government the media the investors began to realize that there was just too much that didn't add up. Ken lay insisted his company was misunderstood and had done nothing wrong. But evidence began to emerge contradicted. his claims. The question was what to do with this evidence. Andy fast hours adept at concealing the true nature of his complex. Shadowy deals even from other experienced finance professionals but with fastow gone the scrutiny on enron kicked into a higher gear. Those outside the company demanded answers. Desperate to find out just what the company had done wrong and how to respond enron's top executives and their associates. Were getting desperate as well. They raised to figure out what they did and did not have to admit in struggle to save the company. This is episode four death spiral and ron treasurer ben. Gilson spending another long night in the room next a new. Cfo jeff mcmahon's office about nine forty nine pm. But he pours himself a fresh cup of coffee. Squinting in the harsh glare of the overhead fluorescence glisten calls this space the war room. It's filled with boxes of documents required to reconstruct the company's finances. Glisten must make a presentation enron's board in the coming days explaining chewco a fastow created off. The books partnership. He's looking for something. Anything that can make it clear in black and white that schuco is a legitimate sp and not simply a creation to hide company losses and make andy fastow even richer. Like listen is not having any luck. After an hour of rummaging he finds something gives it a cursory glance then finds a place to sit down. It is all here and black and white. Barclays bank loaned enron eleven million dollars through chuka when a company like enron sets up. Sp the legal requirement is that at least three percent of the spd's equity come from third party. Someone has to be willing to risk that money at three percent can't be borrowed but these documents show all the money was borrowed. That means that schuco which has been operating since ninety seven has never been a legitimate special purpose entity. Listen looks up. His lawyer. Christina morton enters the room. She sees the expression on clinton's face and asks what's wrong. He tells her about the trouble with chewco. She shrugs her shoulders as if to say well. Da glisten shakes his head looks down and mutters. we're toast. Sharon walk in sits at home that very night fully aware that she's not the most popular person at enron these days. She doesn't know how it got out. But it did walk ins wrote a memo to ken. Lay claiming the company was engaged in fraudulent accounting. And that he had to do something about it. She didn't go to the wall street. Journal or fortune. Or the sec. Those organizations came to their conclusions about enron. All on their own still. There are some at enron who now look at watkins as if she's an informant out to destroy great company and there is enron was doing just fine until she decided to climb up on her soapbox one person who clearly feels this way. Jeff mcmahon she thought mcmahon was a friend but ever since he became cfo. He's been very difficult to reach. Who was never liked that before. She can sense that the new position is changing mcmahon. Perhaps fast in his supporters are right. Mcmahon is just as cut throat as the rest. He was critical jam. But maybe that was just to get fast in trouble. So mcmahon could push them out and take over. Watkins's added kitchen table. When the phone rings she picks up a hoarse voice. You barely recognize on the other end. Hey sharon it's jeff mcmahon sounds terrible. Says he sick that he's been working around the clock in hasn't had time to return her calls. Walk ins asked. Pointblank mcmahon considers her a trader. He's appalled at the suggestion he says. Walk ins is still highly valued but then. He's not sure what she can do to help. The current situation and ron has the scramble. The stock is at fifteen dollars. Share with no signs of recovering. Mcmahon is pleading with banks to get a loan. the company desperately needs. It's crazy. He says just crazy man promises. He'll reach out again. When things settled down then hangs up. Watkins grabs a notebook and pen. Mcmahon may not think enron could use your help she knows it does with both skilling and fastow gone perhaps enron can start fresh and redeem itself. She begins a new memo. Titled disclosure steps to rebuild investor confidence. The idea simple. And ron must correct the accounting mistakes it must restate its earnings and immediately within an hour. The memo's complete watkins and to hand to. Ken lay personally at the first opportunity. The next evening. Ben glisten is in his bedroom in the phone on a nightstand rings. It's ten thirty unusual for someone to call this late so it can't be good news on the other end of the line. Listen steels himself. Hello is jeff mcmahon. Hey jeff everything all right. No silence just hangs there for several unbearable. Seconds to sweat drips down quizzes forehead. Ben can't take anymore. What's wrong jeff. You know what's wrong. You lied to me lined about what fan i trusted. You thought you could help us. You told me about schuco but you didn't tell me everything. This jeff okay about that. Ljm is ruining us. You know that it could destroy the entire company everything connected to it. Toxic now a lot of people are lying about what they knew and what they didn't and honestly i can't sort out who's telling the truth and who's full of shit but i do know this. You should have disclosed that you had a personal stake in l. Jan van should've told me that glisten racist for an explanation he should have said something he could have said something but he never did. He didn't think anyone would ever figure it out that it was probably best to let sleeping. Dogs lie okay. Jeff if i had invested directly in elgin japan i promise i would have told you but i i. Invested in a company that purchased a subsidiary of l. jam. You see an jim subsidiary. I didn't invest in ljm. I didn't invest in enron. So technically okay jeff. Technically i did not lie to you. Listen wipes sweat away fired. It's late at night. And sharon walk ins in her kitchen again. Listening to a voicemail that jeff mcmahon just left on her machine. he's read her memo. He says they all hear her loud and clear but a massive restatement of earnings even if it's not related to core businesses will cause a major credibility issue with the investor community and in case she's not aware enron is already dealing with major credibility issues. Shareholders tend to be forgiving but not lenders. He says a restatement results in some nasty stuff. What he's getting at here. Is that a new guy. Might be able to come in and fix it all. That's a possibility but he's not so sure that the old guy can hang around and say whoops sorry for what i did. Things will be better from now. On mcmahon wants watkins to think about that. Watkins just stanton her kitchen. She knows he's right. Restatement of financial reporting is a confession of guilt companies. It all the time and survived but customarily the top management does not the executives admit. They were wrong and then they perform the corporate equivalent of harry carey. Walk ins hasn't realized until this very moment that should enron pursue recommended course of action. Ken lay and jeff. Mcmahon will both have to resign. Jeff skilling tried to escape but he couldn't you went to florida. His wife said the beach would help them relax but it was impossible to pick up a paper or turn on cnn without being reminded of the fact that enron was imploding. Skilling thought he'd be less depressed after he left the company and for a time he was. He thought that he was doing the right thing when he quit. Not just for himself but for enron he really believed that the bad stock price was obviously a reflection on his leadership. So it should have rebounded once he resigned. Lay return to the hell but enron's fortunes haven't improved things actually got worse now the. Sec is all over the company the idea that these people would criticize enron over a few stumbles with all the good. The company has done for the average consumer is outrageous. Meanwhile enron his emerging more and more cash every day there's a term for what's happening to enron death spiral skilling assure. That really is only one option. So he cuts his vacation short and charter jet back to houston after a few days. He's ready to make the call. Takes a deep breath picks up the phone dials and talks to ken. Lay can you gotta bring me back. He says he tells lay. He's been thinking about it long and hard and he can return as interim ceo consultant. He lay and company president. Greg wally will fly to new york immediately. And once they're skewing knows he can convince chase to offer enron alone the three to four billion dollar range. It's time to fire up the engine. Skilling says it doesn't dismiss the idea outright tells skilling he s ago and he'll considerate get back to them. Skewing just stands there feeling more alone than ever. He can't understand why they didn't jump the offer. All skilling wants what's best for the company and if that means returning he's willing to do it skilling frowns puts down the phone deflate in waller too blind to see that they need his help. Then this truly is. The beginning of the end for enron. American scandal is sponsored by sleep number. You like sushi. Your partner prefers she me no problem. You like rom coms. They liked sci-fi no problem but at the end of the day after cheerfully negotiating. All of your differences. You can't agree on this. Nine out of ten couples prefer different mattress firmness. But i found a way to compromise by going into a sleep number store. Sleep number beds adjust from feather soft to firm so you can set each side to the perfect sleep number setting for both of you. I tested several models and my sleep number three sixty i. Ten smart bet is arriving soon. 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Vpn takes your security to the next level. It's a super fast next gen. Vpn that protects your online privacy and secure your wi fi it helps you become invisible to trackers eavesdroppers and cybercriminals so your private information like passwords bank details and even that surprise birthday gift stays private. Start your free trial of malware bytes privacy today at malware bytes dot com slash vpn. Ken lay can't remember the last time he smiled. Not that he's depressed about all this people. Like jeff skilling indulgent depression but not ken lay. He talked a wally about skilling's recent call but the discussion was brief. While he said there was no way skilling could come back the optics would be disastrous. Such a move would raise questions and the one thing. Enron definitely doesn't need right. Now is more scrutiny. Lay agrees skilling is the past and lay must secure the future. All of this can be handled. The crisis will be managed an enron will make a comeback. This is a war plain and simple and lay intends to fight it. He walks into the conference room conscious to carry himself like a general awaiting him are several executives from enron enron's accounting firm. Arthur andersen. It's late nine. Pm and these chaotic days it was the first available time for this audit and compliance committee. Meeting stone-faced lay takes a seat at the conference table. Chief accounting officer rick causey begins so all of you know the. Sec is conducting a formal investigation of enron. Investigations is ongoing. And i don't really know much more update you as soon as we can. The more serious issue now is that arthur andersen wants to restate our ninety seven through two thousand earnings turns out that well enron made about one point two billion dollars less in those years than initially declared ken lay jumps in. But i'm doing everything. I can't gentleman make calls this past week to commerce secretary evans treasury secretary o'neill even greenspan. I thought maybe they could offer bailout. We can't expect any help from them. One by wander turning their backs told them that if enron fails all of america's energy trading market is at risk. Don't seem to care. I don't think they understand another executive pipes up what. What i don't understand is how are balanced. She could have been off by a billion dollars. Causey response neither schuco ljm qualified as an sp so any debt. They accumulated and a lot. Should have gone enron's balance sheet. That's something anderson should've caught ninety nine with. Ljm what all this means as well when we restate our financials will be about a billion dollars in the red john. Schweiler is in his office at the wall street journal. Writing an article on enron's earnings restatement. When he gets a call he picks up the phone. And here's the jovial. Voice of his friend bernard glasser. He sounds giddy. Glasser is a lawyer in his mid fifties who for more than a decade has been rooting for enron's downfall glasser believes that enron has acted unethically from the very beginning claiming enron higher up stole. The idea of gas bank to finance energy deals from him way back in the eighties. He's been pursuing a lawsuit against them for over five years m.'s. Wiler doubts anything will come of the suit. But glasser isn't a complete crackpot. His allegations are plausible. Just difficult to prove. But i'm trying to likes talking to glasser through his decades long fight with them. Glasser knows how enron works and he knows the people he's been very good at fillion gaps and amtrak knowledge of the company today on the phone. They discuss the restatement and then the lawyer says something that takes 'em swatted by surprise. Glasser says that enron could soon end up in bankruptcy court them trying to laughs. Bankruptcy may be a ways off. Bernie he says i think enron still has a few financial resources but glasser doesn't budge. He goes on to say that the stock price is way down. Won't ever go up again. Ljm is just another example of enron's corruption. Then he hangs up trailer thinks maybe it's possible to glasser isn't crazy. He was on the phone. Just yesterday with an executive at goldman sachs the man said enron was in a death spiral and schweiler been hearing those two words more and more these days. The red lynch president of the california public utilities commission gets up from her desk and opens the window to let some errands too bright crisp san francisco day and for the first time in months lynch feels like justice is on the horizon after a year of screaming into the wind. It seems like people are finally taking her seriously. Knock on the office door signals. The arrival of the interviewer from the pbs program. Frontline lynch smiles sits at her desk pushes them clutter to the side and folds her hands in front of her. She's ready to begin. The interviewer asks her to talk about the california energy crisis. Lynch is all too happy to get this story on the record. Not saying that enron caused the california energy crisis all by itself of course not but it did play california like a giant slot-machine rigged and enron's favor an reduced. The supply will creating an artificial shortage which drove the price up. And when prices pete enron found the power for california and sold to them. Lynch has been trying to get enron to answer for it. Ever since the interviewer points out that enron is in a very serious situation summer saying it might even go under would be happy if enron collapsed. Lynn shakes her head. If that happens thousands of people could lose their jobs. No she says that's not what she's after. The interviewer asks then what is she. After lynch says she wants an investigation a real investigation not a self serving one. Enron conducted the enron executives ran the training department like a cartel so enron should be prosecuted like a cartel. If found guilty. Those responsible should go to jail several miles from the san francisco headquarters. The public utilities commission wall street journal reporter. Rebecca smith sits in her office on the phone. Listening as enron's head of pr. Mark palmer screams in her ear until now she her colleague john m shawn and palmer have all managed to maintain a decent relationship even with the negative pieces the journal has printed about enron. Recently palmer has been relatively gracious through it. All and the reporters are always mindful of being fair. They never blindside him always asking if he'd like to go on the record with enron side of things in the past. You would just say no comment but today is different today. He's on the warpath accusing the journal of having it out for enron and he needs smith m schweiler to stop almer furiously claims the paper's coverage of ljm is biased but maintaining her professional demeanor. Smith says calmly. We've been trying to get you guys to talk for two months. She has that she and mt wyler believed that report to be accurate and objective. She asked palmer to tell them where they bared. And they'll correct any mistakes but palmer cuts her off. He says she's been writing too. Many stories about enron's potential liabilities reporting about things that may happen in twenty months. He's and discounting what we're telling you right now. Smith responds that enron credit rating falling. Just as fast as it stock price if enron's credit hits junk status it's lenders could demand payment at any time and as far as smith can tell enron doesn't have the money to pay palmer fumes that the wall street journal's coverage is completely unbalanced hangs up smith looks at the phone taken aback at palmer's vitriol. That doesn't sound like more. She thinks someone's told him to shut their investigations down. But rebecca smith and john schweiler keep reporting and days later. Loretta lynch quotes from one of their wall street journal articles during a morning committee meeting at the california public utilities commission. The headline reads enron's cfo's partnership had millions in providence. It appears that enron was corrupt from the beginning those millions and prophet went into andrew. Fastow's pocket the way things seem to be going may not be long before enron is finished. Lynch thinks all the way back to nine hundred ninety nine when enron i joined the california electronic market and energy prices suddenly seemed to spike for no reason she had heard of tim belden back then but she knows him now in her face. Redden's and anger at the thought of enron's crooked energy trading boss. She knew what was happening. Didn't make sense. California had an energy surplus so reported power shortage. Something was wrong possibly illegal and though she didn't know who to blame then she does now. And ron's getting a lot of bad press but no one is zeroing in on what the company did to california no one is demanding that enron pay a price for that and lynch knows that even if it is accused a company like enron will play all its face cards money big lawyers and maybe even the president of the united states george w bush who affectionately refers to enron ceo as ken boy so even if enron has been caught in its own wise. It's a different question altogether. If it will actually face justice. American scandal is sponsored by audible. True story my wife has discovered audio despite being married to a podcast or she only recently began listing. And it's audiobook. She turns two in particular. It's audible and there are new plus catalog thousands of listening experiences all included with membership. Listen anywhere on any device without losing your spot. Audible members get one credit every month for any one of the many classics bestsellers new releases regardless of price to keep forever. Recently she started. We are the luckiest the surprising magic of a sober life. By laura mccowan listened with her. Get your free audiobook with a thirty day. Trial visit audible dot com slash. Ads or text. As to five hundred five hundred that's audible dot com slash ads or text. A s two five hundred. Five hundred chuck watson isn't expecting much from this meeting. He drives his silver mercedes. Five hundred into enron's executive lot parks hops out then pauses takes a moment to stare in amazement gleaming towers of enron's headquarters. It's a saturday com with very few people around which is perfect for watson. Who's here to have a conversation that needs to happen quietly. You can't really believe it's come to this. How the mighty have fallen. He thinks watson is the chairman and chief executive of dynegy corporation a houston based energy company on the right up to the thirty third floor. Watson softly whistles to himself and ron is on life support. Historically the great enron was much bigger and much more powerful than dynegy. It didn't even consider dynegy. Competitor and honestly watson can't blame enron's executives for looking down their nose at him dynegy did well but didn't do enron well but today that may very well change. Ken lay needs. Chuck watson to do favor. He needs watson to by enron. It's the only way the company can continue the elevator doors open and ken lay approaches from the kitchen. Area abroad. smile on his face. Watson is impressed to look at lay in his casual weekend where you'd never know the man was facing possible. Bankruptcy and the complete annihilation of his life's work lay shakes watson's hand. Would you like some coffee. Just made it myself. Sure anything eat. What are those sweet rolls. I'll take few of those two food and drink in hand. They walk over to an empty office. And sit down. Watson takes a sip of coffee sets the mug down and gets out of business can if dynegy agrees to this it's going to be merger of equals no premium lane. Nearly spits out. His coffee. Watson is suggesting that dynegy by enron at market price no added cash for shareholders watson watches lay fixing with a stony man to man glare ten years ago. That look maeve instilled fear but now it's just empty posturing chuck you know. That's not right. We're talking about enron just a couple of months ago. We were trading at ninety dollars a share. The only reason our share price has fallen so far. The only reason we've had recent problems is because of shortsellers and the media shortsellers in the media. Well which of those two groups did. Fast i belong to look. It's not that. I don't sympathize with what you're going through but you need to know one thing you've got a hell of a train bearing down on you if you want me to step in front of it for you. This is the only way it's going to happen way. Sits in silence for a moment finally resigned. He nods his head very few other things. Y'all are losing money by the day. So this thing needs to come together. Quick but i won't take everything you're international projects are dogs and i don't want him. We need to shudder everything. You're doing outside north. America except the trading office in lung lay nods again Well if we do merge by believe the new company should be called dynegy wotton scoffs he asked to admire lays gall not a chance can then ron name has to go as just to sell it. Okay okay if not enron dynegy than what about dynegy enron watch i know for their. What's your idea. Would you propose. We call this new company watson shakes his head at this point lays just embarrassing himself watson tries to be kind dynegy the company will be called dynegy lays shoulder slump. It's as if watson has just reached over the table and slapped his face watson. Done ken look. We've got to get rid of most of your management team. That's given while he can stay. But that's it. I'll run the merged company and you can stay on the board. We'll call you. I don't know chairman emeritus or something. Ken way chairman. America's of dynegy lay swallows then slowly hesitantly extends his hand watson takes it the shake meetings over but before he stands watson has one last question can do. I have your word that there aren't any more shoes to drop. Chuck you have my word. The banks the lawyers everyone. They've been all over the place. They haven't found anything watson. Nods and smiles it's november nineteenth two thousand one and jeff mcmahon wonders. If this is how it feels to attend your funeral the waldorf astoria new york is heated of course but mcmahon's shivering as if he's outside on the snowy sidewalk man standing next to gregg wally their midway through a two hour presentation before an audience seventy-five lenders and two hundred bangers. The purpose of this presentation is to outline one by one. The challenges currently confronting enron mcmahon. And wally listened problems at a document and handed copies to all the attendees. It's sixty five pages. Long mcmahon and wally stick to the script they present themselves as the faces of the new enron. The old enron was purely earning string. Big man says with a deal shop mentality. The old enron justifiably earned it's dubious reputation as a black box as a result all creditor investor confidence has been lost. The company has no access to capital. It's debt has outpaced cash flow. it's lost too much. Money relied on. Faulty and misleading off-balance-sheet entities mcmahon promises enron has changed the new enron is dedicated to financial transparency open communication. There is no possibility that the executives and employees retained following the merger with dynegy will regress to the ways of old and ron mcmahon looks at the impassive faces of the bankers and lenders. He doesn't feel like anyone's buying this dog and pony show but he soldiers on he doesn't mention it here but he knows that this torturous day is far from over enron is scheduled to file its quarter report by nightfall and with it will come more admissions of guilt. Chuck watson will not be happy the following week. Ken lay arrives at another enron board meeting. Feeling point yes. The third quarter report landed with a thud last week. The company took a higher-than-expected loss of six hundred sixty four million and prospects looked him for the next quarter two of its. Sp's have more death assets. The debt collectors are demanding immediate payment of more than one billion dollars. Enron doesn't have that in its coffers. Chuck watson was furious when he saw the q. Three report and told lay that the only way he'd consider moving forward with merger now was if lay stepped away from the company once and for all but today lay has a plan. He has decided that he's not going to step down. And he thinks that watson will be okay with it. He believes that the light at the end of the tunnel is growing brighter and brighter. By the minute. He is convinced what he built is too strong too important. And simply to meaningful to america and the global energy business lay is one of the most well known corporate leaders in the world. Watson won't pass up and opportunity to acquire enron simply because lay wants to remain as chairman board members not in support lanes back in his chair. He believes he's pulled it off. Enron was pushed to the brink but because he held on dynegy will take over handle the debt and everyone will be able to move on as if two thousand one never happened. He reminds himself. The dynegy was always like enron's little brother short made money but never on enron scam. Watson was never on the cover of business magazines watson close with the bushes and shore and ron has its issues but with this acquisition watson can catapult himself into a whole other week he should feel grateful. Lay out the window at the surrounding skyscrapers. He's happy to be at the top of enron corporation. There's no place he'd rather be. It's morning on wednesday november. Twenty eighth when chuck watson calls ken lay. You was up until nearly midnight talking with banking officials. They all told him. Enron's debt load is beyond anything they could have anticipated and there will be no more loans which means enron can't borrow another dime from anyone in the world except dynegy but dynegy's not in the lending business when watson asked. Ken lay of there anymore. Shoes drop lay assured him there were none now the q. Three statement has led watson to conclude. Lay is stupid. Or liar and watson doesn't think lay stoop plus there are now rumours lay has changed his mind about stepping down and enron's ratings are in the toilet just morning. Snp downgraded and ron two notches. Moody's took snp's lead and downgraded enron as well fitch ratings followed suit. Everyone seems to agree. Enron is junk so watson keeps his conversation with. Ken lay short simple to the point. Can i've decided to terminate the merger. I'm disappointed this didn't work out. And i wish you the best of luck but if lays taken the news hard he doesn't show it. I'm disappointed to he replies motionless. I'll move onto our other alternatives. Watson hangs up. He just shakes his head. Incredulous enron is currently trading at sixty one cents a share. It used to be ninety dollars. Plus it's ten billion in debt watson. Was its last hope. And he walked away. Lay referenced other alternatives. But the only alternative watson can thanks chapter eleven and after bankruptcy indictments will surely come down and hearings will follow. Ken lay is probably going to jail. Still chuck watson too angry to feel bad for him and he suspects. The rest of america will feel the same way next on american scandal. Enron declared bankruptcy in late skilling and fastow are someone by the federal government to face justice from wandering this is episode four of enron for american scandal. If you like our show please give us a five star rating. Leave a review and be sure to tell your friends. Follow american scandal on apple podcasts. Spotify amazon music the wondering or wherever. You're listening right now. Listen at free by joining wondering plus you'll also find some links offers from our sponsors in the episode notes. Supporting them helps us keep offering our shows for free another way. You can support the show by philly small survey at one dot com slash survey to tell us what topics we might come next. You can also find us and me on twitter. Search for hashtag american scandal. Were follow me at lindsey graham lindsey with an a middle english way. Be sure to listen to my other podcast to american history tellers and businessmen a quick note about our reenactments in most cases. We can't know exactly what was said. But all are are based on historical research if you'd like to learn more about enron. We recommend the books. Power failure by mimi. Swartz was sharon watkins. The smartest guys in the room by bethany mclean and peter l. kind conspiracy of fools by kurt. I can walk and twenty four days. By rebecca smith and john m schmil. American scandal is hosted edited an executive produced by meet lindsey graham for airship sound designed by derek. Barron's music by lindsey graham. This episode is written by hannibal. Ds our senior producer and editor karen low executive producers far. Stephanie jen's jenny lower beckmann and her non lopez for one won't business is battle and there's always somebody else out there willing to do the same thing faster or cheaper or better than you can. I'm david brown. The host of the business wars podcast from wondering and on each season of business wars. You'll be treated to stories of legendary. Corporate battles learned the very heart of each rivalry. Unearth all the valuable lessons to be found. There you'll get to hear all about fights between companies like spacex and blue origin tick-tock versus instagram nike and adidas and so many more remember when home entertainment was ruled by blockbuster video. We've got the story of how netflix swooped in and left them in the dust. You prefer chick-fil-a over kfc check out our season all about the fast food giant's fighting for your attention and your appetite learned the unbelievably true stories of how today's biggest businesses got to where they are the fighting. That goes on behind the scenes. And just how the best companies rise to the top. Listen to business wars on amazon music apple. Podcasts were joined henry plus in the wondering app to listen one week early and ad free.

enron dynegy skilling fastow schweiler jeff mcmahon Jeff skilling schuco ken lay rebecca smith andy fastow watson Ljm mcmahon Mcmahon glasser ron Chuck watson watkins
Encore: Enron | The Black Box | 2

American Scandal

46:18 min | 3 months ago

Encore: Enron | The Black Box | 2

"To listen to american scandal one week early and ad free join one plus in the country app. Download the wondering app in your apple or google. Play mobile app store today. Enron chief financial officer. Andy fastow was about to kill an alligator. That's what former enron ceo rich kinder used to call it. He said that enron's problems we're like alligators and to fix them. You had to get in the swamp kick out all the alligators than kill them. One by one fast. Al likes to remind himself of this every time. Someone at enron becomes a problem and when that happens. It's time to go alligators fast. Out gets out of his chair paces with each passing second. He gets a little angrier. Then there's a knock at the door. Today's alligator has arrived. It's open jeff. Mcmahon enters enron corporate treasurer glorified accountants more. Like it and fastow hates him. You wanted to see me andy. Yeah how'd you meeting with jeffco my meeting with killing the slip your mind. You don't remember speaking jeff behind my back and do we really have to do this. Your problem talk right now. Fine the current situation with l. J. m. is completely untenable is it. Yeah you're enron. Cfo but separately. You run j. An investment fund. That does all its business with enron. Yeah so so. This is a conflict of interest about bankers at maryland. I union calling me you've launched. Ljm two now and you want them to provide debt financing and you're threatening to pull enron's business altogether if they won't do it and also enron employees are telling me that when they negotiate with ljm. It strongly implied that if they fight for themselves too hard they'll be punished with negative performance. Reviews over at enron andy. This is completely out of control. Fastow clinches and unconscious his fist in feel the heat in his face knowing he's turning red wonders what would happen if he just hit mcmahon right here in the office he could probably get away with it. But there's no need for such extreme measures yet. jeff. I don't know if we can continue working together and what you talk him l. g. m. is legal. Ljm is good for enron and as an employee of enron. That should be good enough for you. I need to look out for shareholders. Look out for them. Then that's not my problem. You think i don't know what this is about you know. Ljm is a great idea. You're just mad. You didn't think of it first and instead of coming up with something innovative on your own just trying to tear down when i built it's lazy and it's unethical. You're calling me unethical. Your little trick with a nigerian barges. Come on. I know everything that happens in this building. And everything you say to skilling gets back to me everything so just thinking about that next time you wanna run crying to him like a little bitch. Get out. mcmahon just stares back at him trembling with rage. he can't express fast grins. He knows skilling will soon have mcmahon transferred and he will no longer be able to stick his nose and fastow's business look at him broken man with nothing left to say just looking down to the carpet fast and watches him. Trudge back toward the elevators. If mcmahon didn't understand before who really runs things at enron he does now american scandal sponsored by malware. Bytes like your privacy. Tired of being tracked by ads for sites you just visited use public wifi at the coffee shop or airport. Sounds like you could use malware bytes cyber protection for everyone. Malware bites is complete cyber protection. That keeps all your devices and personal info. Safe from threats. So you can shop play in connect online without a second thought and their privacy. Vpn takes your security to the next level. It's a super fast next gen. 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An easily build from there with claves best-performing templates to get started with a free trial of club. You visit clavier dot com slash. Listen that's k. L. a. v. i. Yo dot com slash. Listen from wondering. I'm lindsey graham and this is american scam as the twentieth century drew to a close enron was arguably the number one company in america ceo. Ken lay c. o. Jeff skilling and. cfo. Andy fastow steered enron into new businesses and greater profits than ever before but he was all an illusion. Those at the top of enron manipulated quarterly statements and employed any loophole. They could find in order to deceive shareholders and stock analysts and throughout the nineteen nineties. These scheme succeeded brilliantly but in two thousand cracks began to appear in the company's carefully constructed facade enron's leaders rushed to capitalize on energy deregulation and california. They propped up company balance sheets by increasingly fraudulent means and in the process. They made some mistakes mistakes. That would cost them in imperceptible ways until it was too late. This is episode to the black box in may of two thousand. Tim belden had of enron's western electricity trading desk is having a ball. It's been a year since he. I figured out how he could trick. The california energy market into overpaying electricity. And do it legally. But belden isn't some kind of criminal low-life. He has a masters in public policy and spent five years as a researcher at lawrence berkeley national laboratory. Most importantly has what enron executives liked to call intellectual purity meaning he answers no god but the free market and will exploit institutional inefficiencies for cash. Belden leans against his desk tossing a nerf football in the air. He looks at his troops of about ten or so traders all of them intellectually pure just like him. It's time to take stock of the latest strategies to gain the california energy market make millions in the process. there's the classic submit a scheduled to reflect demand that doesn't exist to drive up costs the call that one fat boy. Then there's the old file transmission. Schedules then get paid to relieve the system of congestion. That little maneuver goes by the name. Death star mellon asks if there are any new ideas. One trader suggests enron could sell power. It doesn't actually have for use. As reserves enron will probably never be asked to supply the power anyway or could buy it back later. Lower price bell then loves it. The call this latest scheme. Get shorty coming up with these fun. Codenames his favourite part but one of the trader says. He's concerned about something. He knows that what they're doing is legal. Just maximizing the loopholes and california energy law but even so this this all ethically questionable belvin laughs. Who let this buzzkill in the building. He explains at enron is in the business of doing. What's best for the state of california. It's in the business of doing. What's best for enron. If you build a house with no doors and fill it with valuables. Don't be surprised if it gets robbed belt and asks for more ideas and several traders start talking at once. It's music belgians ears. And he doesn't feel an ounce of guilt. His team puts the hours into studying all this complex and convoluted policy. They've done their homework. And now they will reap the rewards rebecca mark sits in the boardroom at enron in houston staring at a bunch of middle aged suits with frown on their faces. She knows what they want. They want her to throw in the towel. Admit she was wrong and walkaway. She drums her fingers on the table organizing thoughts. She's never given up before and she's not about to start today. The most important thing is to stay calm. if she gets rattled. she's done. She knows that. And sodas jeff skilling and that's why skilling is doing his very best to rattle her jeff skilling looks at each of the board members intern and digs in. Rebecca said we should get into the water business. Said she could run it. We'd make billions told you all. I didn't buy it. Would you side with her anyway. Except that even freed up some enron cash to get the new business on its feet. Well we all know what happened next. As eric's her brilliant plan to conquer the water industry around rebecca mark can't contain herself. Jeff that's not fair. You know who started with two hundred thirty two million dollars an operating profit. Now you're down to less than one hundred as their stock is trading at three dollars and fifty cents a share. We've made some missteps but were correcting them. Restructuring moving into internet as wreck something completely new and. We're building something unprecedented. They're going to be some bumps along the way pumps. Your outfit is two billion in debt. One more bump like that enron is over. Why won't let it happen. Gentlemen it is time to shut this thing down. Let me figure out how we're going to save this company. This company that rebecca mark through her negligence and stupidity is doing her very best to destroy. It takes a moment for mark to process. What jeff just said she knew skilling was going to hold a gun to her head today but she didn't know he'd pull the trigger. Mark looks at the other board members. They avoid eye contact. Even ken lay the past. She could always count on him now for the first time. She sees a look of genuine anger on his face. Anger directed at her. She's committed the one unpardonable sin lost money for the company. Mark swallows hard and response in the strongest voice. She can muster. I don't agree with just analysis. I believe that as rick's will pay off in the long run. If you give me the opportunity. I'll show you skilling says nothing in reply he doesn't have to. Its lay who inquired voice response. Rebecca it's over with those three words. Rebecca mark is told that after fourteen years of service she's finished at enron. She collects her papers and stands on late for another meeting. I regret what happened with asterix true but once you all to know that it would have worked just needed time. Rebecca mark always knew. Jeff skilling wanted enron all to himself and now he's got it with her out of the way he will no doubt be named ceo within a year or two. We'll good for him. She thinks hope it works. Out as she exits the boardroom. Rebecca mark holzer had high. She played well but she lost still. There's no shame. In in october. Of two thousand richard sanders head of litigation for enron north america trips over a remote control car benz down to peel away twix. Rapper stuck to his shoe like he's into the bedroom of his nine year old son but no he's in enron's western energy trading office with several of his attorneys time for him and his colleagues to have a chat with. Tim belton all ten tv screens around. The office are tuned to the same news report. No one can quite figure out how the fifth largest economy on earth wound up with a power shortage. California is in the grips of a full-blown energy crisis with rolling blackouts plunging homes schools and hospitals into darkness. Sanders looks around stunned. The traders are laughing. The most well educated well compensated young men in america and they're wreaking havoc with the state's government for their own amusement while they're not doing purely for laughs they're also making an obscene amount of money for enron the head honchos and houston clearly aren't complaining but they sent sanders to talk to belden. Just want to make sure that he's not doing anything that can't be explained down the road. If necessary sanders approaches belden casually. Leany back in his chair feet. On his desk immersed in the graph scrolling on his computer screen upon seeing sanders belen smiles wide and shakes hands with him and the other lawyers sanders asks if they all might speak privately in the nearest conference room and once seated sanders doesn't waste time. He needs to know. Exactly what belden is doing. He cautions him that he is not belgians lawyer. So if he says anything incriminating sanders could use it against him to protect enron's interests but if that worries belden at all he doesn't show it in the slightest he bounds over to a whiteboard and starts drawing. There's the ricochet project which exports power from california than imports of back at higher prices. Of course it ought not to make up with death star fatboy or get shorty. These are all little games made to california. Energy lawn to enron's advantage explains but don't worry he adds these strategies are so complex that they'll fly over the heads of lehman and fortunately for enron all california energy regulators peer to be lehman he finishes by placing the cap back on his dry. Erase marker you will now take questions. Sanders begins to speak and stops. He is utterly almost cartoonish. -ly dumbfounded the only response he can manage as a simple question is a two eight to change the nicknames to something more innocent puppy dog or mama's cooking belden giggles a sanders. It's clear that thanks to tim. Belden and ron is definitely going to get suit. It's raining in houston. When sanders returned to his office. The weather fits his mood. His team looks just as concerned as he feels. California's energy crisis is about to become a major pr crisis for enron. Sanders can't get out ahead of this thing and along with belden. They've got andy fastow to worry about. Ljm all the rest of fast down special purpose entities were created to minimize the appearance of losses. But they're on the very margins of what law intolerant is not time to panic yet but everyone must be on alert if enron lands on the front pages at the wrong time. The company's reputation will be on the line as never before. American scandal is sponsored by better. Help it's strange to think that even not that long ago certainly. When i was a young adult and i'm not that old now. There was a stigma against therapy. I'm glad it's changing because it makes no sense. Who would stigmatize going to the gym. Eating healthier talking with a therapist is emotional strength training. And when you're ready for that better help is therefore you better help. Assess your needs and match you with your own. Licensed professional therapist. Someone you can begin communicating with and under forty eight hours. It's not a crisis. 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The voices of those locked up some as miners have been all but written off but no more written off premieres july fourteenth. Listen wherever you get podcasts. Do it's early. Two thousand one and tim belden is annoyed. He's over in the office snack area. And there's no sign of the chips. He likes he specifically told the new girl to restock the chips have to talk to her. Maybe even let her go still deciding about that when the phone at his desk rings probably unimportant but he rushes back anyway when he sees two eight one area code. He knows it's his bosses in. Houston this could be bad. He might have pushed death star one too many times. His head is spinning. He picks up the phone with some reluctance. As if it's a snake on the other end of the line. The enron executive talks and tim belden listens when he hangs up the phone. He stands there in shock the peers. That some california. Legislators are looking into their energy crisis are beginning to point. The finger at enron california citizens are bit more enraged over the blackouts. Any execs anticipated. Tim belden doesn't need to worry about any of that because he's getting promoted now. Belden won't just run enron's western energy trading. He'll be the new managing director of all energy trading. Nationwide his hustling on the california grid has netted enron two hundred fifty four million dollars. And that's just for the month of january belden is so filled with joy he's almost teary eyed then. He sits down throws on his headphones cranks up the volume gets back to work back in houston. Ken lay looks at the sea of enron. Employees gathered to hear him speak. There's hundreds of them on the trading floor knee appreciates each and every one. Enron is a truly magnificent company and he takes a brief moment to reflect on. All he's accomplished. He realizes that the day will come when he'll miss moments like this. Even though he hates public speaking lay steps the microphone and begins first of all says they should know that the administrators in california are way off base flaming enron for its problems. There have been a lot of finger pointing in the press lately and lay finds it all very unfair people at enron too much integrity to try and quote game a whole states energy system. Then he tells those gathered. That lay can explain what's really going on here. See california didn't deregulate properly. The handle deregulation piecemeal didn't commit california's refusal to embrace a truly free market has led to its present. Embarrassment skilling warn them lay himself on them deregulate fully or not at all. If you don't you shouldn't be surprised when you run into problems and that's the end of it. Enron has done nothing wrong and no one need be concerned about statements. From california's attorney general calling for lay to be jailed. He chuckles a bit remembering a great joke. That skilling made the other day you know what the differences between the state of california and the titanic. At least the lights were on. The titanic went down as lay leaves the podium. He thinks about the future late last year. He made a decision in two thousand one. He would step down and skilling would replace him as ceo of enron as of today. The transition is due to take place in about three weeks. And ron has had an incredible sixteen year. Run under skilling lays confident that the next sixteen and beyond will be even better in march two thousand one in the enron office lobby. Jeff skilling hits the button and waits for the elevator to arrive he stares at the arrows on goes up one goes down. Life is a lot like added occurs to him only in life. You don't always know which button you've pushed out of. The corner resigned. Skewing spots than approaching enron employees guys prompting the counter. Something one look at skilling's face and he backs off. This is not take the elevator with the ball stay. I'll grab the next one. The accountant says king right. You will spilling things hinders the elevator alone and begins to ascend skilling things back to twenty four years ago he was twenty three years old trying to get into harvard business school. His grades weren't quite good enough. Though and the deans on offense they meet at the houston high for a final interview. White-haired dean peered at the young nba candidate and asked a simple question skilling. Smart skewing. looks him straight. He is with no hesitation. I'm king smart. He replies but recalling that now. Skilling's fist clinches. Well if you're so king smart he thanks the. Can you figure this out the elevator doors open and skilling marches down the hall with a scowl. He sees the people at their desks in their offices looking busy on the phone typing away but they're useless every last one of them. None of these people can tell him. Why enron stock price is falling. It was at eighty at the top of the quarter today. It's at fifty five. Enron stock price does not drop but now all of a sudden was skilling at the helm it's plummeting and the media is beginning to take note skilling secretary says he's right on time she has the reporter for fortune on the line skilling winces. He forgot he agreed to this. He doesn't like reporters especially since the wall street journal published at hit piece a week or two ago. Volatility in the natural gas and electricity markets will hurt and runs investors down. The road claimed everyone should be wary of enron's mark to market accounting strategy. The company isn't financially transparent enough whining. Totally uncalled for skewing. Thanks he should sue skilling slams the office door behind him sits at his desk and takes call reporter dentis herself as bethany mclean with fortune magazine. There's something in her tone skilling disliked already. She sounds like a new york. No all twenty something taking shots at someone who actually matters one by one. She asks her questions. How exactly does enron make. Its money mr skilling. Your financial documents are unusually difficult to comprehend mr skilling some call enron and blackbox as in. It's impossible to understand from the outside what's happening inside. mr skilling. skewing looks out. The window wants to just go home you know. I have to go to a meeting. He says she starts talking again. But skilling cuts her off no you really don't get it anyone who's successful people wanna take them down based on ignorance and he slams the phone down interview over skilling deep breath actually felt good. Hang up on her smiles for the first time all day he is still jeff being smart skilling and he is still in control but his smile fades for the first time in a long time and ron might be in trouble. It feels like the doctor grimly. Examining your x ray. Then calmly asking have seat feels like an end. Bethany mclean thirty. One is in a conference room at fortune in new york reviewing her questions to move down. The type page lightly taps each full of point with pen. The men from enron will be here soon. She waits for them alongside fortune. Editors jonas sarah and jim in poco the room. They sit in his dark and windowless. It's usually just a place to review photos. But it was the only space available deadlines nearing it is what it is when it sends the wrong. Message mclean thanks. this is not an inquisition. She's not trying to bring enron down. She genuinely wants them only to help. Clear up a few things things that once explained she knows will help wall street and the business community breathe easier. She would have explained that to skilling had given her the chance but instead he hung up on her and within hours of that panic enron. Pr person call to apologize. Mr skilling regrets is earlier behavior the man said it had been a tough day skilling ascending executives from houston to new york immediately to meet with mclean personally clear up any concerns about enron the enron representatives arrive is promised they file into the dark conference room at ten. Am on the dot. They're all smiles and handshakes head of corporate communication palmer had of investor relations mark caning and the famed financial prodigy himself enron cfo. Andy fastow fassel leans back in his chair and lifts his hands outward in. I'm an open book gesture as he begins. Let me just start by saying that. Enron is diverse dynamic provides customers with optionality the way to understand enron is the think of toyota. Mclean just down toyota with two question marks. What does this guy talking about. She also can't help notice fast just went out of his way to ignore her presence. He directed his opening entirely to her. Two older male editors interesting. She responds if i may mr fast. And i'd like to begin by asking you the same question. I posed mr skilling. How exactly does enron make. Its money mclean wonders. If she's the only one who catches the momentary look of loathing. Passover fastow's face with a tight smile fast alex back at her male editors and says we're a logistics company with a number of interlocking businesses that span the globe the full nature of winter simply beyond the scope one. I might explain in single meeting here but but you can ask. The analysts thirteen out of eighteen. Rate enron stock. A by i think that right there speaks for itself fast. I'll take some water then. Continues much like toyota. We negotiate our suppliers arrive at costs. And well you're smart. You can see what i'm getting at. The clean feels like alice at the tea party. She looks at the enron exacts that flank fast out they nod and finally she looks at her editors in poco. Sarah who look the wilder so good. It's not just. Her fast is not making any sense at all so she tries to another question. Maybe you could offer some details and just basic layman's terms. As to how enron so reliably generates profits on a quarterly basis. Fastow raises a quizzical eyebrow. And well unfortunately we. We need to keep certain specifics confidential for competitive reasons. But what. I'm getting at here. Is that in terms of enron success. Where exactly like toyota detroit used to own. Every aspect of automobile manufacturing then toyota came along and said well. We'll hey we just want to build the best cars you know so. Toyota outsource the various components that make up a car transmissions radios everything. They went to whatever manufacturer's soul the best stuff at the best price. And well we're just like that at enron. We find the best. What is with this guy and toyota. Mclean thinks toyota. An enron are not remotely. The same a high school economics student would be able to tell you that claimed frowns. Fastow opens his mouth to speak again but fortune editor. Jim poco has run out of patience. Mr fastow i'm sorry. You've got to drop toyota. Analogy doesn't make sense tells me you don't understand your own company. I'm having a hard time figuring out what you're trying to say about. Enron tense moment follows and fast outbursts out laughing laughter. That mcclain would describe as nervous. She decides that playtime is over. I read about the related party. Transactions involving eljay m. What can you tell me about. L. j. m. mr fastow smile is white office face the other exact shift in their seats. The editors leaned forward in unison for a moment. The room is so silent. You can hear the vacuum running faintly down the hall. Fastow picks a piece of lint off his sleeve and tosses on the floor jaw tight. He responds all. I can tell you is that our senior executives run that fund anything further confidential. I see well. I think that about does it. Right yes gentlemen. We have few other appointments. Who tent city trusted if there are any further questions. You won't hesitate to reach out to my secretary fast down the others from enron. Stan straighten their suit jackets. One opens the door and they begin to file out mclean. And the editors say goodbye and fastow stops in the doorway and for the first time looks directly mclean says look i don't really care what you say about the company. Just don't make me look bad. And he's gone mclean looks at her. Editors ella needs to say it out loud. The situation at enron is clearly worse than they could've imagined they're going to run mclain story immediately weeks later back in houston andy fast out angrily shoves pay for from his desk into his office shredder truth be told he doesn't even know what he's shredding but it seems smart to shred it all fourteen magazine really screwed things up. He tried to be nice. Tried to explain. And they repaid his kindness with an article. by bethany. mclean called is enron overpriced now. Everyone's his ass the pointing the finger at him when they brought him in. They made it clear that enron had display constant quarterly growth. We need you to make that happen. And he said he understood and he worked hard worked. His way up came up with ideas. They couldn't cover them when they couldn't cover themselves. Andy fastow put enron i. He was a good employees. No one's going to make him feel ashamed of that. No one especially not the three men currently standing in his office. Doorway there's chief accounting officer rick causey fastow's right hand at the company michael copper and lawyer jordan mintz. Men's that leads. The charge tells fast out that the stock prices at fifty dollars and reporters are snooping around the other day. Frontline centrally accused. The company of pillaging california and laughing all the way to the bank while the state suffered the men are here to confirm fast has given up all personal stake in ljm fast our explodes skilling told him two weeks ago so of course he did. Watch the problem copper. His right hand is apologetic. Counts wanted in writing. I need fast to sign a letter from arthur andersen declaring that he's given all interest in. Ljm if you just signed the letter they'll get out of his office. Never bother him about it again. Fast has some choice. Four letter words for the bean counters at arthur andersen and he shares them at the top of his voice. Then he tells copper to give him a goddamn pen so he could sign when it's done fast outfits. He looks to three colleagues and says look. I'm sorry it's just that i created l. gm and it means a lot to me. Zoologist pretty emotional. I think you can understand the three men. Assure him they get it. And everything's fine and quietly. They leave his office working at enron with a lot more fun in the nineties. Fast out things. The nineties are over and now it seems that a new era has begun. Andy fastow gets back to shredding. It's time to prepare for war. It's not always easy to know where to turn. When you or a loved one hits a low point and seeking help becomes even more difficult when it comes to stigmatize topics like addiction and mental health. Lemonade media show in recovery hosted. By dr n'singa harrison is here as a starting point season. One of in recovery focused on all things addiction while season two is broadening its scope to cover the many facets of mental health. This series has an incredibly inspiring lineup of guests over the next few months including podcasters like georgia heart stark. From my favorite murder. David smith from the cost of care and array mckesson from potsy of the people. Follow along as guests. Bravely share their experiences with addiction trauma and the progress. They've made you can listen to in recovery from lemonade media. Wherever you get your podcasts Sherron watkins returns enron's offices following her lunch break. There's noticeable of spring in her step. It's not the things are going poorly exactly. She just feels like her. Strengths could be better utilized elsewhere to has recently transferred to enron broadband tasked with implementing cost. Controls feels like she's running a daycare. Employees have broadband or mostly a bunch of spoiled brats. What she tries to do her job yell at her start her fault that they lose more and more money every month because they're deals don't work out. Maybe it wasn't so smart partner up with blockbuster video then. Jim fallon took over. Walking's has known him for years and never liked him. She tried to make suggestions informing him. How broadband might be saved. His response was to suggest she looked to transfer to a different department in the company. Walking is all too happy to do that but where this is the question. She's mulling over by the elevators when she feels a tap on her shoulder. Walking's turns around and sees a man she hasn't spoken to in a very long time. Sandy fast down. He's in charm mode. It wasn't so long ago that he was berating her for joking about enron's accounting practices but everything changed when she transferred from his division and made vp after that fastow viewed her more as an equal. Now he says it's nice to see her and asks what she's up to these days. Watkins relates the whole sorry tale of her adventures and broadband. Andy listens respectfully and shakes his head at the stupidity of falun. Then fastow's eyes light up since she's looking for a new place to land. Why not join his team. They'll be just like old times that night. Watkins calls for all friend. Jeff mcmahon mcmahon is easy to talk to with a gift. Watkins lacks for seeing all the angles. She was distressed to hear rumors that he'd come out on the losing side of a power struggle with fastow though. It seems like things wound up okay for him. His current title is ceo of enron industrial markets. Walk ins tells mcmahon about fastow's offer it. Is enticing walk. Ins would evaluate potential deals and bring the strongest wants to his attention and fast out has told her that if she finds a good deal on her own. She can put her name on it ensuring that she'll get all the credit should the deal prove lucrative mcmahon listens patiently says. It's entirely her decision. You wouldn't recommend working with fastow. Walk ins asks if he's just saying that because he has a personal problem with fastow mcmahon assures her he doesn't he just thinks it's a bad. Idea walking's thanks for the advice. She says she'll continue to mull it over on march twenty second. Two thousand one. Jeff skilling looks at the conference table the chairs the faces surrounding him he wonders if the decor and here was always so dreary. Everything appears to be a different shade of grey. He could've sworn used to look warmer in here. More inviting perhaps did in the better days the days when the stock price soared an inch every day towards one hundred bucks. A share not stuck at sixty. At least that's an improvement from last week when it was fifty. Five skilling won't admit defeat. Yeah he sips his diet coke start bobbing his head like a fighter approaching the ring getting himself pumped up. He nods his assistant to get the conference call rolling most of the board members around him at the conference table. Once you couldn't appear in person who dialed in including. Ken lay now serves as enron's chairman. There are also a number stock analysts and shareholders on the line with a broad smile skilling looks down the polycom speakerphone in front of him and gets to it. Well we did it. We beat our first quarter. Earnings estimates by two cents share an outstanding quarter another outstanding quarter. We're very optimistic about each of our businesses and confident that our record growth is sustainable for for many years to come any questions. Richard problem here with highfields capital. That's great about your earnings and all jeff but the investors i represent read the wall street journal and they read fortune. So we want to see it. Balance-sheet for your company and we're tired of waiting for skewing feels like a bucket of ice water was just pour overs head. We do not have the balance he completed. We will have that done shortly when we filed a quarterly report. But until we all of that together we just cannot give that to you. Skewing things that should satisfy him shocked when grubbing dares to speak again concern understand. Why mine would be an unreasonable request. I'm not saying we can't tell you. What the balance is are. We clearly have all of those positions on a daily basis. But at this point we will wait to disclose those until all the right accounting's put together in your the only financial institution that cannot produce a balanced or cash flow statement with earnings ash. Skilling sees at the board members. Look nervous this is bad. He's losing the room tugs at his collar. China affecting affable tone and says well thank you very much we appreciate. You appreciate it asshole. Skilling here's the gasps and sees the drop jaws but he smirks. Yes so what that prick took a swing at him. So skilling swing back it's called balls. They're lucky the ceo has a pair. A young associate scurries over with a note on. It is written one word apologize. Skewing takes the note. Wade's cutaway and shoves it under some papers. That sensation of being doused ice water returns call ends skilling watches the exiting board members and realizes. He hates them all. He hits this job he hates. This company must fall is beginning to hate himself. Ken lay sits in the office of the chairman. He comes and goes as he pleases. These days thought like when he was. Ceo and practically lived in this building lay looks out his window at the setting sun and reassures himself that he made the right decision. He does not think of himself as a man capable of making mistakes. Not when it comes to the important things spin a few days. Since he heard that jeff skilling called hedge fund manager an asshole conference call such a lapse in judgment would be unforgivable in the lesser man but lay trust skilling. Ceo is a high stress job. Les can't expect everyone to handle the pressure as well as heated and this morning skilling call and ask if he could meet today lay of course said yes his certain his ceo just needs a little friendly council bit of advice. Maybe he wants to personally apologize. Which is good because lay is in a forgiving mood. He's ready to share his wisdom. Yes and ron is in a bit of a storm right now. But he's certain skilling will do what needs to be done to turn things around their meeting was supposed to begin at five but it's five. Oh three it's not like stealing to be late then. 507 the c. e. o. of enron stumbles in shirt untucked unshaven face hair skew bags under his red eyes. He throws himself into the chair opposite desk asking just sits there. They feel something he hasn't felt since he was a small child. Fear this can't be the great jeff skilling. he thinks. This can't be the man that i've entrusted with my company. My legacy. What lay is looking at a drowning man. Skilling's voice quivers all spills out of and everyone warned him not to go to california but he wasn't going to hide he was going to stand up for the company. People in california. Wanna get mad about their traffic lights. Not working they should talk to their elected officials. And ron didn't create their problems. But once in san francisco he couldn't believe what awaited him hundreds of protesters some of them wearing masks of his face. Jeff skilling stop the killing that chanted fears he would be assassinated prompt san francisco police to install metal detectors at the doors at the commonwealth club where he was scheduled to speak he was just there to defend enron to show the people he did nothing wrong and he was midway through a powerpoint presentation when there was commotion before he can react something clicked the sign of his head. He became aware of security dragging woman toward the exits. He touched his ear and pulled away white chocolate. The woman had heaved a pie. His face skilling pauses staring off into the distance. I want resign. He says he's taking the declining stock price personally. He hasn't been spending enough time with his kids. He feel sick all the time. He can't sleep layfield. Many things at once disappointment disgust confusion. Anger but also concern. He asked skilling if there's any other reason that skilling doesn't want to be ceo anymore skewing shakes his head. There's nothing else going on. And he stands russ's hand through damp hair offers lay a limp handshake. He turns without another word leaves the office. I wonders what the hell just happened. What the hell are they gonna do. Next lay took it well skilling. Thanks but it doesn't really matter though he feels like he's being pulled apart the company he just abandon his in a noose and tightening all worked. Fine as long as wall street didn't look too closely at the numbers. They haven't found anything yet but they will. Then they'll understand that when it comes to enron. There are facts and then there is fiction when the investors find out that for over a decade. They mistook one for the other. It's gonna get ugly but skilling was able to cash a few hundred million dollars worth of enron stock before. He tendered his resignation. You may not have much but at least he has that he is still rich. Sherron watkins is in her new office at fastow's floor staring down at the accounting documents in front of her. She feels like throwing up. She's just met any fastow's raptors that off book entities created protect enron against losses from underperforming assets. Walk ins knows that what she's looking at can't be explained and can't be justified. She is just uncovered the truth about fast. And it's this andy. Fastow is a criminal and he will get caught in he does. he will fall hard and in the process. Take enron down with next american scandal. Sherron watkins attempts to blow the whistle and ken lay comes under fire as enron goes from being the most celebrated company in america to the most hated from wandering. This is episode two of enron for american scandal. If you like our show please give us a five star rating and leave a review. Be sure to tell your friends. Follow american scandal on apple podcasts. Spotify amazon music the wondering app or wherever. You're listening right now. Listen at free by joining one. Plus you'll also find some links offers from our sponsors. The episodes supporting them helps us. Keep offering our shows for free another way. You can support. The show is by filling out a small survey and wondering dot com slash survey. Tell us what topics we might come next. You can also find us and me on twitter search for hashtag un-american scandal follow me at lindsey graham lindsey with an a little initially. Be sure to listen to my other. Podcast to american history tellers and business. Movers a quick note about our reenactments in most cases. We can't know exactly what was said but all our dramas asians are based on historical research. If you'd like to learn more about enron we recommend the books. Power failure by mimi. Swartz was sherron watkins. The smartest guys in the room by bethany mclean and peter l. kind conspiracy of fools by kurt. I can walk and twenty four days. By rebecca smith and john m schmila. Americans scandal is hosted edited and executive produced by meet lindsey graham for airship sound design. Fight eric parents music by lindsey graham. This episode is written my hannibal. Ds our senior producer and editor is karen. Low executive producers. Are stephanie jen's jenny lower beckmann and hernan lopez for one in the aftermath of a shocking crime. People always ask why who would do something like that. What makes people like that tick. I'm candice delong and in my new podcast killers psyche. All by using my five decades of experience as a clinical psychiatric nurse and criminal profiler to dissect the thoughts behaviors and motivations of the most infamous felons in every episode of killer psyche. All cover high profile cases. That shocked the world. Some that i've personally worked on. Like the unabomber and other cases like christopher punch aka. Dr death where my training will help you understand what was going on inside his head was he delusional or a cold blooded killer to hear the most gripping details of the most chilling criminal minds in modern history follow killer psyche on apple podcasts amazon music or you can listen to new episodes early and add free by joining one three plus in the wondering app.

enron skilling Jeff skilling Rebecca mark fastow california Andy fastow belden Fastow sanders mcmahon mr skilling clavijo Tim belden houston toyota mclean tim belden jeff bethany mclean
Encore: Enron | The Reckoning | 5

American Scandal

52:16 min | 2 months ago

Encore: Enron | The Reckoning | 5

"To listen to american scandal one week early and ad free join one plus in the wondering app. Download the wondering app in your apple or google. Play mobile app store today. December sixth two thousand one four days since the largest bankruptcy filing in american history. Jeff skilling is in new york city. He sits shirtless in dark room with wires attached to his fingers. There's a to wrapped around his head another wrapped around his chest. His mouth is dry his heart races. He closes his eyes desperate to remain calm. You ready to begin mr scaling. Yes skilling stares at the man sitting across from him. His name is paul. Minor formerly chief polygraph examiner with the federal bureau of investigation. A start with an easy one is your name jeffrey. Skilling yes minor casually marks the scrolling polygraph chart with his pen. His face is completely expressionless as he asked the next question. Are you concerned that you might fail this test. Skilling swallows hard yes minor sits in silence after what feels like a full minute. He resumes mr skilling. While president of enron were you aware of any improper financial arrangements concealed from the board of directors no president of enron. Did you ever take money for yourself without the board's approval no as president of enron. Did you ever intentionally deceive the board or the company's investors with the use of misleading accounting documents no minor concentrates as he marched up the test results skilling looks down his hands and tries not to make too big a show wiping the sweat off his face. Minor guess killing occurred smile. Thank you very much. Mr skilling minor begins to wordlessly remove the various sensors from skilling's bonnie. Why did i pass on he to speak your lawyers. They'll be insured. Linked skilling reaches shirt minor leaves abruptly skilling. Can't tell if that's a good sign or very bad one. He's still can't believe that. Enron is bankrupt and that people want him to answer for his lawyers asked him to submit to this lie detector test to prove he wasn't hiding anything from them skilling bidder. Your i'm the guilty one. I'm guilty of pumping billions of dollars into the american economy. Guilty of saving the energy business to of his lawyers interests killing finishes buttoning. His shirt was smiling. You pass jeff. You told us you were telling the truth with no attempted seve. Congratulations skilling. let's out deep signed. Oh thank you god so onto more pressing. Business skilling has a meeting in washington tomorrow with the securities and exchange commission. He figures he'll get past them just like he got past this lie detector skilling stance tall he feels invigorated the company he built is now on trial and he intends to defend it with only god despite what his enemies may say he did nothing wrong. He leaves the polygraph room behind confident that he can prove enron's innocence to the world. American scandal is sponsored by cleo attention ecommerce founders entrepreneurs side hustler's marketers and growth hackers. If you're working round the clock to build your dream ecommerce business. You need an e commerce marketing platform that works just as hard as you do. That means unique. Flavio with cleo you'll delight customers and drive revenue at the same time with personalized email. Sms marketing campaigns. That you can design and send in minutes plus building. A marketing campaign is drag and drop easy. You can get started with your first campaign in under an hour. An easily build from there with clave ios best-performing templates to get started with a free trial of cleo you visit clavier dot com slash. Listen that's k. L. a. v. i. Yo dot com slash. Listen we get support from thumb tack. How will you ever stop your to do list from growing. You could become a magician or you can do what i did and download thumb tack. It's the app finds local pros for all your home projects. Hire a plumber to fix your leaky faucet or a handyman. To hang your curtains you can even higher a proud organizer messy closet. Yep there are people in your city who specialize in that. I actually just downloaded the thumb tack up. And i could feel my apartment. Breathe of relief. Hello fresh paint and an ac unit that actually works on the thumb tack app. You can compare. Prices read reviews and chat with pros directly. When you found the right person. You can book them with just tap. All of those annoying projects will just disappear. Maybe it is a little magic. Download them tack and start your next project today from wondering. I'm lindsey graham and. This is american scandal distrusted by the banks abandoned by shareholders and ron's history of deception finally caught up with it on december. Second two thousand one. The day declare bankruptcy soon. After both investigators in enron's disgraced executives acted fast. Law enforcement officials worked to ascertain just what crimes company had committed. And who to hold accountable. Meanwhile and ron's most prominent leaders were looking for ways to turn the tables on their accusers. The outcome of this decisive legal battle will determine the personal fates of anti fast out. Jeff skilling. Ken lay thousands of jobs and billions of dollars hung in the balance. This is episode five the reckoning just after nine am in early december sherron. Watkins arrived at enron headquarters. She squeezes past local news. Crews as they set up tripods she takes home to gaze. The various cameras trained on reporters. Standing patiently with their microphones in hand. Ready to go live walking. Shakes her head. She never thought she'd lived to see the day. When the downfall of a corporation would attract the same level of coverage as a natural disaster she and hers and ron's main lobby. She expected a grim scene but nothing could have prepared her for this shell shocked former. Employees had towards the doors in a mass exodus their personal effects piled into cardboard boxes. Any of them have put their boxes on the seats of eight hundred dollar office chairs. They're wheeling out like shopping carts. Men and women weep openly the layoffs have begun walk walking systems. Sure where to go what to do or who to talk to. She's waiting for the elevator. When a man approaches she recognizes him. I can't remember from where as they step into the elevator. He reminds her that. He's one of the company's lawyers now that enron is bankrupt. He says with a smirk. It's lawyers are the only ones with job. Security walk ins wonders. Exactly what that means for her as the doors open to her floor. He tells her not to worry her job safe for another month at least walk ins asks. Why man raises his eyebrows. As if he's just been asked the dumbest question in the world and ron still needs her. He says she'll probably be asked to appear in court as lawsuits against enron begin to land in the coming weeks after all. You're the one who tried to warn. Lay the company was in danger right. You're famous now. It's january tenth. Two thousand two prosecutor leslie caldwell as dressed in all black suit or close cropped dark hair combed neatly to the side she walks down a narrow dimly lit hallway the sec building in washington. She's running the government's enron task force. Fbi director robert. Mueller personally recommended her for the job for a long time. He's admired her direct practical but aggressive approach to pursuing the truth and she skilled and breaking down intricate acts of accounting fraud. Enron is her biggest case yet on the grandest stage possible. Caldwell andrews the sec conference room. It's packed with officials from various federal investigative agencies as caldwell makes her way to the head of the table. Those in the room quiet down. She sits down and begins. Thank you all for coming. There's a lot to sort through when it comes to enron and we still got more questions than answers. We have to assume they'll attempt to hide as much as they can. So we need to work fast since the sec has been looking at enron the longest. I'd to hear from them. I caldwell nods toward the sec official at the end of the table giving him the floor. Well progress has been slower than we liked us for sure. And we've been digging into enron for months now but it's very possible that we would just scratched the surface fast refuses to testify in without him. It's it's going to be very tough to connect all the dots called well makes no so fast is the priority. We need him to talk absolutely. But i do need to warn you something. This is just an initial view but there may not be a criminal case here. Admittedly what we are seeing is limited. But we just don't see the criminal angle yet. We see it. More as a disclosure case call considers this but fbi special agent show ford projects. Well frankly. I think it's highly unlikely there's no criminal case given the speed and severity of enron's meltdown caldwell nuts. I agree the magnitude strongly suggests. There is a criminal case here but but obviously that doesn't mean anything until we can prove it so keep digging someone on their side is gonna slip up and when they do we'll be reading in los angeles reporter john. Ms wiler with the wall street journal types as fast as he can he cradles his phones handset against his shoulder trying to keep up with a voice on the other end of the line. He's not sure who he speaking to. But the man knows his stuff claiming to be an associate of andy fastow. The informant wants to remain anonymous. And that's fine with them schweiler. Before publishing he'll check all the facts with official sources willing to go on the record. So for now. M schweiler listens as the man comments on recent developments especially as they relate to enron's defense of its special purpose entities the anonymous sources incense that skilling lay in the others are acting as if they didn't know what fast hours up to without jam skilling knew he was involved from the start. The man says it wasn't just them. This was all vetted by the general counsel's office and anderson to according to this man anderson was enron's closest and most important business partner the accounting firm even sometimes help enron bend and break rules technically mark to market accounting is a perfectly legal practice that allows business to book profits from deal before actual revenue has come in but the thing about mark to market though is that it's not legally applicable to every deal when enron asked for ways around this for its broadband division anderson signed off any andersen accountant to objected was replaced by one willing to play ball. That's probably in part. Why andersen employees engaged in a mass shredding operation. Just as the sec began to close in 'em schweiler takes it all in. It certainly does seem like arthur. Andersen was more deeply involved with enron than he realized. And he doesn't need the anonymous source to spell out exactly why the shredding operation was a disastrous blunder. One it just looks extremely suspicious and to the sec considers all accounting documents related to enron be evidence ansi legal to destroy evidence. Both companies are now in very deep water at home in houston jeff skilling things about how he and cliff baxter have had their ups and downs. Baxter was aron. Vp corporate development and briefly in charge of the company's north american division for time skilling considered baxter enron's greatest steelmaker until everything changed skilling moved higher in the company of baxter friend and in many ways an equal resented being told what to do men clashed frequently. Finally baxter. just quit three months before skewing did to. Since then skilling's thought a lot about the past and mistakes he had made with baxter recently. They've been on good terms again. Skillings thankful for all the friends that you can get these days it's mid-january skilling emerges from his study. He just got off a tough call with his lawyers. Can't help but smile at what he sees. His wife is in the kitchen. Taking place are the dishwasher and setting them in the cupboard assisting her as cliff. Baxter baxter nods. It's killing a jeff back. Said i can hang out for a while. You're on the phone. Hey yeah yeah of course. Sorry i thought. I heard you on here and i would have come out sooner but i don't worry about it seriously. I was just in the neighborhood. Felt like saying. Hi we talk. Sure up skilling baxter walkout to skilling screened in porch skewing polls an extra patio chair and they sit down. Skilling's not sure who supposed to speak. I. it's a little unusual baxter. Just popped in like this skilling's not going to complain. He's happy to see him. He turns the baxter. How are you holding baxter. Frowns picks it the laces of his shoe not too great all these attorneys coming out of the woodwork to sue enron. Now we're getting trashing the press. I mean i've got kids. You've got kids. no no well. I'm not giving up a penny. I'd rather pay my lawyers and fight to the death. I've been out for almost nine. Months is just about to buy a boat other day. The lawyers call me and say the boats no go. It would look bad. Yeah ridiculous baxter size. jeff. I think i understand why my father was the way he was. He was just a good guy trying to get by skilling taken aback in all the years he's known baxter the man has never referred to his father as a good guy. If baxter talked about his dad he did so only to dismiss the manas drunk or worse but baxter continues i. I understand what is like to battle the world. Now how i realized how bad the world could be but i bet my father knew that jeff. We just don't deserve this. We're good people know cliff on their man. Can you believe this is even allowed to happen. Skilling doesn't know what to say to that. He just stares out across his yarn for a moment the two men sit content to look at the golden magenta texas sunset. Baxter shakes his head and when he speaks again. It's barely above a whisper. This is like it's it's a beautiful day. The sun is shining. And you walk out your house. And the temperatures perfect and all the kids in the neighborhood or riding bikes and throwing baseballs and the adults are chatting over fences. It's just one of those great great days. And you're talking with the kids throwing ball and wave and your neighbors and then all of a sudden your next door neighbor comes up to you and says you're a goddamn child molester. Just like that and then turns around walks back into his house and closes the door. The neighborhood just silent all the neighbors heard it. All the kids heard it. You're going wait a minute. Women one minute one minute ago. It was as good as it could get then all of a sudden your child molester. Action closes his eyes then opens them again. He brushes something from his face stands. Suddenly he seems ready to leave it. Looks down at skilling. Jeff for now want it doesn't matter what we say. This will never wash off skilling frowns. He knows it can't be that bad. He searches for encouraging words but baxter turns his shoulder. Sierra jeff skilling watches as baxter walks away talk has given him a lot to think about states in his chair for a long time till the sun slips below the horizon he reflects upon baxter showing up at his home out of the blue departing justice abruptly. Suddenly jeff skilling feel scared when he doesn't know line. American scandal is sponsored by better health. Happiness is a journey not a destination. You don't achieve happiness. You maintain it and sometimes that takes work work on yourself to learn and improve and then work to remember the lessons you invariably will forget when the road of the journey to happiness gets bumpy. Better help is therefore you better help will assess your needs to match you with your own. Licensed professional therapist. Someone you can begin. 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His actual defense team the rasa from wilmer cutler and pickering the firm higher by ken lay to get to the bottom of enron's many special purpose entities facile shirley sees this as a sensible way to help clear his own good name but fastow views things differently in his opinion. This committee is just a way for lay to throw fast fastow under the bus again. But he's not about to give them the satisfaction still. His lawyer told him it would be best for him to cooperate at this stage. So that's what. He's doing today cooperating. The committee will ask questions and fast. And we'll answer to the best of his ability soon. The inquisition begins but before. Chuck david al with wilmer cutler and pickering finishes even his first question. Fastow cuts him off. Is this interview privileged. Even though i'm a former employee. David out confirms that enron considers the interview privileged. What fastow says this room cannot be disclosed to the outside world without fastow's permission fastow then gestures for david out to resume. I david asks for an explanation of chico. Fastow suppressor smile. He came up with that named after chewbacca. Han solo's copilot. But of course he's not about to say that out loud instead he says. I'm not really familiar with the details. Next question is about the leader's of chewco but luckily his lawyer david gergen jumps in. And he's not gonna answer any questions about who came up with the idea of making an enron officer the manager of chewco. He says fast out keeps his expression neutral but he's overjoyed girders worth every cent. David our nextel's into chico's transactions with enron enron had sold the company but bought it back in two thousand one was fastow involved in the repurchasing discussions of course not fastow replies for him to get involved in discussions personally would have been appropriate. That's when david out calmly opens a manila folder. Lying flat on the table and pulls out a three page. Handwritten document fastow forces himself to maintain eye eye. Contact as panic begins to rise fast hours asked if he recognizes the document you should. It's a note from enron finance executive. Michael kopper it's addressed to andy and it's all about enron's repurchase of chewco. David house is narrow accusation. Fast alex girder gerber. Says i need a moment to confer with my client out in the hallway and an urgent whisper girder shares. The next plane. It's pretty simple fast. Not going to answer any more questions. The interview was over. Girder will go back in and make a statement on fast behalf. What's the statement fastow asks girder positive for a moment to thank and says andy did not prepare the accounting documents regarding the transactions and he was not responsible for enron's accounting fast nods at works for him and enron headquarters. Ken lay quietly. Eases himself in the plush office chair at the head of the table he watches his lawyers and accountants continued to file into the conference room. Apparently what is about to happen is a very big deal. He doesn't understand why though this is just as wilmer cutler investigative committee interview. You wonder what they expect him to say that he hasn't said already. He simply can't grasp why his explanations aren't good enough for the world. Enron was a great company and while he was in charge. It had a great ceo. He did his best to fight for the company right up until the end now people are saying he was crazy for thinking enron could be saved but in his opinion the world. That's gone crazy. Even bill powers. The head of the committee is there as far as leno's powers hasn't personally participated in any of the interviews until now but powers is now asking that the conference room door be closed next. He says it's very important that they all get their facts. Straight lawsuits are flying. It's only a matter of time before lay is asked to appear in court. It's time to know what did and did not know about enron in the lead up to the bankruptcy. They offers an agreeable smile and not before asking powers to begin. First powers asks about the raptors. His power sees. It is quite clear. Now that andy fastow's rafters were off book entities constructed with the express purpose of hiding about a billion dollars in losses. Can i have one thing to ask our says. Did you think the rafters were real economic hedges laced. Quince a strange question. He asks powers to repeat it. The raptors did you believe they were real economic hedges that protected enron against loss in other words did lay really think they were a standard and perfectly legal way to help enron instead of just a means to conceal loss and stuff fast as pockets. Just shakes his head. He really doesn't understand what kind of person they think he is. Well of course. I thought they were real hedges. He replies he understood the rappers to be a hedge for l. j. m. if ljm lost money the raptors would be to soften the blow lay takes notice. Several lawyers shift uncomfortably. They don't believe him very well. Thanks i'll explain it to them. Then he begins with a history lesson in the beginning enron was just your simple run of the mill pipeline company but then the wholesale energy market really started to grow naturally enron expanded. It did business in india and brazil and by nineteen ninety eight. They tried to get into the water business. The point is lay continues. We had trouble financing are rapid growth so to persuade banks that the company was solid. We move money losing operations off the balanced. We did this so we could continue. Focusing on rapid growth. The lawyers begin asking questions from all sides. Did you know about the prophets fastow was making from. Ljm shakes head. I never asked andy about his compensation he'd already told me that he would actually prefer not to be involved with ljm. It was simply doing to help. Enron committee returns to the raptors once. Again flustered lay throws up his hands. It's possible he didn't fully understand the logic of the rappers. He says he thought he did. But maybe he didn't after all he's asked how he could possibly have failed to notice that at one point the raptors owed enron one hundred seventy five million dollars. That couldn't be paid. And which wasn't reported the committee asks. Les how enron can report raptors were generating five hundred million in profit. Even though the value of the investment was plummeting. How could he not know. That meeting has taken a mean turn lay feels like he's being bludgeoned with questions he thought wilmer cutler was here to help he was told to bring them in so they would conduct an investigation that we clear everything up and vindicate enron once and for all. He thought they were here to aid him in the pr war. But they're being so hard on him. Takes every ounce of resolve. He has not to simply put his head in his hands and pegged them to stop. He feels confused. Can't think straight all these years. He was certain he was a good leader. And a good man for the first time he truly grasps that many people don't share that opinion of ken lay power says that he'll end the interview now but before he does he has one last question can do you still think rafters were real. Economic hedges. lay looks down before applying now of course on its evening and ken lay sitting at home in his study lost in thought his phone rings he picks up. And here's the voice of tom. Roberts one of his lawyers robert says that in order for the bankruptcy to proceed lay must formally resign once and for all the creditors se. Les is too big of a liability in needs to relinquish the title of chairman and ceo by the end of the week like processes. The information suddenly feel very old and tired. Okay he says guess. We need to hold a board meeting. Make it official. Yes and needs to be scheduled. Robert says my size is next words. Come out quietly tom. will you pray with me. Pray for the company and for all of us. There's a long pause at the other end of the line. Finally roberts says right then closes his eyes and remained silent for several moments and he opens his eyes again. Thank you thank you on january. Twenty fifth two thousand and two deputy constable scott head with the fort ben texas county police department drives east on palm royal boulevard. It's two fifteen m. constable head. Scans each side of the street on alert for anything unusual so far nothing stands out as he's about to head back to the station. Though he spots a black four door mercedes on the side of the road slows down. Something about the car doesn't look right is just sitting there between two medians. He pulls off except his flashlight and cautiously approaches the as he nears a car. Here's the engine. Running points a flashlight inside the car and sees a man in the driver's seat at first glance he looks like he's in his early to mid forties. He's in pajamas. And as constable head gets closer he sees. The man is slumped over blood dripping from his temple in his hand as a magnum revolver constable head recognizes the dead man. He's cliff baxter. It's february fourteenth. Valentine's day two thousand and two and share watkins's in washington dc. She stands in the doorway of the congressional committee room and tries not to blink as camera flashes go off inches from her face as she waits patiently for security guard. Patter down she reflects it's been just over a year since cliff baxter anguished over the unfolding. Enron scandal killed himself. She may not have known baxter well but she's still can't believe he's gone. He was only forty three years old left behind a wife and two children in his suicide note. He asked for forgiveness. Watkins follows the security guard to wear. She'll be sitting for most of the day. She's not entirely comfortable with the raw. She's been cast in for these congressional hearings focused on enron's crimes. The people want her to be enron scandals virtuous whistle blower they want to be the fiendish puppet master cloaked in shadow they want skilling and fastow to be the unfeeling monsters deployed to delays evil bidding. They want this to be simple. But it isn't skilling's a great example in the beginning. Many of his ideas were genuinely innovative. Plus he has to be taken. The loss of his friend baxter. Hard watkins knows the two men were close. Then there's fast down who certainly be brought up on serious criminal charges any day now. Fastow is unquestionably a crook. But he wasn't always that way walk ins will never forget that. It was fast out who i saw true potential at her. He was the one who brought her to enron nine years ago and put her in a position to realize the career of dreams. Many of the legislators in this room today are eager to be seen on television. Berating and humiliating. Ken lay and his associates. Still a can't be denied that many of these same legislators were all too happy to accept lays campaign money just a few years ago. None of this simple walk ins arrives. At her seat she knows a few days. Skilling and mcmahon will join her giving testimony. but they're not gonna enjoyed neither man will probably even look at her watkins's sure skilling believe none of this would be happening if it weren't for her at man who took over enron after lays departure has obviously come to feel the same way she doesn't know when exactly mcmahon turned against her. Or why but he's not the man she wants. New post-bankruptcy many rank and file enron employees saw their entire retirement. Plans wiped out even some higher ups or suffering vice presidents and above opted for the deferred compensation offered to top executives. Now can't access their money. Account is frozen but mcmahon has made it very clear that is not his problem. Last time they spoke he told watkins that executives were always well compensated and if they're struggling now for whatever reason than it's their own fault they should of saved better. Good morning this. Hearing of the oversight and investigations subcommittee of the energy and commerce committee will come to order and the chair recognizes himself for an opening statement. I wish we could get caught. We're such a crooked company of all of the words in the now famous memo are witness sent to kenneth lay in august of last year. These might be the most chilling sharon watkins nods. Along to the congressman's words. She said a long dark wooden table a microphone in front of her. She is the sole witness today. Before the house energy and commerce subcommittee this watkins. Thank you for your help. Walking testimony jae recognizes the gentleman from florida. Mr dewey trees but you must german. I wanna thank you miss watkins for coming here today. This watkins you mentioned in your interview with committee staff at when you met with mr laid to discuss your you felt like the child who tells the emperor that he has. No clothes walking straightens. In her seat she leans forward into the microphone and speaks directly. Yes i do believe that. That mr skilling and mr fastow along with two very well respected firms did dupe. Ken lay in the board. The saying around. Enron was that heads. Mr fastow wins. Tails enron loses And i was highly concerned that that Not only had the titanic at the iceberg. But we were already tilting. But jeff skilling has no opportunity to respond until he joins walk ins. And jeff mcmahon before a senate subcommittee twelve days later. Mr chairman distinguished senators My name is jeff skilling. I worked at enron for ten years spending my last six months there as ceo. I left the company in august of two thousand and one as i did when i appeared before congress. I want to apologize to all of those affected people for what enron has come to symbolize before we start. There are few things i think. This record should reflect I will not respond to all the outrageous things said about me in this process because some have been so silly that they merit no response skilling turns towards watkins glares at her with contempt then turns back to the microphone. I never duped ken lay. I heard miss watkins testify. To her opinion. I have no idea what the basis is for that opinion. The entire management and board of enron has been labeled everything from huckster criminals with a complete disregard. The facts and evidence assembled these untruths shatter lives. And they have and they do nothing to advance the public understanding of what happened. Enron the framers of the bill of rights are watching watkins. Winces skilling's grandstanding. She wishes she could respond to say something. So glad to hear senator barbara boxer of california. Bring up a challenge. Mr scaling senator cleanline- gave you a chance to get a softball. And if i might say your answer stunned me. This was your chance to tell us what went wrong in the company. How you might do something. I want to tell you. If you look miss watkins testimony she says it in a sentence my understanding as an accountant she says is that a company could never use its own stock to generate a gain or avoid a loss on income statement. Did you is that true We aware of that. I am not an accountant. i didn't ask you. That is her statement true. I think i'd have to be an accountant to know. If it's true i young to be an accountant to know that a company could never use its own stock to generate a gain or avoid loss in an income statement. What was your education. Mr early i know i read. It was pretty good. What are masters in business administration. A master's in business administration and yet you didn't know the simple fact. Is that correct. You're saying you were ignorant of that fact that miss watkins has told us. It's not comedy to give you to those of us up here understand this very clearly. Everyone's to generate a gain revolt a lot. And you're saying in getting your masters and where did you go to school or business school in harvard business school. You did not know this. Is that correct. I did not know that. There is an absolute prohibition on watkins. Listens skilling stammers and makes excuses senator. Boxer has just eviscerated him publicly. Walk ins actually feels bad for him as she watches. Skilling's is water. After this humiliation there will be little left for him to do except go. Home continued to pay his lawyers. Tens of thousands of dollars and wait for a judge to decide his prison sentence but in that he won't be alone american scandal sponsored. By nam nam we all know. Diet is a major factor to our health. The right portions of fresh ingredients and whole foods keeps us healthy. Why would our dogs be any different. My friend brian has a seventy five pound rhodesian ridgeback named talks beautiful dog and he got thinking about this he said i think that it's so easy to default dry food. He said you throat in the cabinet and plastic bin and that's it out of sight out of mind for a month sitting at room temperature. But i wouldn't eat month old bread. I would need month old anything so. Brian feeds talks not fresh restaurant quality food for dogs and cats. Every meal arrives fresh and comes perfectly proportioned for your pets dietary needs. Just tell nam a little bit about your pet. And they'll create a meal plan based on age breed. Weight and health needs not a calorie more or less and very convenient. Just open the pack. Pour and serve no scooping from a bag no grouping from cam switch to the fresh pet food endorsed by science taste buds and talks try nam nam today and you'll get fifty percent off two week. Trial go to try. Non dot com slash. As that's t. r. y. an oem dot com slash ads for fifty percent off a two week trial. It's january fourteenth. Two thousand and four. And andy fastow sits opposite. Us district judge. Kenneth hoyt in room. Twenty twenty five of houston's federal district court house fast runs his hands through his hair. It's much greater now than it was three years ago he turns and spots a woman sitting quietly. Her face is difficult to read. Fast down knows that her name is leslie caldwell and she runs the enron task force. They've outsmarted his lawyers and went for the low blow by going after his wife wonders. If they're proud of themselves. The judge speaks. I understand you'll be entering a plea of guilty this afternoon. Yes your honor fast. Our bastards didn't much choice. He and his wife leah had made a little money from an enron transaction with existent investors. Back in ninety seven fast needed some outside investors to make tricky s. p. e. appear totally legal but he didn't know where to turn until he came up with an ingenious solution he'd put up the money and just make it look like it. Came from outside. Investors leah who worked at enron at the time helped with the record keeping and the to make money off the deal later. They filed jointly and naturally neglected to declare the income of course when the enron task force found out. They threaten the couple with criminal tax charges. What happened next was predictable. He was the one they really wanted. So they said plead guilty right now and drop the charges against your wife fast outfield. They didn't have enough to convict him so he told them to go to hell. But after leah was indicted and it became clear the government would likely win fast. I realized he had to change his tune. His two young sons might grow up with both their parents behind bars. Fastow couldn't allow that prosecutors returned with a new offer cooperate and will unsurely does no more than a year. This time fast out took the deal. The judge amerson fast out pretends to listen. This is all one big stupid show. Fastow says yes. Your honor at the appropriate moments then. Hoyt says the court finds you guilty and brings down the gavel. It's over fastow has just agreed to cooperate. With the government's investigation of enron surrendering nearly twenty four million dollars in assets and served ten years in jail. But he doesn't feel sad something inside won't let him feel the impact of this yet. He's grateful for that. It's clear to him. America needed a convenient scapegoat and decided he'd fit the bill fast. Alex down at the paper cup of water in front of him. Picks it up takes a sip and tries to ignore the fact that his hand is shaking. Jeff skilling's wrists ache from the handcuffs. But he's not about to ask the federal agents to loosen or remove them skilling made a decision when he woke up this morning no display of weakness no matter what he smiles cheerfully nothing in particular as the fed's lead him through the back door of the courthouse on the way to room seven. Four he passes ben glisten enron's former treasurer listen has traded his suit and tie for an orange jumpsuit the feds nabbed him to schooling. Thanks but i can't remember. What for he calls out. Hey ban how you've been doing. Listen gives a tentative tight-lip smile guess. I've been better skilling. Wishes him well then. He's ushered into the meeting room to hear the charges. His lawyers are already there. The judge recites skilling's rights and the prosecutor runs down. The charges skilling is accused of manipulating earnings disguising losses and lying to investors. The maximum sentence for these charges is three hundred. Twenty five years the judge asks for skilling's plea without hesitation skilling response. I plead not guilty to all counts. Ken lay can't believe the media. Turn out on this warmth. July day just to see him get indicted. He reached the reporters and the camera people morning. Everyone good morning little later. Perhaps feel excuse me place. He's determined remain gentleman in spite of this persecution being forced to do this perp walk up the courthouse steps and houston is slightly embarrassing. But he knows he'll put behind him in time he also knows that any day now the federal officers will realize that they are wrong about him and let him go simply don't see the error of their ways and he forgives them. A special agent gently leads him toward the billing by the elbow as his lawyer catches up alongside can pretty straightforward today. You'll go before the judge. Judge will say that. You're accused of deceiving. Arthur andersen line to the banks and making misleading statements. Well they're certainly entitled their opinion but none of that's true. Obviously course it's not. I believe you and the jury will too but until then we just to deal with these formalities. Now when the judge asked you for your plea you just say not guilty you say it with your head held high at work for you. Yes sure does oh yeah. I'm sorry can't but they need you to wait in this holding cell until call by the judge you're only going to be in here about an hour so real sorry about this. Oh i'll be fine. Don't worry about me. Lay andrews the sal than sit down on. The bench are two prisoner sitting on the other. End greets them. Hello oh hey you're that guy. The guy i saw you on tv yet. Any investment advice for me lay raises an eyebrow then responds with the politis of smiles later that summer sharon walk ins is at home in houston when she hears a knock at her front door. She checks her watch. The interviewer is here earlier than expected. But that's okay watkins's ready to begin. Smiling she opens the door and shakes hands with the woman from the journal on leadership studies in the last couple of years. Walk into his grown accustomed interviews such as this. She spoke with the new york times and was even named person of the year by time magazine. At first she thought she grow tired telling the same sad stories about enron over and over again but recently she's come to view things differently enron. It would seem is rapidly becoming the defining corporate cautionary tale of the century. If interviews like this can help illuminate what went wrong. And perhaps prevent similar crimes from being committed in the future. And she'll do what she can to help walk ins the interviewer sit comfortably in her living room. She looks down as the interviewers tape recorder reels. Turn slowly and answers the standard questions. She recounts her warnings to lay her battles with fastow in what it felt like to go before congress. Then she's asked. When did she leave. Enron officially walk ins thinks for a second. She left enron two years ago but can still remember the details of that day late november with absolute clarity. The interviewer nods leans forward eager for her to continue walk. Says the first thing that comes to mind is the echo her footsteps made as she walked across the main and ron lobby. For the last time the inspirational banners once hung from the ceiling had been folded up and packed away. The hundreds of computer monitors formerly man by an army of traders devoted to jeff skilling. Were now dark. The assets have been sold only. The bankruptcy lawyers remained walk ins paused at the exit. There was so much potential in that building and ran really could have been what its leaders pretended it was if they had just been more patient if they played fair but now after seventeen years and ron was gone and even if they all got caught in the end it's leaders made enough to remain millionaires. The rest of the employees would simply have to venture into an uncertain future with their resumes tainted walk ins wishes. She could have done more on their behalf. And on her own she flung open the building's doors on her way to the parking lot. She passed the spot where enron's giant slanted easy logo once stood. It's gone now. Sold cheap to a strip mall computer store just off the southwest. Freeway walk ins leans back against the count and the interviewer shuts off the record. These days walk ins is determined to pursue new business ventures determined to make new memories. And in retrospect that enron e wasn't on a slant she realizes it was just crooked. Andy fastow was released from prison after five years. On december sixteenth. Two thousand eleven just a week. Shy of his fiftieth birthday. He joined a houston law firm as document review clerk you currently towards the lecture circuit as an unpaid speaker on business ethics on may twenty fifth two thousand six jeff skilling was found guilty on nineteen counts including conspiracy insider trading securities fraud and making false statements. He was sentenced to twenty four years in prison but agreed to pay. Forty two million dollars in exchange for a reduced sentence. He was released after twelve years on february twenty first. Two thousand nineteen the monetary assets seized from skilling were distributed to people victimized by enron's crimes. Ken lay died of a heart attack. On july fifth. Two thousand six. He was sixty four years old six weeks earlier. He had been convicted on six counts of fraud and conspiracy yet be sentenced at the time of his death. Twenty thousand people lost their jobs. As a result of enron's bankruptcy they lost two billion dollars in pension funds and one point two billion dollars in retirement funds. Enron's downfall prompted passage of the sixty six page public company accounting reform and investor protection. Act in two thousand and two after it passed. President george w bush said the era of low standards and false prophets is over no boardroom. In america is above or beyond the law. Free markets are not a jungle in which the unscrupulous survive or a financial free-fall guided only by greed in two thousand and thirteen. Andy fastow appeared before the association of certified fraud. Examiners in las vegas with a warning. He told the crowd in my opinion. The problem today is ten times. Worse than when enron had its implosion. The things that enron did that i did are being done today. And in many cases they're being done in such a manner that makes me blush. I was to see if o. Of enron fastow spoke six years. After the united states of america suffered its worst financial crisis. Since the great depression it was brought on by opportunistic wall street banks and firms which sold bad securities and fudge the numbers on their balance sheets. None of these companies top executives were ever prosecuted next on american scandal. We attica correctional. Facility was notoriously brutal. Prison beatings comment and a living conditions. Were inhumane. The inmates were pushed to the brink and in september of nineteen seventy-one. They rose up and took control the maximum security prison. Their rebellion turned into a four day. Standoff with the prisoners demanding fundamental changes at attica but the nation was shocked when the uprising took a sudden and violent turn from wandering. This is episode five of enron for american skin. If you like our show please give us a five star rating leave review and be sure to tell your friends. Follow american scandal on apple podcasts. Spotify amazon music. The one ram or wherever. You're listening right. Now listen at free by joining one. Plus you'll also find some links and offers from our sponsors in the episode notes. Supporting them helps us keep offering our shows for free another way. You can support the show by philly a small survey at one re dot com slash survey to tell us what topics we might come our next. You can also find us and me on twitter. Search for hashtag. Americans scandal or. Follow me at lindsey graham lindsey with an a middle initial before to listen to my other podcast to american history tellers and business. Movers a quick note about our reenactments in most cases. We can't know exactly what was said. But all are based on historical research if you'd like to learn more about enron. We recommend the books. Power failure by mimi. Swartz was sharon watkins. The smartest guys in the room by bethany mclean and peter l. Kind conspiracy. Fools by kurt item. Walt and twenty four days. By rebecca smith and john m schmila. American scandal is hosted edited an executive produced by. Meet lindsey graham for airship sound designed by derek. Parents music by lindsey graham. This episode is written by hannibal. Ds our senior producer and editor karen. Low executive producers are stephanie. Jen's jenny lower beckmann and her non lopez for wondering. Hi this is jim committee. Former new york city prosecutor retired. fbi profiler writer-producer of cbs's criminal minds and executive producer. Fox's new america's most wanted. I'm also the co host of wondrous very first true crime podcast real crime profile where we analyze real cases with focus on the victims this month. Real crime profile is covering a brand new extraordinary case called victim. F- about denise hoskins and erin quit who were victims of shocking home invasion that developed into a kidnapping and sexual assault but not only were denise. Narain terrorized by the offenders. They were traumatized by the police. Who were supposed to be investigating their case. You won't want to miss hearing from denise and erin about their story as well as our analysis of the crime join me. New scotland yard criminal behavior analysts laura richards along with our co host lisa ambati on our next episodes of real crime profile. Real crime profile is available on apple. Podcasts amazon music or wherever. You're listening right now.

enron skilling fastow jeff skilling baxter Andy fastow Skilling wilmer cutler watkins Fastow sec cliff baxter schweiler raptors mr skilling ron leslie caldwell fbi jeff Mr skilling
Introducing Bad Bets

WSJ What's News

28:30 min | 3 d ago

Introducing Bad Bets

"Sustainability is a critical issue and on the new sustainably speaking podcast, we'll talk with trailblazing leaders who champion solutions to ensure a more sustainable and low carbon future. Subscribe today and don't miss this limited episode podcast. Hey, what's news listeners, it's Anne Marie for toli. The Wall Street Journal launched a new show this week called bad bets about the big business dramas that have had a big impact on our world. Season one is about enron, the 90s energy giant that later became synonymous with epic corporate fraud. The reporters who covered the story for The Wall Street Journal, John M schwer and Rebecca Smith are back with key players from the saga to explain how and why it all fell apart. Today we're sharing episode one with you. If you like what you hear and want to keep listening, you can subscribe to bad bets wherever you listen to this podcast. All right, here it is, episode one of bad bets. My name is John, am schwarz. For four decades, I was a Wall Street Journal reporter. In that time, I wrote a lot of stories. There's one that stuck with me more than any other. Enron. It's been 20 years now, since enron fell into bankruptcy. Its list of creditors was 54 single spaced pages. So this was a massive bankruptcy filing. Within weeks, tens of billions of dollars, thousands of jobs, gone. Retirement plans destroyed. This was my life savings, my nest egg. And that was just the beginning. Congressional committees rushed to investigate. The Justice Department launched an epic criminal probe. The CFO, chief accounting officer, treasurer, and more than a dozen others pleaded guilty. And perhaps the highest profile corporate fraud trial in U.S. history, former CEO Jeff skilling was convicted. He maintained his innocence, but he spent more than a decade in prison. Here's a measure of just how big a deal enron was. On the FBI's list of its most famous cases, JFK's assassination, Watergate, 9 11. It's the only corporate name. It would, in fact, go from being this highly respected company into being this massive symbol of corporate dishonesty. It happened so rapidly. My colleague Rebecca Smith and I broke the stories that enron officials blamed in part for sparking the company's collapse. This podcast, based on hundreds of interviews, years of reporting, and reams of court documents is about how it all happened. And why today, the enron story is as relevant as ever. Don't miss the limited episode podcast series sustainably speaking, featuring trailblazing leaders, discussing how to improve sustainability and address climate change through innovation. Join Joshua baka from America's plastic makers for these final discussions with policymakers, academics and industry pioneers about partnerships and policies that support advancements to meet this urgent challenge. Subscribe today wherever you listen to podcasts. In the 80s, enron was a pretty Standard Oil and gas company. It had pipelines that moved energy around the country. But executives weren't satisfied. They told everyone they were going to revolutionize the energy industry. And they did. Starting in the mid 90s, enron would be named America's most innovative company, year after year. And I had a reputation. An executives would do just about anything to keep it. That's where I'd like to start the story. 1998, enron headquarters, Houston. That year, and run one to showcase a brand new sales room, and it set up for one of its new operations. Enron energy services. The goal was to cut out the middleman by selling energy directly to businesses, and, of course, make a lot of money in the process. Enron had invited Wall Street analysts to downtown Houston to check it out. If they were impressed, the analyst might fill their clients to invest even more in enron. There was just a little problem. The sales room wasn't ready. Enron still hadn't hired enough people to fill it. They could have delayed, or just told people they were ramping up. But instead, enron executives decided to just go ahead and make it look like it was falling running. A member being told everyone bring some of your personal items, put it on the desk, make it look normal. And everyone just act like you really busy. That's Robert Bradley, a former enron speech writer. He was one of the staffers asked to be an extra. A sort of body in the room. I thought it was strange, but I really didn't follow up or investigate it. On the day of the tour, Bradley headed to the 6th floor with a pen and notebook. And got settled in the back. We had to look out the window. So my back was turned. But I do remember, you know, turning around and looking and seeing the people coming. The people were stock analysts. The audience from Wall Street. Bradley says he and his colleagues were personally invested in impressing them. We all had a lot of stock and so, you know, keeping the stock price up was really important. And it spared no expense on their new sales room. They've been included flat screen TVs, cutting edge tech at the time. When employee would later describe the elaborate cruise as a potemkin village. You know, like that story about the Russian minister who tried to impress his queen by building fake villages all along her travel route. This was sort of like you invent your own reality by deceiving others and making it happen. Now, it's hard to know if this whole charade had a direct impact on the stock price. Enron had already promised that this venture was coming. But the company's showboating had often been effective, and it would continue to be over the next couple of years, the stock would soar from $20 a share, all the way to 90. You know, a lot of your sins can go unnoticed if everything's going well. And back then, everything was going, it seemed very well for enron. Eventually, enron hired more people and got that sales room fully up and running. At the time, Bradley says seem more like a half truth. Than a lie. And that's a good example of the slippery slope when you start going along with this stuff. How you can become a pretty numb toward it all. It was only in retrospect that realize that, yeah, I'd participated in this and there was something really wrong with it. When I look back at it in, run, there are a lot of moments like these. When reality didn't match executives ambitions. But most of these moments weren't about a stage play in the sales room. They were about creating financial facades to mask problems brewing inside the company. In 2001, reality, bit back. It's a stunning fall. Enron had grown into the 7th largest company in the country ahead of IBM and AT&T. Enron once an energy giant now amid government investigation finds itself in chapter 11 bankruptcy court. It's hard to believe that a company with revenues of some $100 billion last year would be filing for bankruptcy this year. This is bad bets. A podcast from The Wall Street Journal that unravels big business dramas that have had a big impact on our world. Season one, the story of enron's collapse. My colleague Rebecca Smith and I will take you inside. Show you the successes that made enron a Wall Street darling and explore the deceptions that brought it down. The scandal rocked people's faith in big business. Because in the eyes of many, it didn't just expose what was wrong at enron, it exposed unchecked power throughout corporate America. The story of success became so enticing that for a moment there, it didn't matter if it was fraud. This is episode one. Potemkin village. I came to this story two decades ago, knowing very little about enron and the world of American energy. I covered white collar crime for the journal. But I was paired with Rebecca Smith. The journal's reporter for utilities and power markets. Enron was part of repeat. The company was headquartered in Houston. The epicenter of the U.S. energy industry. Houston was to energy what Wall Street was to finance and what Silicon Valley was to the tech industry. It was the center. There's a massive gas pipeline system, of course, there are oil and gas reserves in Texas, many big companies were based there. Enron had a certain swagger and at the time, of course I was in California. I was never sure, is this just Texas? Is it the Texas swagger? Or is it the enron swagger? Enron was the flashiest brass player. Car clicker was a training manager at enron. He remembers pulling up on his first day of work to the enron tower. It was like he was working in Hollywood, not energy. There were like 25 Ferraris and maseratis in Bentley's lined up on bonus baby roe, and I thought who works here. This is crazy. And what I found out later was, if you're a 26 year old Stanford MBA and you make a $1 billion deal, you get a $1 million bonus. Enron was about big bucks and big attitude. Right down to their hold music. Yep. That's Tina Turner. Simply the best. I mean, who does that? Enron's bravado never seemed to miss a beat. Then something happened. The first real crack in the enron facade. And it was a big one. It was August 2001. In Ross CEO, Jeff skilling resigned, completely out of the blue. Jeff skilling through resignation was just a stunning shocking thing to have happened. I mean, this is a man who spent years working his way up to become CEO. And, you know, he'd barely gotten the seat warm. Killing had only been CEO for 6 months. But he'd been with enron for more than a decade. He helped transform the once sleepy gas pipeline company into a global enterprise. He became a corporate celebrity in the process. You might compare him to apple's Tim Cook, where Tesla's Elon Musk. So when he resigned, sent shockwaves through the industry. He said it was for personal reasons. But CEOs usually don't just quit. Especially after just landing the job. It often signals something is up at the company. Now, covering something like this would normally have fallen to Rebecca. Like I said, this was her beat. But she was moving into a new house that day, and had no Internet connection. So I was asked to fill in. I figured it would be one and done. I had no idea that I'd be spending the next few years on enron's trail. That's next. After the break. What's important to you? What drives you? What do you want your wealth to do? At PNC private bank, we call that your why, and we want to understand yours. Maybe it's creating a legacy, buying a home or enjoying your retirement. Whatever your goals are, we'll work with you to build a personalized wealth plan to help you achieve it. So tell us what's your why to learn more, please visit PNC dot com slash private bank, copyright 2021, the PNC Financial Services group Inc all rights reserved PNC bank national association member FDIC. After I was asked to write the story about Jeff skilling's sudden resignation, my first move was pretty standard. I called enron's PR head at the time, Mark Palmer. Chess departure as a milestone in the history of enron was big. It was it was huge, but it was just kind of one of those things that didn't stand out as a oh my gosh. This is really bad. Parm are downplayed it. Nothing to see here. But I still wanted an interview with skilling. Palmer quickly got the CEO on the phone. He was a great spokesperson for the company. So I had a lot of confidence in Jeff. He's getting stuck to his story at first. Did he resign for personal reasons, which he wouldn't go into? But is he interview progressed? He started to sound troubled. Almost depressed. Then, to my surprise, he went off script. And he said something that would help turn a two day story into years of investigation. He told me, right there on the phone, that he was disappointed by the fall in the stock price. It fell by half during his 6 months of CEO, and if it hadn't fallen, he said, he probably would have stayed. I remember when he said that, I thought, well, that doesn't sound like a personal reason. That sounds like a business concern. It sure didn't seem like a great one to bring up in an interview with The Wall Street Journal. Skilling declined to be interviewed for this podcast, but his admission on the phone that day in 2001 certainly caught my attention. This wasn't a canned response. I thought, hey, I've got a scoop here. I wrote of a quick story for the paper. But the interview and scaling is almost confessional tone about the stock price. Just kept bouncing around in my head. Sure. Lots of executives see their stock price and quarterly returns as a personal report card. In 2001, was it generally bad year for the stock market? It was right after the dotcom bubbles at burst. A lot of CEOs weren't thrilled. But they weren't all quitting in mass. And restock had long been considered a good bet. One that was likely to outperform the broader market. The price could rebound. That's why skilling bringing up the stock price dropped made the whole resignation feel more suspicious. It made me think there might be bigger problems inside of enron. That the captain might be abandoning a sinking ship. Earlier in 2001, in red stock price had been $80 a share. By August, it was 40. Now, skilling it suddenly quit. Enron was understandably eager to quiet any concerns. And the company had no better man for that job than former CEO can lay. The charmer in chief. Rebecca had interviewed him several times. Kinley was always a very affable congenial polite person to talk with, as you know he grew up on a farm in Missouri. He could make you feel you'd had a visit instead of an interview. Lei had been enron's CEO for over a decade before skilling, and was perhaps the company's most famous figure. He got close, personal relationships with both presidents Bush. George W, sometimes even referred to as Kenny boy. Lay step back into the CEO role after skilling resigned. He knew the shareholders couldn't be happy about the falling stock price. And many of his employees had their life savings wrapped up in company stock. So a couple of days after skilling's resignation, lay held a company-wide meeting at the Hyatt regency imperial ballroom in downtown Houston. Good morning. Under the spotlight, he spoke directly to employees. Many of you concerned about the value of your stock options. I'm concerned about the value of my stock options. In a seeming effort to boost morale, he offered them a little something pulled from his back pocket. More stock options. I won't make you rich, but it might make you feel better. I think we've got a lot of great stuff going on. We are now about three times the size of the next largest competitor. But there's more than meets the eye here. Listen closely. We certainly think we're close to if not at the bottom of this cycle. And we want you to enjoy the ride back up. Do you hear that? The prediction, the stock would climb. Well, that type of positive spin would eventually get can lay in big trouble with federal criminal authorities. I should note here that ley would plead not guilty to charges of misleading investors, but he was ultimately convicted in 2006. That conviction was vacated because of his death shortly after the trial. His optimism, that meeting in 2001, which soon collide, with a reality, Rebecca and I were on the hunt to uncover. After the break, an enron insider reaches out. Publicly traded companies in the U.S. are supposed to disclose. It's really going on in their organizations. The good and the bad, so investors know companies right quarterly reports and submit them to the Securities and Exchange Commission. The SEC. One of the strengths of American capitalism is the existence of generally agreed upon standards for what will be included in these public documents. And they can be a treasure trove for reporters. The day after scilling quit in August 2001, I had pulled up enron's most recent SEC filing before I did my interview with him. Just to see if anything jumped out. It was 37 pages, single spaced, and pretty dense. I was on deadline. So I scanned some important sections, including one titled related party transactions. These are outside business deals involving directors or top officers. Is what I've always thought of as a company's potential dirty laundry list. And there, I found something most unusual. Something that ended up being a big deal. Deep in the document was a reference to outside partnerships that were doing vast amounts of business with enron. Worth hundreds of millions of dollars. These were not something that enron had ever talked about in any setting I'd ever been in. So it seemed to come out of the blue. Rebecca also hadn't heard about these partnerships from stock analysts who followed enron. Now the descriptions of the transactions in the SEC filings were so convoluted, they were practically gibberish. But one thing was clear and it's stunned me. The partnerships have been run and partly owned by a senior executive of enron. Didn't take me long to think conflict of interest. It raised the possibility that a senior executive enron might be making money for himself and his partners at the expense of his employer, and its shareholders. It seemed to me at the very least an outrageous arrangement. Rebecca agreed. It's as simple as saying you can't serve two masters. If you're in an arrangement in which you're on both sides of a transaction, you're going to have to pick which side to favor. They're never going to be equally treated. At first, I suspect that the unnamed executive running the partnerships might be former CEO Jeff skilling. After all, that person had just quit the partnerships, according to the SEC filing, and skilling had just quit the company. I hardly call Palmer again. He was essentially the only source I had at enron. Palmer said the partnerships were fully disclosed and completely above board. It had been all approved that the accountants, the lawyers, the board, everybody was had approved it. So it was fine. Palmer said the partnership simply provided outside capital that helped the company. It was a company line. Ken lay told us the same thing in a subsequent interview. During that call, Palmer told me the executive who had headed those partnerships wasn't skilling. It was enron's chief financial officer, Andy facile, who was still working at enron. He was the first time I'd ever heard fast style name. It would hardly be the last. Now to be clear, Mark Palmer was never accused of wrongdoing by authorities. But he suspected something was up with these partnerships. Many months later, he confided to me that he sensed people inside enron were concerned. Maybe I should have asked a hell of a lot more questions. Yeah. Clearly, Rebecca and I also needed to ask a hell of a lot more questions. It felt like we weren't getting the truth. Hitting walls. We hit something we bounce off we go on another direction. We come back. We bounce against it again. We're roombas. We just keep moving. We look back at some of the prior SEC filings. And we saw these partnerships have been up and running for a while. And it dealt with a lot of money during that time. You know, their annual filing in 2000. Said that these enterprises were conducting more than a $1 billion worth of business with enron. Well, that's a massive number. But there was absolutely nothing in it to tell you what these relationships were. And on top of that, we noticed enron had some of its own stock tied up in these deals. 12 million shares of it. And we knew the stock had dipped, potentially crippling those deals. Potentially crippling enron. Did these partnership deals have anything to do with skilling being so upset about the fallen stock price? I didn't yet know how it all fit in. So we did what journalists do. We made it public. In late August, two weeks after skilling resigned, we wrote about the partnerships in an article. It was a small mention. Just a few paragraphs near the bottom. We quoted directly from the SEC filing. It says enron has entered into agreements with entities formed in 2000, which included the obligation to deliver 12 million shares of enron common stock in March 2005 and entered into directory. It was basically gibberish eliminated the but that's pretty much all we had at that point. And it absolutely defies the entire purpose of financial disclosure. There's no information being conveyed through this. We didn't understand the information in the SEC filing, but hoped that someone would come forward and help us. I was so happy that we were able to do that because to me, and I've done this many times as a reporter. I think of these as a letter in the bottle. You put the letter in the bottle, you toss it into the ocean. You have no idea where it's going, or if anyone's ever going to read it or pick up on it. Well, this time, someone did. A person who had a lot of knowledge about these partnerships and enron insider. The source didn't want us to use his name. He feared enron could harm his career. So we called him our mutual friend. His identity is a secret we've kept for 20 years. Was I the first person to talk to The Wall Street Journal? Yes I was. I felt like finally, somebody is getting this story out in public. He called Rebecca at the journal. My first impression of him was that he sounded like someone who is very knowledgeable. He was clearly intelligent, he sounded like he had a well balanced view of the company. So he sounded trustworthy. I said, what do you know? And she said, we know very little, but we were hoping our hoping, somebody comes forward and tells us more about it. Do you know anything about it? And I said, well, I was probably the architect of the idea. What information would you like to have? Because I've got quite a bit on it. I told her my name and I asked her to keep me anonymous. He said he had internal documents. It's one of the most beautiful phrases any reporter can ever hear. So at that point, I thought, wow, this guy could be really important in helping unlock what's been happening at enron. Our mutual friend knew a lot about these outside partnerships. He didn't work on them. He sent Rebecca trove material. It cracked our case open. It told us that there were rampant conflicts of interest that had not been dealt with. It told us that your average shareholder would have no idea what the true financial condition of the company was. And we soon learned that enron had been taking extraordinary steps to hide losses. Losses that federal prosecutors later said should have been reported to the public. Losses of hundreds of millions of dollars. It was the first indication that we were really on to a big story. It was our key to unlocking one of the biggest corporate scandals in American history. We had a cash problem. We spent all the cash. It is my belief that enron's failure was due to a classic run on the bank. I didn't drive us into the iceberg. I'm just trying to warn the captain of the ship. A lot of the watchdogs did not bark. On this season of bad bets will take you through the many layers of mistakes and misdeeds at enron. The accounting tricks that hit hundreds of millions of dollars in losses, the trial. The demanded answers from the men once at the helm of American energy. And we'll hear from the whistleblower who kicked it all off. Enron is dead. But 20 years later, the forces that gave rise to the scandal, well, they're still very much alive. And on the minds of folks such as Lin Turner, former chief accountant at the SEC. We could see that we're setting ourselves up for another round of corporate scandals, which history tells us does occur every 25 to 30 years. That's next time on bad bets. This episode of bad bets was hosted by me, John M schwer. The original reporting on which this season is based was done by Rebecca Smith and me. Bad bets is production of The Wall Street Journal. This season was produced in collaboration with neon hum media. From The Wall Street Journal, kateri oakum is the executive producer of this podcast. Dan Rosen is the co executive producer of WSJ studios. Anthony Galloway is the global head of video and audio at The Wall Street Journal. From neon hum media, muna Danish and Haley faker reported, wrote and produced this season. National Cato is the associate producer, story editing by Andy gilbertson and Vikram Patel. Sammy Allison is the production manager. Sound design and engineering, why Scott Somerville? And the executive producers from neon hum are Shara Morris and Jonathan hirsch. This episode was fact checked by Laura bullard. The theme song and many of the tracks you hear in this series were composed by Hans Dale suit. The other music in this season of bad bets is from epidemic sound and blue dot Sessions. Subscribe and listen, wherever you get your podcasts. I'm joined in Schwartz. Thanks for listening. 20 years ago, energy giant enron was considered one of the most innovative companies in the world. But in late summer 2001, the company's top executive resigned out of the blue. That set my colleague Rebecca Smith and me on a reporting journey with an end we never imagined. I'm John McHale from The Wall Street Journal. On our new podcast, bad bets, we unravel big business dramas that had a big impact on our world. Listen, wherever you get your podcasts.

enron Jeff skilling Rebecca Smith The Wall Street Journal skilling Houston America Rebecca John M schwer Bradley toli Joshua baka enron headquarters Mark Palmer SEC Robert Bradley Palmer AT&T. Enron
Introducing Bad Bets

WSJ Tech News Briefing

28:57 min | 3 d ago

Introducing Bad Bets

"Tech news briefing is supported by expensify, expensive is a payment super app that helps individuals and businesses around the world simplify the way they manage money. It offers free corporate cards with up to 4% cash back, alongside free expense tracking, invoicing, Bill pay and more. Download the app or sign up today at use dot expensify dot com. Hey tech news briefing listeners, it's Zoe Thomas. The Wall Street Journal launched a new show this week called bad bets about big business dramas that have had a big impact on our world. Season one is about enron. The 90s energy giant that later became synonymous with epic corporate fraud. The reporters who covered the story for The Wall Street Journal, John M Schuyler and Rebecca Smith are back with key players from the saga to explain how and why it all fell apart. Today, we're sharing episode one with you. If you like what you hear and want to keep listening, you can subscribe to bad bets wherever you listen to this podcast. All right, here it is, episode one of bad bets. My name is John McHale. For four decades, I was a Wall Street Journal reporter. In that time, I wrote a lot of stories. There's one that stuck with me more than any other. Enron. It's been 20 years now, since enron fell into bankruptcy. Its list of creditors was 54 single spaced pages. So this was a massive bankruptcy filing. Within weeks, tens of billions of dollars, thousands of jobs, gone. Retirement plans destroyed. This was my life savings, my nest egg. And that was just the beginning. Congressional committees rushed to investigate. The Justice Department launched an epic criminal probe. The CFO, chief accounting officer, treasurer, and more than a dozen others pleaded guilty. And perhaps the highest profile corporate fraud trial in U.S. history, former CEO Jeff skilling was convicted. He maintained his innocence, but he spent more than a decade in prison. Here's a measure of just how big a deal enron was. On the FBI's list of its most famous cases, JFK's assassination, Watergate, 9 11. It's the only corporate name. It would, in fact, go from being this highly respected company into being this massive symbol of corporate dishonesty. It happened so rapidly. My colleague Rebecca Smith and I broke the stories that enron officials blamed in part for sparking the company's collapse. This podcast, based on hundreds of interviews, years of reporting, and reams of court documents is about how it all happened. And why today, the enron story is as relevant as ever. Tech news briefing is supported by expensify, expensive is a payment super app that helps individuals and businesses around the world simplify the way they manage money. It offers free corporate cards with up to 4% cash back alongside free expense tracking, invoicing, Bill pay and more. Download the app or sign up today at use dot expensify dot com. In the 80s, Anne Ron was a pretty Standard Oil and gas company. It had pipelines that moved energy around the country. But executives weren't satisfied. They told everyone, they were going to revolutionize the energy industry. And they did. Starting in the mid 90s, and run would be named America's most innovative company, year after year. And I had a reputation. An executives would do just about anything to keep it. That's where I'd like to start the story. 1998, enron headquarters, Houston. That year, enron wanted to showcase a brand new sales room and it set up for one of its new operations. Enron energy services. The goal was to cut up the middleman by selling energy directly to businesses. And of course, make a lot of money in the process. Enron had invited Wall Street analysts to downtown Houston to check it out. If they were impressed, the analyst might tell their clients to invest even more in enron. There was just a little problem. The sales room wasn't ready. Enron still hadn't hired enough people to fill it. They could have delayed or just told people they were ramping up. But instead, enron executives decided to just go ahead and make it look like it was falling running. I remember being told everyone bring some of your personal items, put it on the desk, make it look normal. And everyone just act like you really busy. That's Robert Bradley, a former enron speech writer. He was one of the staffers asked to be an extra. A sort of body in the room. I thought it was strange, but I didn't really didn't follow up or investigate it. On the day of the tour, Bradley headed to the 6th floor with a pen and notebook and got settled in the back. We had to look out the window. So my back was turned, but I do remember, you know, turning around and looking and seeing the people coming. The people were stock analysts. The audience from Wall Street. Bradley says he and his colleagues were personally invested in impressing them. We all had a lot of stock and so, you know, keeping the stock price up was really important. And it spared no expense on their new sales room. They've included flat screen TVs, cutting edge tech at the time. When employee would later describe the elaborate cruise as a potemkin village. You know, like that story about the Russian minister who tried to impress his queen by building fake villages all along her travel route. This was sort of like you invent your own reality by deceiving others and making it happen. Now, it's hard to know if this whole charade had a direct impact on the stock price. And run had already promised that this venture was coming, but the company's showboating had often been effective. And we continue to be. Over the next couple of years, the stock would soar from $20 a share, all the way to 90. You know, a lot of your sins can go unnoticed if everything's going well. And back then, everything was going, it seemed very well for enron. Eventually, enron hired more people and got that sales room fully up and running. At the time, Bradley says it seemed more like a half truth than a lie. And that's a good example of the slippery slope when you start going along with this stuff. How you can become a pretty numb toward it all. It was only in retrospect that realized that, yeah, I'd participated in this and there was something really wrong with it. When I look back at it, run. There are a lot of moments like these. When reality didn't match executive ambitions. But most of these moments weren't about a stage play in the sales room. They were about creating financial facades to mask problems brewing inside the company. In 2001, reality bit back. It's a stunning fall. Enron had grown into the 7th largest company in the country ahead of IBM and AT&T. Enron once an energy giant now amid government investigation finds itself in chapter 11 bankruptcy court. It's hard to believe that a company with revenues of some $100 billion last year would be filing for bankruptcy this year. This is bad bets. A podcast from The Wall Street Journal that unravels big business dramas that have had a big impact on our world. Season one, the story of enron's collapse. My colleague Rebecca Smith and I will take you inside. Show you the successes that made enron a Wall Street darling and explore the deceptions that brought it down. The scandal rocked people's faith in big business. Because in the eyes of many, it didn't just expose what was wrong at enron. It exposed unchecked power throughout corporate America. The story of success became so enticing that for a moment there, it didn't matter if it was fraud. This is episode one. Potemkin village. I came to this story two decades ago, knowing very little about enron and the world of American energy. I covered white collar crime for the journal. But I was paired with Rebecca Smith. The journal's reporter for utilities and power markets. Enron was part of repeat. The company was headquartered in Houston. The epicenter of the U.S. energy industry. Houston was to energy what Wall Street was to finance and what Silicon Valley was to the tech industry. It was the center. There's a massive gas pipeline system, of course, there are oil and gas reserves in Texas, many big companies were based there. Enron had a certain swagger and at the time, of course I was in California. I was never sure, is this just Texas? Is it the Texas swagger? Or is it the enron swagger? Enron was the flashiest brass player. Car clicker was a training manager at enron. He remembers pulling up on his first day of work to the enron tower. It was like he was working in Hollywood, not energy. There were like 25 Ferraris and Maserati and Bentley's lined up on bonus baby roe, and I thought who works here. This is crazy. And what I found out later was, if you're a 26 year old Stanford MBA and you make a $1 billion deal, you get a $1 million bonus. Enron was about big bucks and big attitude. Right down to their hold music. Yep. That's Tina Turner. Simply the best. I mean, who does that? Enron's bravado never seemed to miss a beat. Then, something happened. The first real crack in the enron facade. And it was a big one. It was August 2001. In Ross CEO, Jeff skilling resigned, completely out of the blue. Jeff skilling's resignation was just a stunning shocking thing to have happened. I mean, this is a man who spent years working his way up to become CEO. And, you know, he barely gotten the seat warm. He had only been CEO for 6 months, but he'd been with enron for more than a decade. He helped transform the once sleepy gas pipeline company into a global enterprise. He'd become a corporate celebrity in the process. You might compare him to apple's Tim Cook or Tesla's Elon Musk. So when he resigned, he sent shockwaves through the industry. Skilling said it was for personal reasons. But CEOs usually don't just quit. Especially after just landing the job. It often signals something is up at the company. Now, covering something like this would normally have fallen to Rebecca. Like I said, this was her beat. But she was moving into a new house that day, and had no Internet connection. So I was asked to fill in. I figured it would be one and done. I had no idea that I'd be spending the next few years on enron's trail. That's next. After the break. Don't miss the limited episode podcast series sustainably speaking, featuring trailblazing leaders, discussing how to improve sustainability and address climate change through innovation. Join Joshua baca from America's plastic makers for these vital discussions with policymakers academics and industry pioneers about partnerships and policies that support advancements to meet this urgent challenge. Subscribe today, wherever you listen to podcasts. After I was asked to write the story about Jeff's sudden resignation, my first move was pretty standard. I called enron's PR head at the time, Mark Palmer. Chest departure as a milestone in the history of enron was big. It was, it was huge, but it was just kind of one of those things that didn't stand out as a oh my gosh. This is really bad. Hammer downplayed it. Nothing to see here. But I still wanted an interview with skilling. Palmer quickly got the CEO on the phone. He was a great spokesperson for the company. So I had a lot of confidence in Jeff. He's getting stuck to his story at first. Did he resign for personal reasons, which he wouldn't go into? But as he interviewed progressed, he started to sound troubled. Almost depressed. Then, to my surprise, he went off script. And he said something, they would help turn a two day story into years of investigation. He told me, right there on the phone, that he was disappointed by the fall in the stock price. It fell by half during his 6 months of CEO. And if it hadn't fallen, he said, he probably would have stayed. I remember when he said that, I thought, well, that doesn't sound like a personal reason. That sounds like a business concern. It sure didn't seem like a great one to bring up in an interview with The Wall Street Journal. Skilling declined to be interviewed for this podcast. But his admission on the phone that day in 2001 certainly caught my attention. This wasn't a canned response. I thought, hey, I've got a scoop here. I wrote a quick story for the paper. But the interview and skilling's almost confessional tone about the stock price, just kept bouncing around in my head. Sure, lots of executives see their stock price and quarterly returns as a personal report card. In 2001, was it generally bad year for the stock market? It was right after the dotcom bubble at burst. A lot of CEOs weren't thrilled. But they weren't all quitting in mass. Enrich stock had long been considered a good bet. One that was likely to outperform the broader market. The price could rebound. That's why skilling bringing up the stock price dropped made the whole resignation feel more suspicious. It made me think there might be bigger problems inside of enron. That the captain might be abandoning a sinking ship. Earlier in 2001, in red stock price had been $80 a share. By August, it was 40. Now, skilling it suddenly quit. Enron was understandably eager to quiet any concerns. In the company had no better man for that job than former CEO can lay. The charmer in chief. Rebecca had interviewed him several times. Kenley was always a very affable congenial polite person to talk with, as you know he grew up on a farm in Missouri. He could make you feel you'd had a visit instead of an interview. Lee had been enron's CEO for over a decade before skilling, and was perhaps the company's most famous figure. He had close, personal relationships with both president's bush. George W sometimes even referred to as Kenny boy. Lay step back into the CEO role after skilling resigned. He knew the shareholders couldn't be happy about the falling stock price. And many of his employees had their life savings wrapped up in company stock. So a couple of days after killing his resignation, lay held a company-wide meeting at the Hyatt regency imperial ballroom in downtown Houston. Good morning. Under the spotlight, he spoke directly to employees. Many of you concerned about the about the value of your stock options. I'm concerned about the value of my stock options. In a seeming effort to boost morale, he offered them a little something pulled from his back pocket. More stock options. I won't make you rich, but it might make you feel better. I think we've got a lot of great stuff going on. We are now about three times the size of the next largest competitor. But there's more than meets the eye here. Listen closely. Are we certainly think we're close to if not at the bottom of this cycle? And we want you to enjoy the ride back up. Do you hear that? The prediction the stock would climb. Well, that type of positive spin would eventually get can lay in big trouble with federal criminal authorities. I should note here that ley would plead not guilty to charges of misleading investors, but he was ultimately convicted in 2006. That conviction was vacated because of his death shortly after the trial. His optimism at that meeting in 2001, which soon collide. With a reality, Rebecca and I were on the hunt to uncover. After the break, an enron insider reaches out. What's important to you, what drives you, what do you want your wealth to do? At PNC private bank, we call that your why, and we want to understand yours. Maybe it's creating a legacy, buying a home or enjoying your retirement, whatever your goals are, will work with you to build a personalized wealth plan to help you achieve it. So tell us what's your why to learn more, please visit PNC dot com slash private bank, copyright 2021, the PNC Financial Services group Inc all rights reserved P and C bank national association member FDIC. Publicly traded companies in the U.S. are supposed to disclose what's really going on in their organizations. The good and the bad, so investors know. Companies write quarterly reports and submit them to the Securities and Exchange Commission. The SEC. One of the strengths of American capitalism is the existence of generally agreed upon standards for what will be included in these public documents. And they can be a treasure trove for reporters. The day after scilling quit in August 2001, I had pulled up enron's most recent SEC filing before I did my interview with him. Just to see if anything jumped out. It was 37 pages, single spaced, and pretty dense. I was on deadline. So I scanned some important sections, including one titled related party transactions. These are outside business deals involving directors or top officers. Is what I've always thought of as a company's potential dirty laundry list. And there, I found something most unusual. Something that ended up being a big deal. Deep in the document was a reference to outside partnerships that were doing vast amounts of business with enron. Worth hundreds of millions of dollars. These were not something that enron had ever talked about in any setting I'd ever been in. So it seemed to come out of the blue. Rebecca also hadn't heard about these partnerships from stock analysts who followed enron. Now, the descriptions of the transactions in the SEC filings were so convoluted, they were practically gibberish. But one thing was clear and it stunned me. The partnerships had been run and partly owned by a senior executive of enron. Didn't take me long to think conflict of interest. It raised the possibility that a senior executive enron might be making money for himself and his partners at the expense of his employer, and its shareholders. It seemed to me at the very least an outrageous arrangement. Rebecca agreed. It's as simple as saying you can't serve two masters. If you're in an arrangement in which you're on both sides of a transaction, you're going to have to pick which side to favor. They're never going to be equally treated. At first, I suspect that the unnamed executive running the partnerships might be former CEO, Jeff skilling. After all, that person had just quit the partnerships, according to the SEC filing, and skilling had just quit the company. I hardly call Palmer again. He was essentially the only source I had at enron. Palmer said the partnerships were fully disclosed and completely above board. It had been all approved that the accountants, the lawyers, the board, everybody was had approved it. So it was fine. Palmer said the partnership simply provided outside capital that helped the company. It was a company line. Ken ley told us the same thing in a subsequent interview. During that call, Palmer told me the executive who had headed those partnerships wasn't skilling. It was enron's chief financial officer, Andy fausto, who was still working at enron. He was the first time I'd ever heard fast style name. It would hardly be the last. Now to be clear, Mark Palmer was never accused of wrongdoing by authorities. But he suspected something was up with these partnerships. Many months later, he confided to me that he sensed people inside enron were concerned. Maybe I should have asked a hell of a lot more questions. Yeah. Clearly, Rebecca and I also needed to ask a hell of a lot more questions. It felt like we weren't getting the truth. Hitting walls. We hit something we bounce off. We go on another direction. We come back. We bounce against it again. We're roombas. We just keep moving. We look back at some of the prior SEC filings. And we saw these partnerships have been up and running for a while. And it dealt with a lot of money during that time. You know, their annual filing in 2000. Said that these enterprises were conducting more than a $1 billion worth of business with enron. Well, that's a massive number. But there was absolutely nothing in it to tell you what these relationships were. And on top of that, we noticed enron had some of its own stock tied up in these deals. 12 million shares of it. And we knew the stock had dipped, potentially crippling those deals. Potentially crippling enron. Did these partnership deals have anything to do with skilling being so upset about the fallen stock price? I didn't yet know how it all fit in. So we did what journalists do. We made it public. In late August, two weeks after skilling resigned, we wrote about the partnerships in an article. It was a small mention. Just a few paragraphs near the bottom. We quoted directly from the SEC filing. It says enron has entered into agreements with entities formed in 2000, which included the obligation to deliver 12 million shares of enron stock in March 2005 and entered into directory. It was basically gibberish eliminated the but that's pretty much all we had at that point. And it absolutely defies the entire purpose of financial disclosure. There's no information being conveyed through this. We didn't understand the information in the SEC filing, but hoped that someone would come forward and help us. I was so happy that we were able to do that because to me, and I've done this many times as a reporter. I think of these as a letter in the bottle. You put the letter in the bottle, you toss it into the ocean. You have no idea where it's going, or if anyone's ever going to read it or pick up on it. Well, this time, someone did. The person who had a lot of knowledge about these partnerships and enron insider. The source didn't want us to use his name. He feared enron could harm his career. So we called him our mutual friend. His identity is a secret we've kept for 20 years. Was I the first person to talk to The Wall Street Journal? Yes I was. I felt like finally, somebody is getting this story out in public. He called Rebecca at the journal. My first impression of him was that he sounded like someone who is very knowledgeable. He was clearly intelligent. He sounded like he had a well balanced view of the company. So he sounded trustworthy. I said, what do you know? And she said, we know very little, but we were hoping our hoping, somebody comes forward and tells us more about it. Do you know anything about it? And I said, well, I was probably the architect of the idea. What information would you like to have? Because I've got quite a bit on it. I told her my name and I asked her to keep me anonymous. He said he had internal documents. It's one of the most beautiful phrases any reporter can ever hear. So at that point, I thought, wow, this guy could be really important in helping unlock what's been happening at enron. Our mutual friend knew a lot about these outside partnerships. He didn't work on them. He sent Rebecca trove of material. It cracked our case open. It told us that there were rampant conflicts of interest that had not been dealt with. It told us that your average shareholder would have no idea what the true financial condition of the company was. And we soon learned that enron had been taking extraordinary steps to hide losses. Losses that federal prosecutors later said should have been reported to the public. Losses of hundreds of millions of dollars. It was the first indication that we were really onto a big story. It was our key to unlocking one of the biggest corporate scandals in American history. We had a cash problem. We spent all the cash. It is my belief that enron's failure was due to a classic run on the bank. I didn't drive us into the iceberg. I'm just trying to warn the captain of the ship. A lot of the watch dogs did not bark. On this season of bad bets will take you through the many layers of mistakes and misdeeds at enron. The accounting tricks that hit hundreds of millions of dollars in losses, the trial. The demanded answers from the men once at the helm of American energy. And we'll hear from the whistleblower who kicked it all off. Enron is dead. For 20 years later, the forces that gave rise to the scandal, well, they're still very much alive. And on the minds of folks such as Lin Turner, former chief accountant at the SEC. We could see that we're setting ourselves up for another round of corporate scandals, which history tells us does occur every 25 to 30 years. That's next time on bad bets. This episode of bad bets was hosted by me, John M Schwartz. The original reporting on which this season is based was done by Rebecca Smith and me. Bad bets as production of The Wall Street Journal. This season was produced in collaboration with neon hum media. From The Wall Street Journal, kateri oakum is the executive producer of this podcast. Dan Rosen is the co executive producer of WSJ studios. Anthony Galloway is the global head of video and audio at The Wall Street Journal. From neon hummed media, muna Danish and Haley faker reported, wrote and produced this season. National Cato is the associate producer, story editing by Andy gilbertson and Vikram Patel. Sammy Allison is the production manager. Sound design and engineering by Scott Somerville. And the executive producers from neon hum are Shara Morris and Jonathan hirsch. This episode was fact checked by Laura bullard. The theme song and many of the tracks you hear in this series were composed by Hans Dale suit. The other music in this season of bad bets is from epidemic sound and blue dot Sessions. Subscribe and listen, wherever you get your podcasts. I'm joined in Schwartz. Thanks for listening. Adoption of teens from foster care is a topic not enough people know about and we're here to change that. I'm April Dinwiddie host of a new podcast, navigating adoption presented by adopt U.S. kids. Each episode brings you compelling real-life adoption stories told by the families that live them with commentary from experts. Visit adopt U.S. kids dot org slash podcast or subscribe to navigating adoption presented by adopt U.S. kids. Brought to you by the U.S. Department of Health and Human Services administration for children and families and the ad council.

Enron Jeff skilling Rebecca Smith The Wall Street Journal skilling Houston U.S. Rebecca Bradley Zoe Thomas John M Schuyler John McHale Anne Ron enron headquarters Mark Palmer SEC Robert Bradley
Encore: Enron | Damage Control | 3

American Scandal

43:26 min | 3 months ago

Encore: Enron | Damage Control | 3

"To listen to american scandal one week early and ad free join one plus in the wondering app. Download the wondering in your apple or google play mobile app store today. it's august two thousand one. An enron ceo. Jeff skilling has left the building. sharon walking sits patiently outside rex. Rogers office she still can't believe the one energy trading company in america is heading into a hurricane and captain has abandoned ship. This tells walk ins few things as ceo skilling knows what she knows and resigned because enron engaged in illegal activity and will soon get caught. The irony of this is that watkins herself plan to the very same day. She pictured herself breaking the news to andy fastow than marching back to her office collecting her belongings walking out the front door never to return but skilling beat her to it the man businessweek put on its cover the man who had drunkenly declared i am enron at a company party. People don't know that the good ship enron spout the hit the shoals and skilling left them the face the consequences of what he done. He didn't try to make it right. He just ran away. The moment skilling announces resignation walk ins made a decision. She would do what she could to make this right. And that's why she wrote the memo. Sarah commit rex. Rogers is an enron attorney. Dour pale man with thinning hair. He does not offer to shake her hand. Dusty books and paperwork are stacked all around his office and it smells like mildew rogers clears his throat and begins. So you're the one. I'm the one. I'm sorry i don't think i please. You wrote the memo. Sorry but around here. Non mus would be whistleblowers. Don't stay anonymous was hard to trace this document to you. trust me. Rogers puts on his glasses and begins to read. Dear mr lay has enron become a risky place to work for those of us who didn't get rich of the last few years can we afford to stay. Skilling's abrupt departure will raise suspicions of accounting improprieties. And so on and so on. Rogers looks up briefly registers watkins astonishment and then continues skilling. Is resigning quote for personal reasons. But i think he wasn't having fun. Look down the road and new. This stuff was unfixable and would rather abandon ship now than resign. Shame in two years and on and on. I'm incredibly nervous. You said that we will implode in a wave of accounting scandal. Sharon was all this really necessary. Yes rex. I believe it was well. If that's true. How come rick. Causing andy fast. Out and general counsel. Don't think it's anything to worry about. Listening fastow's been enriching himself through. Ljm for years. That's a problem when his rafters collapse. The losses for enron will be enormous lay. Doesn't understand the danger facing the company and frankly rex sounds like you. Don't either. I really don't and i don't know what i'm supposed to do with all this what i would like. Rex's for you to arrange a face-to-face between me and lay. I can help him. I have a plan. I know we can save the company. You won't be easy. It won't be neat but we but we can do this. Enron employs nearly ten thousand people. They don't deserve to lose their jobs. And pensions and maybe everything they own over this masking for your help. Please rogers removes. His glasses leans in lowers his voice. Let me ask you something share. You really want to take your concerns. To lane. Vincent in elkins arthur andersen. They all signed off on these deals and the fast hours a smart guy. He knows what he's doing. He's not this croc you made him out to be. Why would he our accountants and our law firm risk. Everything they have on something. Only you say is illegal. Walk ins swallows. The answer is so obvious. She's embarrassed to say it out loud. They did it out of greed. Watkins realizes that she will receive no help from this man he will bury her concerned under one of the moldy stacks of paper in his office and deny she was ever here. She's at a dead end. She tried her best tried to redeem enron and failed tears of frustration. Earning her eyes. Rogers takes notice. She looks down. She senses that rogers taken aback. A hey sharing less. I do think you're blowing things a little out of proportion. But i'm not part of some sort of cover up if that's what you're worried about your important to this company share. If you wanna talk to ken lay. You're entitled to do it now or engine. Walk ins manages a tentative smile. I appreciate that rex. He stands. I have a meeting coming up. I walk you at the door. Roger stops and waits for her is to meet his. I need to warn you may may be a while before hear anything. These are sensitive matters and things take time walking. smile fades. Time is the one thing. And ron doesn't have american. Scandal is sponsored by malware. Bytes like your privacy. Tired of being tracked by ads for sites. You visited use public wifi at the coffee shop airport. Sounds like you could use. Malware bytes cyber protection for everyone maui. Bites is complete cyber protection that keeps all your devices and personal info safe from threats so you can shop play and connect online without a second thought and their privacy. Vpn takes your security to the next level. It's a super fast next gen. Vpn that protects your online privacy and secure your wifi it helps you become invisible to tractors eavesdroppers and cybercriminals so your private information like passwords bank details and even that surprise birthday gift stays private. Start your free trial of malware bytes privacy today at malware bytes dot com slash. Vpn american scandal is sponsored by claudio. Attention ecommerce founders entrepreneurs side hustler's marketers and growth hackers. If you're working round the clock to build your dream ecommerce business. You need an e commerce marketing platform that works just as hard as you do. That means unique. Clave you with clavijo. You'll delight customers and drive revenue at the same time with personalized email. An sms marketing campaigns. That you can design and send in minutes plus building. A marketing campaign is drag and drop easy. You can get started with your first campaign in under an hour and easily build from there with clave ios best-performing templates to get started with a free trial of you. Visit clave yo dot com slash. Listen that's k. L. a. v. i. Yo dot com slash. Listen from wondering. I'm lindsey graham and this is american scandal sixteen years after its founding enron was accompany sliding inexorably into a crisis of its own making a falling stock price. The sudden resignation of jeff skilling and unflattering media attention all began to tarnish the company's image as always lying just beneath enron surface was the truth behind it success widespread accounting fraud and by august. Two thousand one. The surface was beginning to erode and the outlines of what was to come. We're beginning to emerge following skilling's departure and runs leaders refuse to panic. They weren't about to let the foremost pillar of corporate. America collapsed and disgrace. They refuse to believe it was too late but it was. This is episode three damage control on august. Twenty second two thousand one. Ken lay stance in his office. On the fiftieth floor. In waits for a woman named sharon watkins to arrive. Apparently this walk ins woman has been at the company for some time. She has some urgent concerns to share regarding enron lay thinks he's probably met watkins before but he isn't sure he's met many people in his life including most of the leaders of the civilized world. He can be forgiven if he can't recall her face. Plus he has a lot on his mind these days. He's still can't get over the way skilling just abruptly left lay thinks about the man he spent over a decade grooming to replace him. How could he have failed. So spectacularly and by leaving foot lay in a very awkward position of having to fix his failures and the days following skilling's departure lay was stuck it wasn't as if he could simply conjure replacement successor out of thin air so he did the only thing that made sense. He reclaimed the title of ceo. Not that he was looking to do so lay smiles as walk ins his ushered into his office. He really doesn't feel like smiling. But sometimes being ceo means smiling when there's nothing to smile about that's what skilling could just never understand. He just went right for the jugular. Every chance he got as walk ins walks in he sees a friendly enough looking blonde. Woman lay doesn't know her from eve. He shakes her hand and bites her to sit. Watkins gets right to the point she tells him about l. the raptors and all the rest of the special purpose entities. That could come back to bite the company. She says she knows. The lawyers and accountants signed off on them but they shouldn't have these. Sp's are just an accounting shell game and the analysts and journalists will eventually figure it out she warns lay that this could all bring enron walk and seems like an intelligent person. And she's very articulate explaining what she thinks they must do next to rain in the cows. He sure they're all good ideas. But at a certain point he stops listening. All he can think about is. Andy fast lay thought. The arrangement was very clear so clear. He didn't have to spell it out to those under him. They're all grown men. They should all know. The score lay benevolent public. Face of enron good cop skilling and fastow bad cops when necessary aggressive in their pursuit of money but disciplined lie. Never ask them to do anything illegal. Never ask them to do anything that could get him in trouble. He's not stupid but apparently fast out is walk ins has finished talking and occurs delay. She's now waiting for him to respond. Lay the only question he needs an answer to. You haven't gone outside the company with this have you. She shakes her head. No les smiles believed. Yes if there's anything he can do for her. She says she likes to be transferred from fast. Sounds of vision. As soon as possible lay response that he'll work on it then. Thanks for coming in. Watkins leaves lay sits back down at his desk. His day ruined lay. Hasn't been able to keep straight the details of his. cfo's many schemes. They're all way too complicated. B. understands the significance of what walk ins told him fast out has put all of them at risk but laze takeaways. Not how can i fix this. That's too big a task. Instead he decides the fix is pretty simple fast out must be dealt with and the attorneys have to smooth this over the next day. Andy fastow sets his crosshairs on cindy also ahead of human resources. He's only a foot from her desk when she looks up and realizes he's there he cutter fast with one thing on his mind punishment but she's on the phone fast. Al watches as she smiles and holds up an index finger finger in mouth. Just a sack. It's one more second than fast downs willing to give her immediately jams down the phones hook ending the call. She's mid-sentence she's shocked and upset but he could care less. He wants an explanation. It all started with her sharon watkins went to olsen olsen watkins directs. Rogers rogers sent watkins to lay fast down. No spittle is raining from his mouth but he doesn't care. How could you be so stupid. He screams lay actually listened to walk and believed her. He slams his fist on olson's desk. Thanks to her lay pissed thanks to her lay told fast now he has no shot and making chief operating thanks to her lay is launching an investigation into the rafters. Ljm thanks to her. Andy fast career is over. He looms over her demands. What she's going to do about all this. You watch her mouth. Just open and close like some stupid goldfish. She doesn't know how to respond. Well luckily for her fastow ideas. He tells her that she can start. By seeing to it that security removes walk ins and her secretary from the building by the end of the day. They're never to set foot in enron again. He wants their computers to he tells her to get on it immediately or he'll be back won't be as nice as he was today. Fastow turns and walks out confident. That olson got the message. She's crying so it sounds like she did on august twentieth. Two thousand one can lay is busy and determined. He's fifty nine but he hasn't felt this level of pure focus since his mid thirties. These days people are in and out of his office constantly as he tries to figure out where things went off the tracks in his office this afternoon as a reporter from the wall street journal part of mopping up his underlings messes dealing with the press. They've got a whiff of something badly amiss. He hates dealing with journalists. But that doesn't matter. This is all part of getting enron going back in the right direction reach the reporter and give them a tour of the office. He points out that many humanitarian award. He's collected over the years. He directs the reporters attention to photos of lay with his good friend. President george w bush. The reporter seems appropriately impressed and laze pleased. I sit down. The interview begins. Thanks for doing this mr life. I know you must be extremely busy but we certainly right there. Ceo of an organization. Like this is a high pressure. Job as you as you can imagine. Sadly jeff skilling just did not handle that pressure well we've had to do some course correction in his absence and see what kind of course correction talking about lay begins to speak but then stops himself. He thinks for a moment and considers the proper response. Well we must restore investor confidence in our company. What can i tell you. Enron has lost some credibility lately. Where at thirty eight dollars a share. The reporter seems impatient. Fires off the next question right but concerns have been raised about the nature of certain financial partnerships involving andy. Fastow and on. I can i can assure you that all of that has been rectified. Fastow has no involvement whatsoever with ljm. That was an important measure to take and we took it. What have you taken further measures. Mr lay a lot of people are asking questions about. Just how enron generates prophets lay flinches. This should be easy to explain. But thanks to fast allen skilling it is not just one more way in which they let him down. Here's what i can tell you. I can promise the world that we will as soon as possible. Make public detail financial information which will give a better idea of the profitability. Various businesses reporter nods scribbling notes. Ken lay as mindful to steer this interview in a positive direction. That after all is the entire point of interviews such as these. And i'd like you to write this down to. Yes mr lie. Enron will rebuilt. I can promise you that. In fact august two thousand one was a very promising month for us very very promising. We're running a tight ship here. Next month will be even better and you can quote me on that. You're predicting good. September for enron. I'm guaranteeing it. Enron is still america's greatest company and. I don't see what could possibly go wrong for us in the weeks to come when the interview is over lay shakes hands and flashes confident wants the reporters gone size. Heavily you senses. The report was not swayed by his answers. Lay can't predict the future. No-one can and truth retold he has no idea december. Two thousand one be a good month or the worst one yet. American scandal is sponsored by nam nam. If you have a dog you love them like family but because we're so used to the cans of glop and the bags of bits. We might think that our pets eat or digest differently than us. My friend brian has a seventy five pound rhodesian ridgeback named talks beautiful dog and got to thinking about this. I think it's easy to default the dry food. He said he throw it in the cabinet in a plastic men. And that's it out of sight out of mind for a month sitting at room temperature. But i wouldn't eat month old bread. I would need month old anything so. Brian feeds talks. 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Apr financing for twelve months. On everything you need for the outdoor kitchen of your dreams need expert advice. Barbecue guys has best in class customer service whether by phone or by live online chat. There's a real person standing by to help you. Get the backyard of your dreams shop now at barbecue guys. That's bbq guys dot com for those who were born to grill financing offer details available online at bbq guys dot com on october seventeenth. Two thousand one. Ken lay sits in metallic gray executive conference room stealing himself for an early morning investor. Call just over a month ago. Hijackers flew planes. Into new york's twin towers. Three thousand people died lay watched on television as the towers collapsed for a brief moment. And ron problem seemed trivial and small but the feeling was fleeting ashes from the ruins were still swirling in the air when the critics started circling enron again people want to answer questions about enron. He has good news for them but even good news sounds like bad news. These days the conference call begins lay puts on his most optimistic voice for the investors analysts and executives and ron reports a strong recurring operating performance in q. Three recurring net income is up thirty. Five percent earnings per share are up sharply to that practically tells you all you need to know. He says adding enron's core energy business fundamentals are excellent. There is one minor thing he needs to mention though and he purposefully speaks quickly. We're recording non-recurring charges of slightly over one billion dollars this quarter. The changes are a result of a thorough review of each of our businesses. We're committing to making the results of our core energy business. More transparent to investors. He explained some of the losses. Pertain to as eric's some to broadband some tech stocks and some are spread across a smattering of other assets. He's owning up to the losses but critics don't miss the sleight of hand. Those losses are kept in a separate basket so as not to sully the bottom line as he ends the call he smiles and looks up. He surprised to see a look of confusion on several board members faces. He doesn't know what they're confused about. Everything he said is positive. Enron is on an upswing. There is of course that billion dollars in expenses that came out of nowhere. But isn't it better if he puts it out there instead of critics dragging it out. This is what the new enron is all about telling the truth and facing a directly lay walks back to his office and reflects on a job well done. He's even ordered an internal review of company practices he's asked enron's law firm vinson and elkins to conduct it. It will be a review with reasonable parameters. of course he told the lawyers. They can't second guess past decisions. Made by enron's accounting firm arthur andersen expressly demanded that they not conduct a discovery style and skittish lays confident that simply nothing left to discover skilling has gone fast hours on ice everything is a okay in enron and the company will be completely vindicated soon. Sharon watkins feels ridiculous. She's sitting at the end of a conference table. Large enough to see twelve people at practically too far other end of the table are two men from vincent in elkins their faces impassive the only three people in the conference room. Enron is a client of vini and that strikes. Watkins is a slight conflict of interest. This is not how she would have conducted internal review proceedings. She tries to break the ice first off. I'd like to thank you for conducting this investigation. I think well. I think it's important to know ms watkins not an investigation. It review but the distinction is important. Very well a review. Yes so as we understand it. You suspect some financial impropriety of some sort within enron yesterday and. That's that's putting it lightly. Well elaborate walking's please. We're all ears okay. Anti-fascists investment fund. Ljm essentially. He used it to line his pockets. He often ran the fund in a manner that ran counter to enron's best interests plus. I believe it's quite clear. He used special purpose. Entities specifically the sp he's known as raptors to conceal company losses so he was deceiving investors. This doesn't concern you at all. Well we understand it. Mr fassino is no longer involved in. Ljm so that clears up a lot. I'm not so sure that it. No no i'm not sure it does. Actually watkins feels embarrassed. She isn't cynical enough yet to believe that openly take fast outside fastow who just days ago tried to have her and her assistant fire thankfully. That didn't go anywhere from what walk ins was told cindy olsen and hr called. Ken lay and lay made it very clear to fast out there. Watkins wasn't going anywhere. One of the lawyers continues. Well let me ask you something. Have you seen all the legal documents on the raptor transaction. What i don't think. I can claim to have seen them all. That's exactly right. And how exactly did algae and pull money from the raptor transaction that that's another thing i wasn't privy to miss watkins seems like you weren't privy to much. We've reviewed some of your statements here anonymous memo for one from where we're sitting. It seems like you substantiate much of your allegations with. I don't know things you overheard at a cocktail party. Yeah lots of rumors. Lots of conjecture. Would you agree actually. No i've seen the books with my own eyes. And i know andy is up to. I can give you several names of people who will corroborate my allegations. We'll reach out if we require your systems contacting anyone you might know. Watkins remembers the moment and rex. Rogers office when she nearly cried. What she's feeling now is very different. She's not even close to cry. She's just angry. These idiots care about covering their asses more than anything. They're willing to destroy enron and the process can lay did not take her seriously after all sure he protected her from fastow but a job at enron isn't worth much if is too scared to ensure a legitimate internal review. Ken lay is obviously afraid of what you'll find if he looks at his own company too closely. It's disappointing that sad. Do you have any questions mrs watkins. No thank you for your time. Anti fast down mrs jeff skilling with him gone fast out surrounded by complete morons morons like ken lay and sherron watkins. Who lay was too stupid to fire. Morons like these internal review suits from vienna. They seem apologetic. Beg his pardon for taking his time. Fast doesn't want to hear it. They shouldn't even be here in the first place. He sits across from them in their little comments room. And lays it all out like you would to a couple of toddlers accept everything at enron is completely aboveboard and always has been all transactions. All of them were thoroughly reviewed by arthur andersen the office of the chairman and yes even v. e. itself to these guys really wanna know what this is all about. He'll tell them. Jeff mcmahon wants his job so he's enlisted his pawn walk ins to smear fast out so that they can take enron over together it's obvious via neiman nod and take notes on october sixteenth. Two thousand one share and walk ins his back in the lawyers conference. They have concluded their review and we like to share their findings. Watkins braces herself for the worst. And she is. Not disappointed. Is the belief of vincent in elkins. That walk ins concerns amount to little more than bad optics france yes. Ljm doesn't look great and neither do the raptor transactions all these entities performed poorly combat. Along with a falling stock. Price will not play well in the media but a big company like enron will suffer adverse publicity from time to time. That's just the cost of doing business. The sure watkins that her concerns were thoroughly reviewed but they hadn't found anything that wasn't already known for them. It's a case closed. Walk says it doesn't sound like they gave her concerns any real consideration at all the lawyers point out the enron stock is more stable than it's been weeks. It's held at thirty three dollars. Even after the company announced losses things that are looking up. watkins just shakes her head. She almost feels bad for them at this point. And ron must voluntarily and publicly restate past earnings simply did not make the money at senate did all the mark-to-market fair value accounting and special purpose entity manipulation is certain catch up with the company and when it does people won't be asking if the stock price is holding they will demand that heads wall. Ken lay is in the elevator alone going down angrier than he's ever been his life when the doors open. He answered the public relations department. They appear to all be gathered in a single room having some kind of group meeting but whatever they're doing it isn't enough lay is here to set them straight when he steps into the room. The pr people look up and surprise. Usually a meeting with the boss is booked. Weeks in advance lay asks. If they've seen the wall street journal lately they just look back and nervous. Silence lay raises his voice. Everything he's done to get enron on solid ground the internal review the financial disclosures the interviews. None of it mattered. The two characters at the wall street journal. Rebecca smith and john m schuler are out to destroy him. Enron posted some third quarter losses. Not a big deal. But the journal reporters made it a front page headline worse. They've put fast out under the microscope. Lay thought he was all cleared up. But smith and am schweiler claiming that fastow's relationship with ljm was unusual. They're quoting so-called corporate governance watchdogs. Those people say that since l. Jam purchase assets from enron. Fastow should never been allowed to run. Ljm while serving a cfo. The job of a cfo is to look for the best financial interests of the company that employs him. The journalists insinuating. Maybe he looked out for the best interests of. Ljm at enron's expense. The wall street journal is pulling enron apart. It's highlighting not just the failure of its broadband division asterix but the loss of a billion dollars in equity in the departure of top executives. Later shaking his voice hoarse he adds what is quite possibly the worst news of all enron stock is now down to an all time low of twenty five dollars. Moody's has placed the company's long-term debt on review for potential downgrade lay deliberately makes eye contact with each and every person staring back at him and fear he tells them that there is nothing wrong with how enron does business he says it's a public relations problem and orders them to fix it heads back towards the elevators. Leaving the pr group behind. He's just hired a crisis management team and his first meeting with them and five minutes he can sense the clock beginning to take on. His career quickens his pace. He knows that if he can't save the company within the next few weeks and ron is finished. Lay along with it. He won't let it happen if it's a fight his enemies and he's about to give them the fight of their lives. American scandal is sponsored by audible. Chasing d'alene is a new investigative podcast hosted by veteran journalist. Vicky ward been covering the jeffrey epstein saga for nearly twenty years when ward i interviewed epstein in. Two thousand two. She didn't how close she came to uncovering the web of secrets. Wealth and connections that protected him for decades one of epstein's closest and concerning connection is disgraced heiress gallon maxwell epsteins ex-lover former employees alleged co-conspirator. Maxwell is now awaiting trial could hold the key to unlocking the truth behind epstein featuring new interviews as well as previously off the record. Insights chasing d'alene is a real life geopolitical thriller that will reframe and redefine the epstein. Saga chasing glenn is available exclusively on audible to start listening go to ottawa. Dot com slash. Chasing that's audible dot com slash chasing on october twenty. Third two thousand one. Andy fastow can see. The ken lay is beginning to crack under the pressure. Lay plods into the room. Sits down and rubs dark rings under his eyes. fastow's not sympathetic. Laid did this to himself. Maybe if they had promoted fas- out a coo. Instead of listening to sharon walk ins enron would be in better shape miserably lay sits at the head of the boardroom. Table set to begin. Another grim analysts. Call the pr department has written up an official explanation regarding the circumstances that led to the creation of algerian. It all sounds perfectly. Logical ron ashton. A fat lawyer from vienna chimes he proposes an edit that identifies fast hours the founder of the investment fund fastow can't contain himself. It was skilling. He screams everyone just stares at him. Even lay fast decides. Sit down the others. Do as well lay begins. The call lay tells those on the line that he's disappointed the stock prices so low especially since things were going so well. At the company pastel stifles a snort. Lay recites the prepared remarks regarding. Ljm it was an investment fund created counteract volatility related to various tech deals fastow voluntarily terminated his vomit with l. jam when it became apparent that his prominent position both in belgium and enron made some investors uncomfortable lay then adds that he has the highest confidence and fast down and thinks he's an outstanding cfo. It's a polite remark. Fastow acknowledges it with a flight not. It's his turn to talk now and keep things cheerful. No one needs to worry about. Enron's liquidity its banks still supported plus enron hasn't needed to dip into the three billion to keep socked away for emergencies lay asks if there are any other questions. Kurt launer of cfsp wants to see a balance sheet. When will it be available later. Shrugs the next balance sheet will be available at the usual time about a week or two after earnings are announced. Launer asks if the balance sheet can be distributed sooner lay says sure possibly and leaves it at that fast enroll says is. There's no chance of that happening. Dave fleischer from goldman sachs is next on the line and he doesn't it's words. The company's credibility is being severely questioned. He appreciates it's difficult for to go into details. But now is the time for full disclosure. There's an appearance that enron is hiding. Something make no mistake. And ron is in crisis and lay will need to have a conference call like this. Perhaps every morning from now on until investor confidence is fully restored lay holds up his hands and response. We are trying to be as transparent as we can. We are trying to provide information. We're not trying to conceal anything. We're not hiding anything. The next person to take over the conference call is richard grubman. Fast our remember some well. He's the guy that skilling called an asshole just a couple of months ago grubbing says that he did some calculations and think that enron correctly recognized all the losses taken when asterix went belly-up grubman says it appears enron took a bigger hit for mavericks than it's leading on chief accounting officer rick causey response and says that it's nothing to worry about enron created an. Sp called marlin designed to contain the asterix debt. So everything's fine. But grubman says he doesn't buy he's aware marlin and it has no value as an sp at all. Marlins simply does not have the financial resources required to cover the large debts generated by the failure of as arik causey begins to respond. But ken lay cuts him off. He tells grubman. I know you want to try the stock price down. And you've done a good job of doing that. But i think that's that let's move onto the next question. Fast down raises an eyebrow so the old man still got some fight left in him. Fast looks forward seeing how they will fare later that morning when he has to. Face enron employees lay enters. The houston. high in. The hotel's ballroom is packed. Wall to wall people that work for him. His crisis management team propose this they told lay. It was time to face employees directly to tell them that there was no reason to panic that enron would prevail like. It always has such reassuring. Words would mean a lot coming from the founder and ceo of the company lay weaves his way towards the podium. He tries to make eye contact with as many people as he can says. Good morning to each of them. He's going for confident. Convivial in control but the crowd is agitated to lay. They sound like a swarm. Angry hornets lay climbs steps that lead to the microphone then pauses momentarily. Usually at this point. He be greeted with thunderous applause and a standing ovation. But not today and runs workers. Sit and impatient silence. They're scared. And ron stock is trading at nineteen dollars. A share. Their retirement savings going up in smoke. They are desperate for a reason to believe in this company again so with a thoughtful non les surveys the crowd and begins good morning there. It is now. We've got a packed house. And i appreciate that now in any other circumstance i would probably have a few words to say to you regarding september eleventh on the many heroes. The roast the occasion on that awful day. But of course we're here to talk about enron because just like america's under attack by terrorism. I think we're under attack lay hold for applause but there is none which is odd. He thought that statement would get more. Support lay motion for enron president and ceo. Greg wally to approach the microphone may smiles. As wally lists enron's many business units and describes in detail the ways in which each unit is performing admirably lay. Takes over again. Thank you greg. Let's have a round of applause for greg wally. Of course as you can see the underlying fundamentals of our business are very strong indeed the strongest they have ever been. But regrettably this is. Not what wall street is focusing on. A doubt is what you're focusing on. What i want you to know that enron's been through some tough times before it's right. They tried to take us down in the eighties that phony oil trading scandal. They've tried to take us down many times when each and every case the company has come back and it has come back stronger than it was before. Make no mistake. All of us here in this room today are being tested. it's true will. We measure up to the challenge. True character is born in times of crisis. We need to show our character as an organization. Now it's time for questions and looks like ever got a few up here and offers a stack of cards with employees questions. He selects one at random. Question makes them frown. But it's too late to put it back. Hundreds of people have just seen him take it. There's nothing else to do. So they return to the microphone and read the question aloud. I would like to know if you were on crack. It's october twenty. Fourth two thousand one and andy fast hours fired up charging into enron headquarters at nine. Am for a meeting with the executive committee lay did his best yesterday. Some bought enron overcome schtick. But some didn't it makes no difference to fastow though enron just needs to show. It makes money for that. It needs andy. Fast down with fastow's help. Enron will reign cash again and when that happens analysts watchdogs the wall street journal even the asshole shareholders. They're all gonna shut up and go away. Money makes people have short. Memories is the only answer it has always been the only answer fast outbursts into the executive suite ready to talk strategy. He has ideas on how to keep enron afloat for the rest of two thousand one as well as into the next decade quickly. Take stock of those in the room and stops dead. Greg whaley ken lay. And jeff mcmahon. What the hell is he doing here. They all stare at him and he sees it in their ash and faces immediately. He just shakes his head. Smiles books the floor than backup. Why he asks lay tells him the banks of lost confidence in you andy. I'm sorry but our hands are tied. We have to let you go fast. I usually try to keep his rage check when he's around lay but now he simply can't contain himself. There's no reason to hold back nothing to lose at this point a single bank express the lack of confidence in me and i told you all about that myself last week. Now you're punishing me for being honest fast. Looks for something to throw. But there's nothing reach. He looks at mcmahon and asks. So i guess you're the new cfo. Well congratulations mockingly. He softly applauds mcmahon's face. Ken lay looks disappointed and he just doesn't need to be difficult yet. Does ken fast replies turning to leave but then he stops. He's one last thing to say watching now. I intend to sue for ten million dollars wrongful termination. See you in court way. You're going to all be there soon anyway that afternoon. Ken lay sits down. His office loosens his time and causes size. He doesn't see how this day could get any worse than his phone rings. It's one of the lawyers bad news. The securities and exchange commission has just made an announcement as of today it is launched a formal investigation of enron corporation. Next americans gam enron runs out of options as the wall street journal works to expose the company for what it is. The resulting fallout is more devastating than anyone could have anticipated from wandering. This is episode. Three of enron for american skin. If you like our show please give us a five star rating lee review. Be sure to tell your friends. Follow american scandal on apple podcasts and spotify amazon music the wondering for wherever you're listening right now listen at free by joining wondering plus you'll also find some links offers from our sponsors in the episode. Supporting them helps us. Keep offering al shows for free another way. You can support the show by philly small survey at one dot com slash survey. Tell us what topics we might come next. You can also find us and me on twitter search for hashtag. American scandal will follow me at lindsey. Graham lindsey with an eight middle english wayne be sure to listen to my other podcast to american history tellers and business. Movers a quick note about our reenactments in most cases. We can't know exactly what was said but all our patients are based on historical research. If you'd like to learn more about enron we recommend the books power failure by mimi. Swartz sherron watkins. The smartest guys in the room by bethany mclean and peter l. Kind of conspiracy of fools by kurt. I can walk and twenty four days. By rebecca smith and john schmil. American scandal is hosted edited and executive produced by meet lindsey graham for airship sound designed by tariff parents. Music by lindsey graham. This episode is written by hannibal. Vs our senior producer and editor. Karen low executive producers are. stephanie. Jen's jenny lower beckmann and hernan lopez for one one nefarious. Dr a hit podcast and fifteen million listeners. Later dr death is still making waves all over the world. Dr death is the true story of dr christopher dutch a sociopath with a scalpel who left a trail the bodies behind him now. The phenomenon of dr death is being reimagined in a new streaming series starring alec baldwin on us afia rob joshua jackson and christian slater experienced three brand new bonus episodes of the doctor death. Podcast where the cast interviews the real life characters they portray in the streaming series golden globe award winner christian slater sits down with dr kirby. The man who finally took punch down on a sophia rob talks to michelle shugart the district attorney who put him behind bars. And dr death. Host and reporter lower beal speaks with a full cast about how making the show changed their perspectives on institutions and the medical system to listen to these new bonus. Episodes followed doctor. Death on amazon music apple podcasts. Or you can listen ad free by joining one plus in the wondering app.

Enron skilling fastow watkins Fastow jeff skilling ken lay Andy fastow Watkins Rogers rogers arthur andersen ron rex ljm elkins Rogers office ceo skilling mr lay andy fast
The Crooked E: History of Enron as a Trading Company that Put Swagger in Energy

Oil and Gas Startups Podcast

1:14:03 hr | 10 months ago

The Crooked E: History of Enron as a Trading Company that Put Swagger in Energy

"This is margin cau- a podcast that explores the oil markets. We pull the pieces together to talk about. How every cut of the barrel is market and white prices behaved the way they do with your guides. Alex alexander and george perez step for less it was could use a little church enough slide on down to the trip rock and catch reverend clear office. You boys listen to what he's got to say. I don't want to listen to jive ass preacher talking to me about heaven out you get wise. You get church. Hey there everybody all you wildcatters out there we're glad to be back This is margin call after a great holiday season. And hope you guys all had good holiday yourselves between christmas hanukkah new year's in the like and We're just glad to be back for twenty twenty one. Hopefully it'll be a more more fruitful and not so much dumpster fire as we had the past but glad to be back heroes who always it's big george periscopic with my buddy alex. Our happy new year man marking gear. Bud yeah to be back on the air apsara. Same year on in wola. We'll have more more to come without without break In in the near future. And we're just looking forward. Both of us. I'm sure we've talked about how twenty twenty one is looking up for lotteries for both of us georgia the thirty seventh day of december. Thirty seven of twenty twenty doesn't seem to have turned out much different than your in twenty joining one. I'm not calling beginning of twenty twenty one. Maybe until after the election inauguration stuff because we went through some weird stuff but at least that one but yeah there was a meanwhile nazi right were guy was like all googly. Eyed was his twelve thirty one. Twenty is at twelve fifty nine goes that is thirteen. Zero one twenty twenty twenty over one so it's like a thirteen month. Gut got at scribbled in their backyard. Right tacked on out of nowhere. A leap eon throws an extra month in there. Somehow we're not gonna call an end to twenty twenty. I think we should just keep calling twenty twenty until we get the pandemic under control. And you know some normality back. Call me the perpetual optimism. I'm happy to play. Good cops your bad cop. Seattle shakes out in nevada rubbing can't always about the the the hardest Outlook to find in. A person is the contrarian optimist And i think. George are the contrarian optimist so do you know everyone can be contrarian pessimist and a go with the flow optimist or pessimist but These in artist right. Yeah mozambican easy. I happen to be a contrarian used for the sake of being a contrarian some people would say you're a jerk but then latter years i've tried to nuance it. And when when group thinking monolithic saint happens and things are in a phrase that i coined and i still believe that to the day even though it can really stretch extremes in both directions but i really do feel that aside from a supernova that engulfs the earth or in a bowl of pandemic that wipes out ninety nine percent of the population you know something cataclysmic of biblical proportions Things aren't as bad as good as there. Always put out. With the fearmongering the mass hysteria. There's some serious concerns out there. Currently but on balance i think you know time we'll go on humans will persevere and and we'll we'll come out better on the other end so it isn't it. It's it's sure and you look at if you if you stretch your timeframe out. Further appropriately out into the distance. You can't be but optimistic about the future young. Even if all the only guide you have is is the past because technology and evelyn have materially helped you know life on this planet Whereas if you focus on the immediate problems and you focus on everything that's wrong or the next thirty seconds. Which by the way which i kind of believe what social media folk you know kind of forces you to focus on It's hard to be anything but pessimistic right because the human mind was never designed to process every single problem or emergency in the world which is what social media gives you in spades analysis paralysis exactly but the ability to look further out Young yeah big picture longer term. You'll you you'd have to. You'd have to work very hard to be simplistic about it anyway. That's just my point of view. And i agree with you one hundred percent simply because you know it could get worse absolutely can always get worse but the chances that are gets worse from here you know i. It's more probabilistic that the side starts to occur now histories rife with examples where that one the case but if you if you run the the law of large numbers yeah you there And so you know speaking of speaking of things like that. You know today for upset six. We got other crooked. The history of enron big huge trading company about twenty years ago That you know kinda had had ramifications of biblical proportions a almost old testament style. You know rally wasn't right. Yeah flood in pride and then his suing downfall. You know hearkens back to you. Know after this episode man. We might have to get to church jake. He said his right. And and you know we. We've talked about it in our in our sort of like to formally call it you know. But it's not that formal out. Production meeting I've always wanted to take a much more. Nuanced approach to talking about enron because the one thing about enron is there's so much material available just because of the bankruptcy and all the discovery that had to be done for civil lawsuits or the the court cases that that that had to be processed. You can find a ton of information on enron whatever facet of their business that you want to but i want i want to read sort of take this episode and talk about it. More from the perspective of what was the effect of enron on for lack of a better word zeitgeist of of energy trading And what it was like to live in houston in in nineties Leading up into into two thousand when when enron finally collapsed And what it. What they did to the industry as as a company And not not just as a corporate entity but how the evolved the industry. I think that's that's an angle to the story that hasn't been really fully explored And i think it's it has a lot of implications or at least you know a story that you can tell into where we are today as a as an as an energy industry and i wanted to kind of focus on that and tartar at if the audience will be happy. Enough to indulge on that. Because that's that's an angled that has that has not really been covered. There's a there's a movie about enron. There's a book called room. I likewise tied titled movie but that was really around the the final collapse on the unwinding of of the business. How the business came apart at the seams But you have to think about the years prior to that and what that really meant and how that company you're really changed the way at least in taxes You know there are a lot of benefits that we take for granted today. That came really out of the out of enron's relentless pursuit to not only modernize but evolve the energy markets from what they were before to what they are today. That's absolutely something. I want to get into today with you. Because i know you had such a visceral experienced Almost having been in the belly of the beast With with different entities on the proverbial trading street that tried to emulate a lot of what they did in also some of the shenanigans that were done in the industry there. But i mean. I'm gonna echo your sentiments simply because going back to rockefeller you know how he was kind of lampooned is this bloodsucking urchin. That was just you know a parasite on society in a convenient boogeyman of for you know for political reasons and we kind of we teased back the curtain and saw it on balance a lot of the things. He did with optimization efficiency at not wandering resources even though his his his compunction his motivation was profitability. You know on balance was good so along those lines. You know you talked about me. Is the optimistic contrarian. You know i'm a houston and you have been for quite some time. And i knew people who were hurt and so It's it's a real thing a lot of the the nefarious things that they did were responsible for but it's also cheap easy to just pile on right alex. So we're not gonna do that today. We're gonna call us. Call the line as we see it. And we're gonna ferris and kind of you know not so above board things were done. We're gonna we're gonna call it out and talk about how bad that is in market confidence in conveying things. You know governor lost his. You know. I don't care about your political ideology And whether or not i ascribe to the beliefs of a certain but a governor being ousted of for the sake because it was you know power. Outages were laid at his feet as being responsible. When you find out your california right. Yeah lost his job or the right. I mean there were a lot of qb kind of funny. It was the ascension of arnold schwarzenegger political being but p wilson loss job primarily. There are a lot of reasons had content for him As a governor. But y'all what enron did manipulating the markets in north carolina in northern california Was almost the last straw. That comes back there. And we're going to speak to that and we're obviously gonna gonna call it out but you know we're going to have a much more nuanced approach. United talked about this about being fair and they did a lot of good at least of the seeds that they showed death. Are you know for of which we are reaping the benefits today. It could be argued that had they still been in business and not done some of the shady dealings that you know. We would've felt realized lot of a lot sooner. That's up for speculation. Because i'm sure a lot of the people who who were responsible for for pulling pushing these These different you know ventures across the lines of finish line so to speak probably got their start or i know some for fact got their start sitting. Sit on the trade floor or in the board rooms of enron essentially thinking this shit up so so yeah i mean. Let's let's of go back in and just set the stage. Alex you know. Talk to me. Because i'm a little bit of a neophyte. Here now i had friends who dropped out of college while i was in college in got jobs on a trade desk almost a part time internship job and eventually the money was so good so i had that kind of proximal experience and then obviously the stuff that you've read and then now that we've had trading backgrounds brokering energy backgrounds. We've heard about things about the big. The big guys who ultimately went on to have billion dollar hedge funds gas hedge funds like john. Arnold got their start there but alicia set the stage. You know almost like a a mid twenties. Alex who just moved to houston From i think right and so yes well. Actually i was yeah. I had done my master's here at you've h and then was hired by coco working treasury back and then wrote they rotated me back to houston to work at minute maid. Who still here in houston. Yeah and so. We're we're the timeframe we're talking about here is early to mid nineties An and then the run up to two thousand two thousand one which was when when enron finally came apart of the seams and really Saw all it's it's kinda hard. Incoming compass the whole story. But i'll put a couple of statements out there. Enron went under not because they were not a good trading company. They were actually a phenomenal trading of me they went under house of they leverage their balance sheet In a manner to high debt using their stock as collateral and that all came apart. Okay michelle companies. Could only bay run so many times own offloading the debt to show good balance sheet crab before the rooster came back to crow roosts so to speak so right and you talk about all special financing vehicles. All of that you know they were there there. Bankruptcy was the was the primaries. Y'all instigator for the dodd frank regulations around morning Sorry sarbanes oxley. Sorry yes our veins oxy. Sorry not franks socks. Which which which forced company executives and officers accompanied to be personally liable for the reports that they signed off on But in coming back to who they were enron really was a company that was never. I mean culturally. It started off as an asset company started off as a pipeline company primarily in the gas the natural gas Part of the of the of the energy business But was was was culturally accompanied. That was never asked. Never afraid to ask the question. Why and look at solving a problem through a different lens Part and parcel of their dna on why they were successful now. There were a couple of things that we go back. And you talk about your principles. They're jeff skilling and ken lay. And you know. I'll put andrew andrew fastow aside because fast to me was ultimately the guy that sort of finance the company to unorthodox means and ultimately led it to being a house of cards. But when you think about first-quarter three sixty three which was the beginning of the deregulation of the natural gas market in the united states which unbundled gas supply from gas transportation. Which back in the day. When i'm sort of setting this up for georgian. Feel free to ask me questions but back in the day you'll gas. Applying guess transportation was considered one. Business right you could not supply gas Without transportation or everybody's barrel in an aninat regulated market had the same letterhead so to speak correct correct. And if you go back. And and i have friends who worked dynegy back in the day in in the eighties. Where when they went to your the way. The gas market worked an inner regulated world. Is we went to schedule. Your pipeline literally at dynegy. They would sit in front of a big whiteboard and they would map out all the schedules for the following month. And that was it. You know you got your supply. It was it was scheduled on the pipeline. It was it was. It was scheduled to the city gate to where it was delivered from an. That's it there was there was nothing else that you could do in that market or three sixty three essentially. Unbundle them arkansas. You could be transport you could be supplied but you don't have to be both and essentially what it did was deregulated the market to where It developed a spot market and price discovery around natural gas for you not only for the big liquid locations but for city gate locations and then the ability to be able to trade gas for a day ahead balance of the month. Bell was was henry hub and an active contract him was inactive contract. Right it was attracting louisiana young. You know like we talked about back in the foyer arm for a wildcat listeners of alex henry hub is the equivalent of cushing metro. Gas right were nymex contract for natural gas in what billion cubic feet or m b. Cf Settles much like a contract for west texas intermediate Of thousand barrels for one contract settles is delivered or or you know sold of taken possession of in cushing oklahoma so wanted to hannah. Make sure you know 'cause there were not just you know jumping ahead we're talk. We're we're talking a little different now. We've been very gasoline. Refined products and crude oil centric and still energy but Gas natural gas power. So you had yeah and and and then again like we were talking about you know a cushing oklahoma being As as a benchmark price for henry ob but the real action is down at the city gates when you gas to baltimore or to chicago To deliver gas into that gets gets sold to the local. Utility that distributes sagacity industrial residential uses. But there is a price at the city gate. When you've unbundled supply now you allow price to sort of to flow summary and now is also set by bureaucrats just just arbitrarily set to where everybody's bill almost looked the same in the sense that they're rate which wasn't discovered via market. Yeah those sent to you and you're you're a homeowner or living in an apartment and you're just a price taker. You need lights. You need heating You need cooking On hot water. So you're gonna pay what the what this you know this. Inefficient markets setup dictated. And like you said that furka ruling that they Three sixty three that they heavily lobbied was very instrumental in. Ken lay knew how to work. Washington you knew how to work the he had deep ties to y'all to the bush family At that time we were talking about you know H w and then subsequently w and the ability to enable that deregulation by by sort of being able to articulate very clearly the the the benefits of letting market supply bent determined prices and in the long run. The prices should come down and reflect. Y'all sort of the capacity and the demand at a particular location announcement. This you and i are complete agreement and most free market guys and and just energy individuals in general would. This was a net positive. This was a good thing lutely mean and it just has to be said because this is this is part and parcel of saying that you know we're going to get to some really some really shady shit and we're gonna call it out but this was a good thing and and and we are. We are not to trivialize the loss. The wealth loss from folks. That happened twenty years ago. That's that's painful and people At the top there serve time But you know this was an act good thing of which we are still reaping the benefits the ability for me to go out and shop my rate and i wanna lock it in. I mean i can take. I've had a natural trading for clarity. Since i was a kid and you probably too. But there's people out there just like prices are low or lowest. They've been in years because we've just been in a ten year you know doldrums. Price action wise. I wouldn't mind lock in my stuff at five for five years or thirty six months and you have the ability to do that. as as an individual that's powerful and they were directly responsible. So that needs to be said because the other stuff is also going to be said and the good doesn't trivialize or or wipe out the bad but the good needs to be recognized for what it is. Yep absolutely and will probably touch on this. But the bad was really stemming from a culture aspect of enron But we'll get into. That does second but today you talk about texas. Texas is a completely deregulated market for electric. So part of your three sixty three in the deregulation of the gas market. And then you had sort of y'all the the shift in the stack production of electricity going from your baseload going from coal to natural gasp fired turbans And and the ability to now price your your natural gas on a more real time basis combined day ahead week add Balance of the months ahead and operate those those units with much more efficiency than i would. Let's say baseload on coal or from Nuclear or whatever the other traditional baseload coal is traded on a quarter basis prices for three months as opposed to natural gas where you have to the next day so you can set up the whole stack of baseload and then you have a intermittent supply and picking capacity that i can turn on and off from Because it's gas-fired y'all it's literally a flip of a switch. These are all structural things that happened. Saint time with natural gas route Deregulation that on given their entrepreneurial background absolutely were able to take advantage of and and truly discover price Truly sort of financials and monetize You know the price of power and the interlink. The spark spread the interlinked between gas and electricity down to the location. So i could trade the basis of y'all y'all z. Three to m five so meaning transposed three gas prices to m five. Which was your naipaul electricity. So i could really yo really decide whether i'm gonna supply into new york city or baltimore. Washington d c based on what fuel prices were and based on what electricity demand was at that point in time That level of sophistication and today her ex. You were saying hard. Choose dot org. United as retail customers can go in and look at all these power providers you'll some of whom are actual generators and some of whom are wholesalers who buy from generators and resell and pick the power price the power clan that we want twelve months six months twelve months thirty six months fixed-price variable price Pure a hundred percent Hydrocarbon generated electricity versus green christophe. You'll slow win part electric city. We have choices. I mean i just did it. Two months ago where i was using Reliant energy and then. I switched to spark because they were able to give me your guaranteed eight point. One cents a kilowatt hour all in with all my fees in One hour ago. Yeah i do about. You're gonna eighty yeah. I don't think i didn't that well. But i might have done it for three years. But yeah i mean all the all these things you know were immensely positive and but it also hearkens back to one of these teams that we talked about in the in the in the cast of characters that we've we've been through a past few episodes or since the beginning of of talking about these novel paradigm shatters shifter's of seeking value where it otherwise wasn't perceived whether it's john d. Rockefeller optimizing logistics in economies of scale in an effort to penny pinch literally pennies a barrel but a million barrels a day added up especially the eighteen hundreds to you. Know the moneyball folks That we talked about with with the trading groups that you know essentially the trading head. Honchos are bst's it came from the financial trading world and then took it into sports in athletics in data analytics. These guys were were cut very much in that same out of that. Same cloth where they were like. This is clunky pricing coal prices three months at a time and then of course. No wonder your prices. Don't move or there israel. No price discovery As far as my power bill months two months yet be because there's a little bit of a chicken and the egg. There's no need to when the pricing mechanisms for what feeds it. A are so antiquated in clunky. To begin with all right. that's exactly right. And there's no concern for demand right because demand for power is generated by whether it's delivered by season right and it's the same thing that The oil industry just went through through the pandemic where everyone assumed that. Oh well demands going to grow at one percent or two percent of gdp every year guaranteed and march came around and the pandemic said here. You go here's thirty percent caught on your demand overnight right And that's always been sort of my frustration with liquid side of the business is the fact that they've never been forced to be as dynamic as the gas and power side of the business because the gas bars side of the business transitioned to dare had our ahead optimization and trading years ago decades ago because they had to write an enron was the primary catalyst behind that you had a little bit of demand inelasticity right. We don't have any other ways of powering cars At least you know but but you learn natural. Gas came was was a force to be reckoned with in and was almost was a better fit in a lot of ways and the mechanisms for pricing. It hadn't been Really elucidated at save for like you know the the one big contract of henry hub I've heard Things that enron folks tried to actually get those delivery. Specifications changed because that in of itself was inefficient insofar as they saw it. But on top of all of that you know just think about the fact that the waste that probably transpired that never hear about because power is storable right right so you know. Think about power. That's very important. And when power on prices peak in spike people pay for it in our people everyday people who get hurt where it counts but then the ability to to store it Is is not really there for power so so the ability to have really transient market discovery. Day to day minute to minute. There's what whereas in crude oil schedules pipelines. Once a month refined products schedules once every five. Six days gas schedules. four times. a day. I would i would echo. Yeah i just think about how much more efficient in fluid those markets are so. Think about you know if power. You can't store trinity at least not efficiently right now but but you think about your natural gas is being your proxy to store power. Right if it's your fuel going into a plant and then the ability to to model a plant as a binomial option where you're buying gas and you're selling electricity or y'all we did some pretty exotics when we were back at duke energy where we would you know By yata plant that could could could run oil or coal or natural gas. So you're looking at three different feedstocks and one one output And then you know. The whole notion of weather. Derivatives and heating degree days and cooling degree days these are all markets that came out of the deregulation of natural gas and the deregulation of the power markets are caught being one of the one of the examples of of of a of a regional power market or being the texas electricity distribution grid So you had all that going on and it really required sort of financial and risk acumen that accompany that enron like really Because they were there from sort of the inception Excel that and that's why they were so massively profitable because they were having two or three helpings of the turkey before the rest of the industry even figured out that dinner was on. Why do you think that is. I mean you spoke a little bit of our culture but talk about. Let's talk about the talent that they it was culture. It was attitude name to go back to the nineties. And if you lived here in houston in the ninety s it was radically different place. It was thought about your some of the most. Y'know progressive and and an evolutionary Trading energy trading companies were all based here in houston in the world right between enron dynegy and an el paso and duke and coral which was a a. Jv between a shell in and someone else These were companies that were forcing the rest of the industry to sort of run at the same pace as as they were and because the the industry was new it was so immensely profitable and they were making money It attracted it was a talent magnet. They were bringing people in from all around the country and the world coming in to work at these these these companies these trading companies work on power and gas trading and and having lived here in the nineties editor. George you away at college but the whole downtown renaissance in houston was primarily driven. By the fact that you had a class of folks young people extremely bright fresh out of college remaining couple years experience working these energy trading companies living in downtown the whole nightlife scene. The bars the renaissance of downtown. How the nightlife. You've seen sort of shifted from westheimer richmond. Which were it was there for years to downtown The building of reliant energy stadium The movement near the move of of the basketball arena from from Greenway plaza to downtown all had to do with the fact that you had a ton of you know sort of energy and vibe in downtown that was driven by companies. That were there will. There were working hard. They're working late. They were doing deals they were they were they were. They were literally changing. The industry Day by day to silicon valley of trading and and that was the other thing right. I mean these energy. Cummings enron enron online. Y-yo are real time markets for gas and power. Not just in north america but when they launched that platform where enron stood behind said we will make a market we will be the bid in the ask for gas and power primarily not just in the us but in canada but in a oh but in in south america. Australia your within six months. They were trading gas and power on their online platform. Clearing in your. I think they were doing twenty six countries and back then twenty or thirty different currencies. There were clear this was technology that they were pushing out that rivaled anything that silken valley was doing at that point in time and so not only. Was it the traditional finance talent. The trading risk vanished intel. But you had technology talent here in the in in houston day And it's it's it brought so much luster to the city of houston as the energy capital and always held onto that title. But i think one of the things that really happened. When enron folded and went under and what happened was enron's business got fragmented and was bought up by the big banks were trading the business because it was such they had entered the business of such a profitable business you had sort of the business disperse from houston to new york in stamford connecticut chicago and places like that houston ceased to be an epicenter For for that talent magnet. But i think what you sort of had was the energy industry sort of go into doldrums with adults without sort of the the constant evolution and push and push that can from companies. Yeah and that's really swagger yet swagger houston had such swagger back then right because it was the place to be if you wanted to be In energy is still is but now more from an engineering perspective than from a commercial perspective. But it certainly was Was the place to be and it certainly put a swagger in energy and you think about you know they they had they developed an acumen for risk management that they started to branch out and look at other sort of areas so they started writing insurance on your crop insurance. 'cause they believed that they could model risk better than most companies could most traditional insurance companies. Could there were modeling whether risk there were modeling. Supplier is disrupted risk in real time energy markets Know they actually started. Doing you know they had a pilot program with blockbuster around they were proponents for broadband trading because they viewed broadband as they as they highly elastic demand. Type of commodity that was heavily used during the day but kind of followed the sort of the demand shape of power. You peach during the day in the morning then doldrums in the middle of the night. When people went to sleep and not a lot of electric city was being generated. The debuted broadband dissimilar way. India deal with with Blockbuster to see how they could stream movies right. This was a precursor to netflix. And may twenty twenty one years ago or so right before netflix's became. Who were there was a netflix. Never sits at to deal with the delivery mechanism because barbara game ubiquitous at that point in time but enron and already figured out how to price broadband based on demand patterns that sort of mirrored people's daily routine and activity Which is what. Electricity demand followed So they were doing stuff that you could argue that it was way beyond its time because the technology of which remained the. Tv's even you know you didn't have internet tv and cord cutting you know you gotta have smart. Tv's to run apps for panels of hbo or this or that. So i mean clearly that was actually all the things that i read and of of the online platform trading platform. Where they did cross. You know something that was so localized or used to be as power and then taking it. Globally and then also being able to offset currency risk because it was traded in various currencies. You definitely you know owing to the title of that book. Smartest guys in the room had to have that kind of dynamic to even envision that little alone executed of which they did for a time and it can. It can be argued that that was kind of the pandora's box because of their hubris in that they were so good that they thought you know possible they could get away with with some things that weren't necessarily above board and i think look at the end of the day may not yell in may not Win me a lot of fans out there. But i'm i'm just gonna put it out there. I think jeff skilling was a visionary from that perspective. I think where where he he didn't You know where his blind spot was And remember jeff was mackenzie guy right. That came in and so impressed. Ken lay that. Ken lay hired him into enron and he he truly sort of set at a right The the trajectory of the company made quite interesting enough. You know Rumor has it. i mean it. There was a clash of ideas between Jeff who believed that asset light you could financial is the market not have to own the the fundamental production asser transportation asset to to be heavily involved in that market. I clashed with a gentleman by the name of rich kinder- who believe the opposite right and kinder- laughed enron and went on to found in america. Right which is the biggest one of the largest pipeline in term operators and an intruder fashion. Y'all can rich. Kinder- became a billionaire by owning the assets that the actual physical assets used for the the the the transportation storage of of energy commodities. Because he believed otherwise right. You can't divorce yourself from the physical asset But i think in in in the you're looking today. Would enron been. You would have enron have done sort of a deal. With tesla with they have been on the forefront of vs probably so because of their deep expertise and in the power markets right they would have they would have figured out how to be part of that sort of I dunno structural sort of shift in in or transition in in in vehicle transportation army. It were they weren't is what. Why is it a stretch to think if they could bring in technology folks for an online trading platform that was unheard of until you know this. The screen started coming began reality about a wide. Why couldn't they import battery. Technologists does this is all speculative here. It's right but but like yeah. These guys were definitely forward thinkers ahead of their time. And you can you can probabilistically say that you know had had things not gone so badly for them of which were Responsible for you know a lot of it of that they would still be the vanguard front runners of a lot of technological developments and then and then that in if they were in a deal with blockbuster netflix's finally started coming online. What ten years ago or so probably a little bit before that. I mean who seems why is it. Unheard of that you know. Maybe that was ten years delayed than it could. Well remember. netflix offered to Ideal to blockbuster right or blockbuster had the opportunity to buy. Netflix and walked away from Walked away from it and much to their chagrin rate was away from kodak's we right kodak kodak said hey we're filled food or you go to digital camera film writer film and and then it's then it's adapter die in entities and entities. Do so. yeah coming back to the on. Where do i think blindspot was so american. American claim to put words into jeff's jeff skilling's mouth here. But you know Skilling came from mckinsey right and and the consulting firms are very notorious for having sort of this meritocracy where you stack and rank your employees on an annual basis and the bottom ten percent get caught right. They yet counseled out which is a consulting firm. Meaning you're not meeting the cup in your out and the top ten percent yo. Move on and get promoted and and that was sort of a system off stacking and ranking and performance evaluation and and promotion management that was ruthlessly enforced at enron And what happens and this is my issue with this and always have an issue with us. In an spent time in consulting companies is sometimes good ideas. Take more than a year to come to fruition. But when you put a very very harsh sort of y'all cap and and deadline or or led light on performance saying y'all if you were not in the top rated pureed top for ten percent or bottom a viewer. In the bottom ten percent you have radically different companies. What actually happens. Is you foster a culture of literally survivor. World where you have cliques. That that that will form where they protect each other. And then seek to find Sort of weaklings and forced them into the top ten percent and the protected class stay in or sort of forced the weaklings the bottom ten percent or or or prejudice them into the bottom ten percent and then the protected class stays in the top percent. Ten percent permanently that type of incentive structure sort of leads to the type of behavior that starts to prioritize short-term game gain over long-term vision right and this is where i sort of say. Okay there was this innovation quotient and the stimulus that went out of the energy industry when enron went under and we went back to being sort of an engineering lead market. And your one hundred dollar oil and a lot of pe- money and fat and happy and then all of a sudden covid exposed the weaknesses in in in traditional energy but the good thing about the companies that are run more from an engineering perspective. Is there the patients to take on your. I am going to put in ellen g yo look purfication facility and it's going to take twenty years for me to get my are y but i'm going to invest in it. That goes out the window when you come to the sort of talk crecy Where you just chasing the buck and we have a very hard charging trading mentality behind you set up the sort of the scenario that leads to your special purpose financing vehicles off balaji. And that's that's what a that's that's that's one thing. I was gradualistic stroke by stroke. Progression is the incentive. Now like you said to just taste the buck near term. Just to get your tally points. So when cut in time comes you're not on the block and an and does that evolves serious question here just kind of thinking through philosophically outside looking in alex in you've have you have some some rumored stories that you've heard of of just of the of just the the shenanigans that went on little own trading Nefarious trading practices. But you know when when someone. Somebody's in a protected class but still under the gun. I mean they're looking to arbitrage regulations and essentially play in grey areas and then gradualistic You know if they're not getting sapped of because it regulators not sitting there looking over their shoulder or are there playing in a space that regulators have never even thought of But now they're even if it's morally ethically eventually well into illegal territory. But the money's good and nobody's saying anything so yeah and you're being edited and celebrated for. Yeah for sure. And at what ethical costs right now and essentially could argue that. That's what That's what did enron. but it was. It was a wild west west culture. I mean i worked in in gas trading in the nineties and early two thousands. And i'll tell you that. Risk management was nowhere. Close to where it was where it is today from a formalized structure and where traders would do book tenure deals and get to mark the curve. For what what that ten year deal would look like and then would get paid. Bonus based on the mark to market on a ten year deal as opposed to the actual realized revenue. Which were tight would be nowhere close to an. Let's let's pause for a second. Explain to our our our guys out there who are interested in this alex and why that is just almost laughingly hilarious to a modern day or even a person such as yourself who is there and realize real time the nefarious or not. Say that because it wasn't illegal so let's talk about mark to market. What how that got approved and that's kind of open the pandora's box for them to do a lot of the shnians but let's also talk about a traitor marking their own. Kurtz laino if i if i buy a strip of. Let's just say crude oil. And and i. I wanna buy you know. Fifth forty five dollars. Fifty bucks trading on the board and i just want to buy it a little bit on financial contract for every month but i want to do it for two years into the future will obviously every barrel because of tango and backwardation. Things that we've talked about in the past Aren't gonna make it. So there's gonna be a strip and i'll own you know thousand barrels a month for the next twenty four months to calendar years At a set price. But now you have this thing. Where the exchange which people buying and selling trading that strip or those that series of months that i just bought in this hypothetical example. Now you have an exchange setting the price and then your market and profitability. Upper down as dictated on what you bought it at and what it's trading at day to day in the thought processes if you bought it and you wanted to lock it in you know two years from now it's going to be worth more than what you bought it for two years prior now. Let's let's contrast that with every day. I'm lily on the at the mercy of the market and the the curve that for those twenty four month prices that are averaged together and get that price day to day in goes against where i bought it at. Let's about what the traders got to do in the enron scenario. That really did happen in real time. Right so dead. What you talked about as i am going to do a foreign deal. Sam going to supply gas to a tool to local utility your local distribution company in ill or even in in crude oil. You're gonna lie. Crude oil refiner. Alex in your produce to sell you crude oil and you american agree on a price right own. I'm gonna. I'm going to sell you the next five years. Let's say an honor refiner. So all i care about is just keeping my refinery wet. His i'm going to sell you a ford strip on meaning. Linda deliver crude oil certain Barrels every month for the next. Let's say forty eight months average price of forty five dollars done okay. You're the refiner. I'm gonna buy now. I have now the obligation to deliver forty five old. The customer's going to buy crude oil at forty five dollars every month style have an obligation to deliver that every month. Going up next forty eight months. Now let's say it's enrichment california not cushing oklahoma rights or richmond california. Someone has to say okay. What is that strip. Forty eight months of delivery of crude oil. What is that worth every month to. You and someone has to project out a price of forward curve for every month for the next forty eight months now timothy. What you'd want to have is an independent organization. Typically the risk control organization comes up with a forward curve that they mark your forty five dollars off against so if they market your forty-five obligation at forty dollars. Forty eight month average price going to be forty dollars. You are five dollars out of the money you'll under the market For for ten thousand barrels a day time and forty eight times thirty days a month right. Yeah right so a lot of money. Lots of money so back in the day before you had standardized risk controlling it software to manage this typically. What happens the trader. Set what the price was. So i would set that as fifty dollars. Meaning your mark to market marking this deal to what the market price says. It should be which is a proxy for me to say. Hey if i had to get out of this deal if i had to liquidate the steel today on current market prices water. Would it be worth to me right now. Is if i was a traitor. I did to deal at forty five bucks. I would be highly incentivized to mark that curve at fifty bucks or fifty five bucks always show it in the money especially if my bonus at the end of the year would simply looking at what is the mark to market value of all your deals in your book and then you get paid. percentage of that your now highly motivated to make that curve. Look as much money as possible than it actually is now. They've taken that away from traders and say you can. You can do all the deals you want. But we as risk control are going to. We're going to set the curve and we're gonna we're gonna hold you accountable for whether you're you're making money on the deal you're losing money. A deal and risk control is. If you're losing money on a deal they can come in and liquidate the position and unwinded. Because you are you are so negative on the deal that it is truly. Don't want to leave the game more now but when a trader marx's on mark is on curves yo he's perversely incentivize here she khalil. Possible because it's tied to your to your bonus and there was a lot of that in the nineties before we got really Somewhat sophisticated on on on on segregating control over what was official price curve versus what the trader said it was And so there was incentive to sort of inflate the forward market. So that the deals. I have on the book. Look good or deflate the forward market selling into that market and and make sure that your shorten them and make sure that my book look good and there's a lot of moral hazard associated with that which you know full knowledge ready look like money. That's not in the door right. Because i'm having you haven't flattened out of that strip so you delivered the barrels for the barrels. You haven't gotten out of that strip. Bought the strip to hedge because in the event that you agree to sell it to a refiner for forty five dollars in the market. Goes up ten dollars a barrel ten months in the future. Now you're buying fifty five dollars crude but can only contractually sell it for forty five year losing ten so you go out on paper markets and you buy that strip for forty eight months in the future but that what's what especially you know crazy to me is is how that contract hasn't come to its conclusion yet but i'm getting bonus probably for for all forty eight miles yet the end of the year so i haven't sold a barrel realized the prophet in its i am literally marketing against the forty five dollar Buy or sell against a price that i just got to set up an as and as long as the price of is positive times however many barrels. I did the deal four. I'll get a bonus check at the end of the year million radii hasn't been collected. So that is what. I wanted to hit home. That was just so mind boggling of of how it was done because even me as a college kid off the street. I'd have been like you can do that. It's trading real time power and the answer was yes she could but the reason you could wasn't a good one and it actually ended up being a bad one in the end. Yeah because at the end of the day when you actually delivered the gas or the crude when other invoices is like oh we want delivering your. We wanna buying sixty dollars crude and delivering at forty five dollars for this right. You're fifteen dollars out of the money is what the guy got you know that i got paid his bonus you know years ago and probably not even at the firm anymore and coming i remember we had when i was when i was at the merchant trading arm natural gas i had job of unwinding a book where we don long-term deals in canadian gas in in western canada at four dollars right we had sold forward four dollar gas in a market that was trading twelve dollars right so we were buying you know we had the obligation to deliver four dollar gas Where we had to buy the asa twelve dollars to deliver a fourth and the guy who did that deal. This was a whole bunch of deals. That word sort of lumped into a book and was given to me to unwind was long gone and without and i remember a drive into the garage at at the trading for mars. The first two floors is nuts by ferraris and lamborghinis right and there were some tony legitimate traders that actually made really good money and time on the likes of goldman sachs on on on the other side of of trades by by getting the market right but there was a lot of fluff involved in the market. Now we lot of those problems have been solved with much more rigorous risk control today than was in the nineties. But you can think about a market your day had power market in northern california where enron could literally switch off a power plants. Yeah cause a shortage in northern california and then cycle power in from nevada from other power plants and sell it at a massive profit by causing the the the the price increase themselves. That's where in and that's where the doing right that's ultimately. what cost. Pete wilson his job as the governor of california. In that. there's there's there's recordings of rent taking place where i mean. This is where the line was clearly crossed and and and and definitely had ordered illegal. Because there wasn't any rule that said you couldn't do it but it was certainly highly unethical right now. Definitely unethical to the point where you know. Even you could just make up a story. I mean who knows if you if you if you bought a guy a bar tab a plant operator of a month before and then you give them a call from houston. He's up said northern california and on that recording. One of those recordings said. Hey we're seeing sensing demand kinda low in that area. Maybe curt like that guy. That kid operating the plant even knows it's like can you just flip a switch for me. Yes sure buddy no problem. I'm paraphrasing conversation here. But you hit that idea power not being storable like we alluded to earlier in the in in our in our podcast that that now all of a sudden there's just a snap in demand for power because there's just none trickling out of the local plant and like you said pipe in from a different market altogether instantaneously in donate an awfully to that grid and capture a massive spike. Yep now you can. You can force that situation in this case but the The the real profit and gas and power trading is. That situation will happen. Naturally you have a cold snap. You have a big Generation facility that goes down for unplanned maintenance and it causes an artificial shortage and early guy right and if you're the guy with spot power you can turn on peaking unit and and deliver power into that market. I mean you're talking literally your the the wholesale market going from ten or fifteen dollars a kilowatt hour to two thousand dollars. Kilowatt hour in in the span of like minutes right. Nassif amounts lesser amount of prophet right. Because you you're their requirements you have to have a certain amount of baseload in the distribution system called spinning reserve. Because you can't just turn it on and off the has to be a certain amount of baseload just to get the the grid to operate normally trickling out for sure. So and then the arbitrage back to to natural gas which is the fuel You know there there were so we call the widow makers right z. Three to m m m six or forget. What was the that interconnect z. Three to Tenneco gas to 'em six or employ for awhile and and you had that arbitrage it was called the widowmaker because that was the one spread. You didn't want to be short in the winter in new york city. Because if one of conrad's major your base load plants went out and you were short that you you're you would short selling you know To deliver fifteen dollars m kilowatt hour power in a two thousand or five thousand dollar market right. that's that would put you under in a second Not to mention the gas price would spike at that city gate as well. So so a look. These are things that sort of work themselves over time through your sort of regulatory y'all And process control but the point was was such a wild west. There was so much money to be made And you had firms that were very aggressive and and had these incentive models that that that absolutely in these models than incentivized making money today over. You're making money over time It was a it was a different sort of era that we lived in in houston in the nineties. It was the equivalent of the golden age Think and and and you know we. We haven't quite gone back to that yet We've gone back to more of a state production type Energy model as opposed to a commercial type of market by a houston in the nineteen nineties was something to behold behold into and and it was the envy every. You're not only was it. Duke dynegy enron el paso guess pro trading firms. But you had. Every bank had a trading firm office in this town even even some of the big german utilities. Rwe had a trading floor in houston just so that they could understand how a deregulated market worked and take that learning back to germany and use that in their local markets. Right they were they were. They were so desperate for the talent that was here in houston and that to me is just. It's sort of something that we've missed. And it's it's something that sort of i think is sort of put know the the the the risk appetite technology innovation in sort of a dull jerome In in the energy markets and perhaps his sort of you know maybe cost a little bit of a would call it falling back but the the inability to keep pace with the rest of on of technology stalling of sorts. Nine regression right. Yeah and perhaps maybe would have. The energy would have been a lot more better prepared for or am talking about the crude and refined product side for something like a black swan like the like the pandemic if it had more of that attitude as opposed to you know that that enron sort of forced on the discipline that enron focused on the energy markets then than what it had in in march of this year where you're all of a sudden i'm writing off two billion dollars of inventory and your going to market and leveraging my balance sheet to bring in working capital at five and six percent In a in a market where the fed funds is at zero or point and we got negative and the potential for negative price. Yeah negative prices. So it's like. I'm going to have to pay somebody to take supply pay for the cry at inflated amount and there's no arbitrage opportunities available to borrow because you know like in the energy industry is free market is you and i both are. This is a common same time and again with regulators in with government. Government intervention writ large. They're always willing to come in when there's some sort of financial like wall street You know ramification with the people who got hurt in enron stock and. I'm not advocating that. There should have been a bail. How but if long term capital management which essentially just bailed out the banks even there were ripple effects that would have helped or would have hurt credit lending Globally for a time. Sure But you know that doesn't affect people as much as it does banks and there's rush from free market you know. People like greenspan Just champing at the bit to to come in and save the day and yet the energy industry whether it's enron collapsing and shareholders. Getting hurt through through being an being duped being absolutely Not told the complete story of how business was being conducted to negative crude oil prices this past year where a lot of people got hurt because his big. I mean just time and again. It's it's it's getting to a point where i would actually argue that this talent that essentially left in hasn't returned suss losing the swagger has real no incentive to come in because it's it's such a demonize space. Yeah even when bad things happen. There's of the tax dollars that usually come in and save. The day are nowhere to be found. And so there's this dichotomy not skewing duplicity double standard Between energy commodity markets and financial and bond bond markets writ large across the globe. and it's. It's clearly a traitor. A savvy trader. A young up and coming smart kid is like there's no upside here. 'cause if i win they're gonna find a way to make me look bad if i lose off of some b. s. or black swans during a ceo l. Your big boy a you get it up right. Yeah stuck it out so all good stuff man. Good stuff another Another great telling of Of something that will definitely live in infamy as we said and and will be studied For years and then an probably forty or fifty years over. Probably be some sort of rhyming of this scenario in your president. Look i think she vs probably probably heading to something like that sort of local systemic events because we still haven't figured out what the impact is to supply and demand from so sorta from this sorta transition trend that we're on right now And i think they're going to be firms such as sort in the in the mode of enron maybe not quite to the same size That will absolutely take advantage of it and probably blow themselves up in the process right. So i think they there will be rhyming. Events going forward We'll see herreid. Well dutta. That should do it for a code. Six alex good talk man. I really enjoyed the insight of giving me so much more of of of a breadth of understanding of of the stuff that took place on answer. It's a weird stories in it. 'cause it's such a great story though i don't wanna sound like an apologist but i think we lost more with enron going under than than we gained from the punishment that was meted out. You know it. Maybe i can say that with a bit of confidence because you're twenty years passed it But i think it was a it was a. It was a significant loss to the energy industry. I think i think we're still. We're still paying for that today. Castles made sand melton militancy wrenches. Its human henrik's birds. Yeah so amana will probably talk about this morning. This will be echoing in things whether other amman about or we just refer to it when talking about other things as we progress through this journey that we've undertaken and will do into twenty twenty one but you know let's Let's let's talk about Just a little bit. Does a little teaser. You know next week. We're we're gonna we're gonna kind of pivot a little bit guys and and speak to commodities that have ramifications with energy. But it's going to be a little bit of a nuance. Novel concept in in cryptocurrency. I'm looking or to this. Because yeah i i don't know by by by omission or by by on purpose. I have been so ignorant about cryptocurrencies. George you you sort of the opposite. So i really am looking forward to really being educated in. Vc everyone is looking at the headlines today or at least a lot of people Involved in have a mind for markets and seeing young absolute rip that bitcoin's gone through I ain't gonna stop for year. There's gonna be some serious volatility In the in the future a couple in the next couple of years But but the graph even with intermittent pullbacks and consolidating periods and even brief selloffs are going to get readily bought and the chart. The other is a daily weekly or monthly is gonna go from the bottom left to top right of your screen and and knowledge that but it might get so feverish that Actually i don't think it might. I think it absolutely will if history is any rhyme or reason as far as an indicator that It's dental looks like a tulip mania. Graph that you see and framed and certain museums that was actually sketched when graphs were were done with with with with charcoal and paper pencil and paper so Definitely yeah and you know there's not to not to tip our hander talked too much about it And save some for next time but on. There's a good reason why and at the end of the day. It kind of all comes to third party trusted intermediaries that we've banked on and had confidence in To transact business are no longer conveying. That confidence as we saw with the exchanges and then some of the dealings with the banks where they both sides the it to socialize the losses and privatise the gates so people you know are looking for alternatives just like wail. Oil was so prohibitively expensive and not worth it. Any more to deal in Founded a substitute sovereign currencies and third party intermediaries that are trusted by people out in the street or businesses in order to transact business in house money or store money if you will via bank accounts of. That's that's going to be in. the in. the history books looked back on as this. This time was going to be looked at a time of transition because the technology is now there for peer to peer value. Transfer without having a third party in between as being necessary so stuff point everything potential inflection points. This is going to be a big one. So so all that and more in the coming year We're looking forward to it. alan ear. Everyone probably towards the extent that are random Roman calendar makes a difference. But i'm gonna. I'm gonna call it twenty twenty one in you keep holding on twenty twenty seventh day of twenty twenty right. So are we'll see you guys next time Thanks walk alex. Thank you buddy. Same georgia chair.

enron houston dynegy jeff skilling Alex alexander wola netflix p wilson sarbanes oxley andrew andrew fastow alex alex henry henry ob furka george perez Ken lay Alex
July 7, 2004: Former Enron CEO Indicted

Today in True Crime

15:45 min | 3 months ago

July 7, 2004: Former Enron CEO Indicted

"You've waited long enough. It's time to treat yourself visit european wax center where you get the best. Buy the best bikini. Waxing is their particular specialty wax over seven point five million bikinis a year with numbers. Like those you know. You're getting the best bikini service from the true bikini wax specialists in fact european wax center is so confident. You'll love their services that they offer all first time guests there. I wax free head to wack center dot com to book your reservation today. That's waxed center dot com to book your reservation today and remember. Your first wax is free. Today is wednesday. July seventh twenty twenty one on this day in two thousand four former enron ceo kenneth lay was indicted for fraud. Welcome today in true crime. A spotify original from podcast. I'm vanessa richardson and today. I'm joined by our guest host. Dana goodyear from lost hills her show delves into the shocking murder of scientists. Tristen bo debt. Dana will discuss some of the historical aspects of today's story. While i'll cover the narrative. Thank you so much vanessa. I'm really looking forward to talking about enron with you and the scandalous fall of that company. Absolutely no let's go back to july seventh two thousand four when all eyes were on the world of white collar. It's rare for an indictment to be national news. Indictments are only the first step in the long road to a conviction a simple process to determine whether prosecutors have enough evidence to take a suspect to trial but when the person in the hot seat is the former. Ceo of a company synonymous with corporate wrongdoing. People pay attention the proceedings on july seventh. Were not particularly cinematic. A grand jury heard evidence from the sec. In closed door proceedings there was no press or audience in the courtroom when they announced their decision. But there was plenty of buzz. About whether kenneth lay would face consequences for the collapse of his company since enron had declared bankruptcy in late. Two thousand one. The investigations into those involved in the scandal had enthralled the country but ken lay was a bigger fish than most and it wasn't clear he could be caught proving a ceo culpable for fraud. That occurred at their company is complicated. Prosecutors would need to present evidence that lay either personally knew about the fraud or willfully ignored telltale signs. Anything less wouldn't reach the level of criminal misconduct. The release of the indictment was the spark that set off an explosion of media coverage it paved the way for one of the highest profile. White-collar trials in american history to fully understand the case. We need to take a step back and discuss enron as a company lay had been there from the very beginning when to natural gas pipelines merged in nineteen eighty five and the company was formed in its earliest days. Enron wasn't particularly remarkable due to strict regulations natural gas transactions only occurred in long term steady contracts. The energy industry was a safe unexciting business. All of that changed in the early. Nineteen nineties when deregulation of the energy market shook the status quo suddenly enron and other energy companies had the opportunity to make shorter term deals. This gave enron more opportunities to change prices and react to the levers of supply and demand in the long run. This raised prices and profits with more money. The companies could diversify their portfolios. Instead of just owning pipelines enron bought other means of energy production and distribution but perhaps more importantly enron now had room to take bigger risks. Jeff skilling a senior executive used this shift to completely rethink the company enron transformed from an entity that owned pipelines to a sort of catchall investment business. They sold a lot of their pipes. While maintaining financial connections or control over energy producers transporters and providers however bigger risks meant bigger potential losses enron had to maintain ever-growing prophets to keep investors happy and keep them from selling their stocks. One of their young hotshot executives had the solution and this was where the fraud entered the picture i. The company shifted to a system known as mark to market accounting basically this allowed enron to report potential earnings from new contracts as immediate profit for example in july of two thousand. The company entered a video on demand. Deal with blockbuster which was expected to produce one hundred ten million dollars in profit over twenty years. Enron reported all that prophet as coming in the moment. The contract was signed with no way of knowing whether it would actually ever manifest. It did not an elaborate and intentionally convoluted system of accounts and shell corporations were set up to allow enron to hide their debt from their investors. They could take out a loan. Move it around dozens or hundreds of times and then report that money as income. It was textbook fraud. Lay himself was most responsible for the final piece of the puzzle. As all of this change was happening at enron investors were consistently told. The company was in great shape. Lay silenced any questions to the contrary jeff skilling did the same thing after he replaced lay as ceo in early. Two thousand one. The executives at enron explicitly live to investors about the company's debt risks and available cash. Things went wrong quickly after an incredibly short tenure. As ceo skilling resigned pudding lay back in the driver's seat in august of two thousand one lay continued to assure investors. The company was fine but soon it became clear that enron was a house of cards by december. Two thousand one. The company was bankrupt three years later in july. Two thousand four kenneth lay was finally facing consequences but much was still unknown. There was no guarantee the indictment would actually lead to a conviction coming up the trial of kenneth lay and the lessons of the scandal. The c. i. a. They're the first line of defense for the united states analyzing intelligence to thwart any possible threats and keep a safe. Some of their involvements are made public and others arms. hi it's carter from par cast and in honor of america's birthday. We're uncovering the cases you are never supposed to know about in the new series conspiracy theories c. I a. edition from international assassination plots and mind control experiments to catastrophic cover-ups and secret societies fit for film sift through the agency's most questioned in controversial affairs each week conspiracy theories. Cia addition exposes the covert operations intended to protect us from conflicts. But end up creating conspiracies. Where does the truth lie where to the lies end. And how much do we really want to know. Follow the news. Spotify original from par cast conspiracy theories cia edition. Listen every thursday. Free and only on spotify. These are stressful times. You already have a lot of responsibilities but one of those responsibilities is to yourself. Self care is important so treat yourself with a bikini wax at european wax center. European wax center is the country's leading wax experts. They'll take extra special care of you and help you to feel your best inside and out the secret. Their signature comfort wax. It's a proprietary blend of beeswax sourced from europe along with other skin soothing ingredients that allow for easier hair removal and a less painful experience. You'll get the best service from the true bikini wax specialists that european wax center they're certified wax specialists or expertly trained in prepping protecting and pampering your skin there so confident that you'll love their services that they offer all first time guests there. I wax for free still unsure because safety and security have always been paramount. European wax center has added enhanced health and hygiene measures for extra confidence in care. What do you have to lose other than some hair head to weck center dot com to book your reservation today. That's wax center com to book your reservation today and remember your first. Wax is free now back to the story on july seventh two thousand four enron founder and ceo kenneth lay was indicted for fraud. The move raised serious questions about. If and when ceo's were culpable for crimes committed at their company. My guest host dana. Goodyear is going to take over from here to discuss the trial and fallout of the enron scandal. Thanks vanessa the day following the indictment. The sec released a statement outlining the case against lay at their core. The accusations were simple. Les knew what was going on at his own company when he told investors things were going well he was deliberately lying but in late two thousand one as the business was collapsing. The sec alleged particular wrongdoing according to the charges when skilling resigned as ceo he explicitly told lay and the board that the company was failing. The ship was sinking and he was jumping off over the next several months however lee continued to tell investors that enron was recovering. He said so. Even as the company was forced to change their earnings for the third quarter of two thousand one due to previously reported losses. The smoking gun for all this was lays personal stock sales. He sold millions in stock back to enron while he encouraged investors to hold onto their own shares. Lease defense team on the other hand argued. He really didn't know what was going on. According to lay. Cfo andrew fastow and other executives at the company. Were responsible for the fraud. He only repeated to investors with these executives told him as far as he knew the company was doing great where his stocks were concerned lay claimed the transactions were simply a part of his regular portfolio management. He said he wasn't even aware of them until after the bankruptcy these excuses were soon put to the test. Kenneth lay and jeff skilling were tried by a single jury in two thousand six. The prosecutors tackled lays assertion of ignorance had on they argued that even if lay and skilling were ignorant they had a fiduciary duty to their investors to be aware of what happened at the company and they had a ringer in their corner. Former enron vp. Sherron watkins told the court. She had brought her concerns about the company's finances to lay directly. He investigated her claims. But according to the prosecution lay intentionally limited the scope of the inquiry prevent the fraud from being discovered in may two thousand six lay was convicted of six counts of fraud and conspiracy as well as four counts of bank fraud but he was never sentenced he died that july of a massive heart attack the fallout from the enron scandal is far reaching and in some ways on satisfying despite the myriad abuses to our financial system. Few laws were changed afterward. But the conviction of kenneth lay did mean something important for ceo. Culpability the idea that people at the top of a company are responsible for everything that happens underneath for a ceo. Ignorance is not an excuse. They have a duty to know what's happening at their companies. That principle hasn't always been upheld however in two thousand ten jeff skilling appeal his conviction while his sentence wasn't overturned the. Us supreme court ruled partially in his favor saying that. Ceo's must be directly engaged in the actual fraud to be found criminally liable so while it raises ethical questions for a ceo to turn a blind eye to fraud. Convicting them is incredibly difficult without solid. Proof such as bribery. There's a lot to think about when it comes to the fall of enron. Unfortunately there's a general consensus that the lessons learned from the scandal. Where the wrong ones the next. Enron which could come at any time will likely be even harder to punish. I'm vanessa richardson. Thanks again. dana for joining me today. Thanks for having me. You can find my podcast lost hills on spotify or wherever you listen to podcasts. And you can find more episodes of today in true crime and all other spotify originals from podcast for free on spotify. We'll be back with a brand new episode tomorrow in true crime today in. True crime is a spotify. Original from podcast. It is executive produced by max cutler. Sound designed by one boorda with production assistance. By ron shapiro trent williamson carly madden and bruce kato vich. This episode of today and true crime was written by john mcdonough with writing assistance by terrel wells and fact checking by cheyenne lopez. Today in true crime stars dana goodyear. And vanessa richardson. Hi it's carter from cast every thursday on conspiracy theories c. I a. addition. We are uncovering secrets hidden. Deep within the archives of the central intelligence agency to bring you a special collection of episodes from shows across our network. Follow the news spotify original from podcast conspiracy theories c. I a. edition. Listen free only on spotify.

enron Jeff skilling kenneth lay vanessa richardson dana goodyear Tristen bo kenneth European wax center sec ceo skilling vanessa european wax center cia Dana blockbuster united states Cfo andrew fastow Sherron watkins carter
The One with David Hayes of NGP on Chuck Yates Needs A Job Podcast

Oil and Gas Startups Podcast

1:26:27 hr | 3 months ago

The One with David Hayes of NGP on Chuck Yates Needs A Job Podcast

"Doing good more importantly how are you doing. I'm doing pretty good pretty good. Please tell me you're still just beautiful and bald. You could see me if you turn on your camera. I'm actually in the sound in the sound booth. I figured out that. I have a face for podcasting so i sit in the sound booth and we don't record video always yes i'm i'm quite bald. No no visible signs of growth returning the did they give you any expectations on that. This said three months. Is there any chance at takes hold. Let's just your look for now on or you begging for it to come back. I joke you know. It's it's grown on me in the in the sense that i can look in the mirror and not be like you know startled more than five. Look but i said you know. When when given the choice allah. I choose hair. So i've i've been bald twice once. Was that very first Why dc roast. We did and and all just not very attractive in then 'cause that was fat chuck and then skinny chuck was actually baldwin. James broach was going through brain cancer. We did the sympathy head shaved. And i looked better when i was skinny. But buddy clark called me scary. Chuck balk as a anyway. Saw his drop very honored today. My guest is fellow rice. Alum more importantly rice athlete baseball player. David hayes and you did something in finance right natural gas partners or something like that. Something fact i. I haven't checked. I haven't checked a historical calendar but Started in the summer of nineteen ninety eight. It might have been today. It was it was a. It was a monday at the end of june. So maybe the twenty nine th maybe the twenty six something that zip code so yeah twenty two twenty three years ago today and it took two years off to go to business school otherwise have been air your life for your life or natural gas partners. The did you. Did you had an investment bank before you went to business school or was it. Straight undergrad In gp and as i recall gp liked to send you guys off to get your mba and bring you back. Yeah i i spent I graduated from rice in nineteen ninety six and i spent two years merrill lynch in houston which was which was a great experience. A lot of lot of good people that i worked with are are still very prominent in a in a houston energy and finance market but a two two years there in an an. I got a call one day. From from a bruce l. kirk. Bruce yeah it was an gp and sort of sort opened a new opportunity in. I went and interviewed with ken in march. The ninety eight and the he didn't dislike me enough to not give me the job. So the that's the victory with kin. He didn't hate me. Yeah so anyway. I joined joined in the summer of ninety eight. So so i wanna come back to to natural gas partners in just a second but we really got to get to the to the real stuff so rice university after. Gosh i forget how many years he was actually there. We had wayne graham. We were really good in baseball. We won the national title. Fortunate incident happened. That you know graham was no longer at rice and We had another manager for two years but now we have a brand new manager. They announced last week. Jose cruz jr. Is he the guy you know. I i think he. He's got huge potential You know he's First of all. I've known him since we known entry school together and You know great guy. Hard hard worker comes from a family baseball people who you are just just a great family dedicated to to to family and into into baseball but You know we went l. middle school everything except high school. He went to bel air. I went to lamar so we played against each other and then he was highly recruited to rice. I was accepted as a walk on choosing choosing to go. You know due to a great school close to home as opposed to you know a other great schools further from home. That might have had baseball teams. That were more conducive to my skill. Level at that point but I i. I played my freshman year. It was coach cram. second year. He started he started in a move from sandjak to rice in in ninety one and made a big impact on that program just going. I'd say i can't remember exact numbers but they're like twenty the year before he came there like twenty five thirty five in it was with mostly the same people. Some augmentation figure later. There were thirty five and twenty five and then my freshman year which is his second year. We started the season. Something like twenty two. Into and and know mostly non conference games were stolen the southwest conference but he had recruited crews and you know some other notable freshman and that made an impact in once we got into conference. It was a little tougher. Your plan texas am in texas tack to them. But i'm still still not notable noted improvement and then every year from there is got a little better making that the the tournament in ninety five ninety six in both years they lost. I think ninety five lost to cal. State fullerton who went on to win the series and then in ninety six lost to lsu in the in the regional or super regional and it went on to win the college world series in the ninety seven main. They made it for the first time. That was on the backs of a lance berkman in lubbock crosby and some. You know some other really talented people again who who coach cram had head recruited in developed so my favorite my favorite berkman graham story that i've heard and actually berkman told this to me. Is graham one year. Got on some kick that you had to run a mile and seven and a half minutes or seven minutes or something and or now maybe it was. Maybe it was the three mile loop memorial. You had to run in twenty five minutes. There was some skill test involved with running and so berkman had literally setup that they would take off running and then a buddy was gonna pick him up in the back of a pickup truck drive around the loop and then let him off towards the finish line so he could sprint in and he could make it and anyway so berkman to do the run at eight o'clock so at seven thirty everybody's out there stretching getting ready and all this no berkman seven forty five everybody's zoom stretching still no bergman seven fifty seven berkman ch- pulls up in his car. He's wearing blue tight sweatpants. And he's painted his whole body blue because he doesn't have a shirt on and he's wearing a blue base Football helmet and he runs up and he tells coach graham. The blue streak is running the whole way graham and literally grams. Ira get your ass over there. They line up the hit. Go and just sprints off to the lead and berkman sitting there running. Because he's like great my buddy in the pickup trucks going to come pick him up. Well the guy never shows up supposedly hungover from the night before so burton and winds up running. The whole thing finishes the accomplishment whatever. It was twenty five minutes or whatever you had to do it but literally kind of passed out at the finish line. It was laying on the ground. And supposedly graham comes over to just start screaming at berkman. I know you cheated. I know you and he started kicking. Bergman got blue stuff all over his shoes at such a berkman and graham story. Yeah you know. I think one of on coach grams. I mean he's he's a brilliant guy in a. You know a student of human human nature and what i experienced The burkan is two years below me. And i went on the team by the time he got there but but still observed stuff and he he rode. He wrote the most talented people. The hardest. so you know i- i warmed up with crews many days You know before practice serve before games and in he would you know he'd be all over all over crews in have anything to say to me. He's like i got all day. He can't really run any faster. Although although in various did send me over to work with the track coach. And i did run faster. But you know it was interesting to see. I think in a lot of programs. A lot of coaches whether it's baseballer or or other organizations have nothing to do with athletics. The stars kind of get coddled. And i think what coach graham recognized his the the the the stars make the difference. Make sure that they're focused. In their in their maximizing their potential. And that's that is the difference maker in the games. The the less talented people. Who are there are there in part because they they bust their butt and riding them. Harder isn't going to get more output in therefore not really gonna change it so use you use your time and energy to to focus on the people that are really making a difference in and drive them but that's an interesting point. I had never thought about that. I didn't know that i'd i'd seen that in graham. 'cause i'd always heard berkman stories but you know the take always had was berkman was just a bit of a goof. Ed so you know he got under graham skin on purpose but now that you say that you know bill. Parcells was the same way Bill parcells supposedly re read the stars. Pretty hard like when parcells took over the cowboys. he Supposedly just started picking on darren woodson literally every day. If a rookie made a mistake he'd make darren woodson Do pushups and it was hearing woodson. Talk about it later. It was i you know. Hey if if he's controlling me like that and pushing me to do better everybody else's scared to death. It's going to work harder to so interesting. Take the thing i always found about. Graham always thought he was actually a bad game manager. I mean he was such a slave to the bond he was such a slave to the. The righty lefty matchups. I mean. I don't think he ever ever pinch hit for bubba crosby to get a righty lefty match up. But you know. I mean he. He did a lot of that stuff but boy when it came to player development and teaching those pitchers to throw that knuckle curve ball. I mean that that seemed to me to to be the thing that really set him apart and why we were so good for all those years. Yeah i mean. I think he did have a pretty. You know a focus on pitching of look look at the stats from the rice team. This year in pitching i was. I was astonished. The team your a is i. Don't have it in front of me. But it's it's like north four It's hard to find anybody that that had really impressive stats but you. You go back to what what seems like fifty years ago now. Eighteen years ago when they won the college world series and in a three pitchers or just the whole team era was probably below. Three is shocking. How how good. They were for their their fourth. Pitcher was Josh baker who still got drafted in the fourth round. I think that he was my Here's my the one one one summer. I did rice baseball campbell to summer. Ninety three josh baker was and my group and he was just head and shoulders above the other ten year olds. I think that but But anyway you know. Just such a focus on pitcher pitching development matt anderson who came in the same year as berkman. You know probably forgotten fact. he was the number one pick in the in the mlb draft in one thousand nine hundred. Seven berkman was number sixteen. The matt anderson came in as as a skinny kid. You know some some scout. I think tipped coach graham on inside. This guy's got potential. You should take take a risk on. I'm pretty sure he's from louisville kentucky. So hardly in the backyard of of rice and round numbers. Six six feet maybe one hundred and fifty pounds as a freshman in by the time he was a junior he was six four. Probably you know two hundred pounds in throwing a hundred hundred plus miles an hour and is tom. It was one of the first games he pitched. Maybe his major league debut it it a in arlington and he was. He was in the radar one of four but someone who had the vision to and the ability to develop somebody from you. Scrawny scrawny kid. It was it was throwing mid eighties to you know to what was two years ago or two years later young. There are other examples that prior prior to rice. I played against andy pettitte. It was two abedin. Adamy any played a deer park but he he was kind of a number two pitcher on his high school team behind. A guy named jay bought it went to ut and i think ultimately got drafted maybe in the second round but pettit was a kind of a kind of squatty left-hander through strikes but didn't throw that hard and we went when got drafted really late by the yankees like the twenty seventh round. Somebody's looking it up on wikipedia right now and Went to went to san jacker year in developed in. The yankee signed him for the next draft. But obviously he has a career that arguably hall fame caliber. And that was somebody coach. Graham and then of course roger clements coach cram also coached it. It sandjak a similar thing. You know he was. He was the number two pitcher on his high school team at spring. Woods behind a rayner. Noble was our assistant erase. When i was there but everybody knows what what clemens went on to do. But also a product of trams player development. Yeah i think. I think that the thing i heard about you know it was he would teach folks the knuckle curve which was an amazing out pitch and then the other thing he did was supposedly. He was really good about efficiency of movement. You know so. These pitchers would come with these big wind up. Stir ice and And he'd say time out you know not stepping back. We're not doing this over the head. i mean. Some pitchers even starting pitchers he made just pitch from the stretch. So that they wouldn't flail their flailer bodies around and so yeah there. There's no question i think on. The downside is probably had pitchers throw too much. I don't know that we wound up with as many great rice pitchers in the major leagues. Just because they were overworked. But i don't know if that's a fair criticism or not. Yeah it's it's hard to say. I mean the that was certainly always a criticism of of a cliff. Gustafsen taxes I think i think most players In there's more focus on it these days but you know twenty plus years ago gets were good pitchers were pitched at all levels I actually about. I think it was two thousand twelve. I went to a rangers game with. Can we sat in the owner's box. And i ended up sitting next to jim sundberg. There's a the was catcher for the rangers in the in the eighties and was president of the team at that time and Anyway he's he was telling me about about a study. Somebody had don in what they call the the select ball era and and it was really just a little bit younger than than i am a Specifically mentioned kerry wood and mark pryor. Who were feeding arms at it. Sort of a high school or college level and then had had a degree of success in in the major leagues but shore careers. And i think that's kind of what. You're you're touching on in. He the study. I'll forget the exact things but it was. It was something. It was american born pitchers who who had more than once say maybe two hundred innings in the major leagues and then american-born hitters. Who had more than a thousand at-bats and they just mapped where they were from. And there is a shocking Well the statement the obvious the hitters were mostly from the sun belt so call it north carolina down along the gulf coast across in up to northern california because they got to play around in the malcolm glad well ten thousand hours rule kicked in and they're just more of them from from a baseball baseball doesn't do very well with snow on the ground. Sorry yeah but Then you look to pitchers. They found that they are still obey baseball. Still more popular in the south but they found a a larger number from you know the upper midwest or even even. You know the northeast. The places like indiana and michigan. And and you know. I i think of tom glavin from bill rick massachusetts who you know he he played. He played baseball when the snow melted being played hockey when it was cold. But he the point being he didn't get overpitched. And then you look today you know you watch watch jacob degrom mean that guy is just the dominant fun fun to watch. But he was. He was a college shortstop got converted to be a pitcher and By some by virtue of that wasn't overpitched at the little league high school college level however you define that being overpitched and you know has has still has a gas in the tank and he has a lot of gas because he's throwing one hundred wha one pretty consistently But you know just just examples of it feels like i mean. I can remember pitching in especially for some reason summer league because i think we had dad's coaching. You weren't really paying attention. Know throwing a hundred and fifty inches in a game. Seven game now. That was a little bit of commentary on my Control but if you know nobody was nobody is keeping a pitch count and now you know it's gotten silly that your parents are keeping pitch counts as i. Can you know. The bell went off he. I got preserved my my kids arm for their major league career. I saw a stat watching watching the the vanderbilt mississippi state game last night to two percent of of college athletes. Go on to play in the pros. But i think you surveyed pick pick your pick your little league of taipei's whether the notes what westview or post oak you went out and surveyed the parents on any given nine set which these kids is going to play in the pros and you know they probably tell you the reality is if it will be very very very few. They'll be one every whatever wants a decade type thing. Yeah the yes still remember. It was wanna say it was against nebraska in a super-regional but i may be making it up. But i think kenny baugh through one hundred and eighty two pitches in a rice game. And i don't even know how he picked up his his arm afterwards but yeah. It was different days because i mean way back in the day. I mean walter. Johnson cy young. I mean this guys pitched every other day in and It certainly wasn't four days. Rest so okay. So you go from riots. She got in maryland treaty. Work with merrill lynch. I'm trying to think of. Who was the the team back. Then because they didn't by petri park men until mid two thousands. Yeah so who is. Who's back who is back at. The merrill lynch so chris mayes gave me my job offer. How okay you know. He's he runs. Morgan stanley Office there now has for the last five plus years Ir agreem- is it. Saudi yeah i worked closely together Regarding rainy office and sam dotson is Is now retired was was one of the heads in schuyler. Tiffany rive schuyler. They were kind of the three heads of the office. There's him rob jones bill. Montgomery is a quantum. Okay yeah rob patia who runs the core office was wasn't associate greg guy as one of the I think probably one of the hardest working sharpest bankers. I've i've ever interacted with gregg. Pitkin was air for a year before he left to go to leeman and man. That was a that was a stunning array of talent in that in that office. Because the cause of the previous incarnation of the merrill lynch office. I think he'd been sandy. Vaughn jean shepherd is now ceo. Brigham mike games who just retired as head of the energy group. It at raymond james. They were kind of all at all. At merrill merrill lynch and had just kinda in the wave of what banks did with energy staff up and they get rid of them as energy kind of went through it cycles. So you'd just missed that group. And i'd forgotten. I'd forgotten that the thing i heard about gordon is he used to be able to dictate a whole pitchbook. Like in one breath know dictated in his assistant. We type it up and it always be perfect. Yeah he's a he's a. He's an intriguing guy. In you know he would I was telling the story to with ira recounting the story with ira sometime in the past three or four months and he would come in my office than my officemate was guiding madams almond who is was it s for awhile and does a lot in service that on. He'd come in and play football rice before he got her. He go all right guys going to gym and it'd be eleven fifteen morning in. We didn't have a choice. It was just like stop what you're doing and come to the jam in we're gonna do whatever his little routine was you're going to have lunch and says the houston center glove which is above the The parking garage kinda next to the park shops and might get back in our and a half later but it was. It was what he what he dictated for us to do that day. So one day. I was working on something with iran. You know like the timeline was. We had to have it done by two o'clock for whatever reason ten in came in snapped his fingers said. Come on we're gonna jam in i. You know i said on this. This is the one day i'm gonna i'm gonna protests and say i just. I'm just too busy today. I said rick. I gotta get stein. iris iris. Waiting for it. And he i mean he just shut it down. Look to me is got big. And he said you don't work for ira and it was just you know i just. I just dropped it. And i got up to the gym like you know i got. I got two choices here and go to the gym and get fired. And and so i went to the gym at comeback. Iras like wire the hell of you. Ben and he starts. It's one of those shut the door. What are you thinking. And he's like next time you he tells. You gotta go. Jim you tell him you got stuff to do and i like i did that. How about next time you tell him and he kinda paused nari well. Let's just get it done. get it done. But the o- of a choice. I didn't have a choice. that's awesome. Ira was big talking. Vp at that point. I'm sure yeah that's about right. Yeah right but great. Great group of people very very talented. You know have gone onto to maintain those the senior positions. I mean at the time you know. Most of that group came from first boston. You're talking about the saint. Yvonne's the maryl- maryl- did some big coup. Where they hired. Rick and all those people and i want to say it was ninety three or ninety four Little you know a couple of years. Before i but they'd all moved over but the really you know i i asked One of our associates who was in the city. Aw office before coming to gps. How many analysts did you have at in the city houston office and he was like oh like twenty four. Like you realize the city of houston didn't have twenty four analysts positions when i came out of college in nineteen ninety six and there wasn't a winning. I don't even think it was close. We ed we had like six or seven positions emeril And then i. Boston probably had like five. And then you just go simmons head to and painewebber at one and pm barkman had one a you just have to. You know onesie tuesday until you got up to two to something. In the in the order of fifteen to twenty in just the growth in the east and energy finance community over the past twenty five years has been been pretty tremendous. But i still. I still interact with half a dozen plots of people that i worked with during those two years. Really count. Count them as friends and an industry contacts. So bruce selkirk called you you go interview with natural gas partners. You don't piss count off now. I heard something that i'm gonna. I'm gonna put you on the spot and you can confirm nor or deny or a or say no comment. I didn't know this. I always thought that Dave albans and ken hirsch co founded a co co founded natural gas partners. I just found out like within the last year. Kendall joined to like six months later. It was the rewrite of the narrative. That he was a co-founder is that true or false. I have wasn't an air. I'll tell you what you know from timeline. Perspective than you can make your own judgment. The the you know the concept of the natural gas partners which was a bit of a default name And so just backup a little bit. The genesis was from. Richard rainwater is is now passed away about about six years ago from a awful degenerative disease but Know famous investor made a ton of money for the bass family and then laughs zone ninety ninety six and then went on to Found companies like now hda healthcare who was instrumental in reorganising what became incensio and in pioneer And then crescent real estate. But you know richard. Richard was sort of this famous famous investor and sometime sometime in the nineteen eighty eight timeframe he met with mckinsey partner named just jeff skilling and jeff skilling had at a block the basically said the gas bubble near the oversupply from the from the early nineties is gonna supply demand is going to be come back and balanced. There's going to be a price of that. Prices are gonna pop and you just you want to be long natural gas when that happens And so richard was like. Hey you know make sense. Let's let's find an investment vehicle to you know to profit from that so he he called up. I think addiction rat it was running. You know of the deal. Jay acronym but a diction route was running equitable insurance company. New york and to to put money behind the deals especially stuff richard Retreat said. I got an idea and it's really to you. Know to get long. Natural gas. And then richard When when he was still at the bass's had worked with david ogden and alban Came out all fellow. Ones stanford graduate eighty one in worked worked in new york in the goldman energy group and then went back in gaza. Nba stanford graduate in eighty five and then went to work for this joint venture. It was called built bass investment limited partnership that was a joint venture in greenwich connecticut between the bass family and drexel burnham and. I don't think they had a particular focus on energy. But probably you know some energy deal flow. But richard new david and knew he had energy experience so he recruited david to do it many. He picked up as a story as he picked up in institutional investor and said who's the leading natural gas analysts knows guy named gamble baldwin from first boston who who was actually the the research analysts. When regarding ran the first boston group and anyway he was kind of the luminary but he was you know he was close to retirement at i. I met him a handful of times. He passed away. Maybe maybe no three ed give or take. Eighty eighty eighty four years old. But but anyway that was kind of you know quicker recruit and then ken. Ken was at stanford business school He graduated in eighty nine and was sending letters. He's from dallas sending letters back to potential job opportunities back in the dfw area. He was sending some to richard and at some point. Either richard or somebody in his organization saw that can can had worked at the morgan stanley. And so richard made a couple calls and and got a good Good references on can and so he called him in in camp tells the story because richard Until until he was incapacitated would always have his assistant call So you pick up the phone and it'd be as assistant chico. please hold for mr rainwater and sep. So can you know gets a call this out out in his dorm room at stanford. he thinks. it's some of his buddies. Screw tom but You know he. He hears this voice. Richard had a real kind of jovial voice. And he says. Richard says you want the quote in cans like what you want the quote and he goes. Okay mean quoting somebody what they said and it was. You know somebody that. Richard call it. It morgan stanley energy group in and saying kim's praises so basically they worked out a little consulting gig where can in his spare time was going to go going to kind of verify. I think the mckenzie study on on on on the near term near near long-term natural gas prices. And so you know. Ken tells a story. You know sends richard raceway a bill for five thousand dollars retainer Ten days later he gets a fedex in it's a check from rainwater inc but that that was his project that he did his second year and and he tells a story about coming home to dallas for around thanksgiving and in richard having come over and in present is studying that he had done. And you know copied at kinko's and bound but i e presented his study too. I think the decision maker the final decision makers it equitable. So the the the the The date on the tombstone for the first signed which was a hundred million dollars. I think it was entirely with exception of gp. The equitable insurance companies is is november of nineteen eighty eight. So is right around. The you know that time So you know he he was. He was there in involved but didn't technically become an employee or or you know part of the organization until he graduated in whatever may june of of eighty nine. So it is it is fair to say he was he was a he was a co founder. I kind of liked it as the the The slot and i like kennel. Lot obviously but The slightest side of yeah. You weren't there at the beginning where you can. But i guess you can't really say that you know was he was he You know named as a co managing partner and the formation documents no but but you know funk he was he was present. Here's president and and you know the the name natural gas partners because it was. It was really designed to be an event driven bet on natural gas prices. Put it natural gas in brackets and then it was gonna be renamed to something partners. You know something more creative and it kept going through these drafts of the document. Nobody addressed it and nobody came up with a better name. And eventually they got down to less than a handful of of things and they said what are we gonna call this thing like. I don't know just take the brackets off. Tell that's how became natural gas partners. Now you know years later you know. Call it sometime. In the early two thousands we created the the holding co. and sort of the swoosh logo and and that's when you n. g. gp energy capital was formed. And we kind of dropped just the you know the very generic and somewhat boring natural gas partners name in and made it a little. You know little. Give it a little more sizzle. And so i can. That was kuenz idea. So if you wanna say you know. He was a founder of njit energy capital. That's true because because that was created subsequent to the original athere but a either way was involved in the very early days and clearly is vision. Leadership was was very important to the growth. The growth of the firm out. Yeah clearly a main needs to kind of funny stories to that. One of the speeches. I had to give the ip aa capital conference. They wanted me to get up there. And compare and contrast every private equity fund. And i was like. That's a no win situation. I you know. I say something bad about a competitor. Though of course. Ride me about it. If i say all nice things people say You were just throwing softballs up to puff pieces up on your competitors. And so what i did and i think you and i've talked about this. Hopefully i'm not breaking new ground here but What i'd done was i compared each of the each of the private equity funds to rock bands and in gp i actually said was The beatles because you guys did start it. I mean as the beatles created pop music. And all i mean in. Gp clearly created this business. Now i did throw in the side. Note that when y'all yourselves or sold fifty percent of yourselves to barclays you did it so you could talk in a british accent. Not sound anymore pompous than you already are but you know that was that was the funny side of the speech was it was only forty percent of only forty forty percent. I actually heard original pitches. Fundraising pitches for n. Gp the joke would be made that we were actually Founded by Two michael milken at drexel and jeff skilling at enron and supposedly Those jokes didn't go over very well and they avert there were some fundraising meetings at started. That way i never heard that but but that might have been came in ten years into the just under ten years into the funds life so that might have been an attempted. Humor that in early earlier fundraising. That didn't go over well but they there's you know there's a little bit of truth to it. Yeah now i i. I learned very quickly the to watch the jokes around. Lp's because Not not the not the fun the the funniest bunch and the like and you do need to be taken seriously so settling Just a quick. You know if you've probably gotten one of our business cards the same. The same paper. Texture is as long as i've been there. I think as long as the firm spin around and that paper texture was taken from from drexel business cards. It is from the sane printer in la. The did all of all of the drexel business card. So can michael milkin never had any involvement never anything shady but there that that bass investment limited partnership joint venture. That david alvin came out of the things they carried over the a little a little thing like that and it just you was adopted it edgy. P. it's that's that's the history so you know obviously when you when you get booted from a private equity fund firm they make you clean out your office and take all your stuff away. So i was a bit of a pack rat. I'd been cain. Call it twenty years. And i just kept boxes of stuff and i wouldn't throw things away and you know cleaning out my office taking that stuff you know bringing it home and kind of going through it to to put away. I actually found a business card of william quinn listed as i believe a principal or like director. I don't think it was vice president but it was. It was definitely not billy quinn managing director billy. Quinn co managing partners or whatever the case may be and it was william william quinn at one point you know we still have that title of the principal but the funny the funny thing was. Here's a here's a funny can can story so i started. We have business cards with no titles. So you know there were. There wasn't Maybe we obviously we had a hierarchy. Billy billy i mentioned bruce calling me but then i had a phone interview with billy. He was still at at At stanford and ultimately bruce went to be the cfo at it. Encore when when john bromley started that and i work with billy day to day but but we didn't have titles on our business cards and then You know after a year. My my foreigner and crime is was a guy named brian. Crumley is one of the the principals at vardis investments. Today great guy and after year we have basically moved laterally from banking for the same salary and and bonus structure which is fine. You know we got to invest in the and that was that was the real benefit But you know after a year can call called send a his office and just out blue and we're both saying earning okay. What's up. I want you to know that i'm promoting you guys and like Okay cool like what. Are you promoting us to will your your associates now. Okay okay What what were we before. He's like your analysts before okay and then we were look each other. You know thinking thinking or anything more. Is this come with with any compensation. Booster anything we got. We got a little bold and and we started the jabo and we're like really like in our car didn't say anything before so i didn't know what we were. But if you say so in said yet your associates now are okay cool. And we're kind of pausing waiting for something more. It's not comment. So brian said is that it goes yup. That's it thanks guys in or like really. There's no there's no raise it comes along with the promotion goes out. What are you guys. Make now and i think it was forty five. Gram like forty five grand. Guess about sixty five or cool. We got up and left up. Walked out in high five. Okay we either. We're going to get a chance. We both got fired there but we you know we got you almost a fifty percent bump in pay so that was welcome to be an associate. That's funny that's awesome my favorite kin story. is so i do this roast every year For the charity. I'm on the board of why you see after school literacy program and i know you've been to of a few of them and the first year we had mike land of linn energy the second year we had will van low of quantum. But what. I figured out was never asked the man of the hour if they'll be the man of the hour because some will feign modesty. Oh i'm not worthy of this honor. Other people are just like nen and a now. You're not roastin me. I'm not touching this. So what i figured out for that third year of the roast is you. Don't ask him hersh. Will you be the man of the hour. You go get john wines. Earl and you get billy quinn and you're like all right. How do we get ken to be the man of the hour. 'cause the The and you know it's odd of meat. Essay of wine zero in quinn the underlings but the underlings are always a big fan of having the boss man the bosman roasted so anyway weinzierl and billy were like okay. We're on this and wind. Joe calls me one day. He says call kim tomorrow morning at eight thirty. He's expecting your call. And so anyway. I call cannon i launch into these underprivileged kids and how this rose pays the annual operating budget and all these kids you know can't read but we do such a great job and i kind of lay it out you know. Sorta nervous tics about nine eight or nine minutes. Those storing kenza response was so what you're telling me is of. I'll get my balls busted for babbitt. Our some kids are gonna learn to read. I'd have to be a real asshole. The say no to that. Okay i just get so. He was a good sport. I mean he. He came and got roasted. he laughed. He was. He was as funny as i've seen in his speech at the end was incredibly funny. Made fun of everybody in the room but it was also incredibly gracious As you know we all know. Kim is one of the best speakers in the world so his roast was a was a lot of fun. You've had to adjust scale and even shrink back your office before. Maybe you're at a big established company or maybe at a public company with ample resources at this time. You're a startup. The game's changed. But hey good news. Clean slate to do things differently. The not so. Good news your. Gna budget is limited. Everyone in your organization wears multiple hats. So what do you do you hire. Eaga one source the experts and taking back processes to the next level by saving companies real dollars covering accounting land and production functions and easily integrating your asset as the team behind your team. Check them out. At www dot e. h. e. one source dot com. That is the number one for the number one. Backoffice sourcing group in the game he eight one source so what are what. Are you seeing these These days kind of in your vantage point at at natural gas partners. And i kind of think of sort of three buckets. Maybe you could touch on is one just kind of what's lp cinnamon out there. I mean i. I've only talked really over last year to lp's just in a personal level you know. Hey how you doing. I haven't really heard much in terms of appetite for energy etc and then also love to hear what your take is on the imminent market. These days i mean there's just been record low volumes and like but it feels like it's picking up and then just if you touch on spac stuff. Because i know you guys have Have done a couple of things there and and it'd be interesting to hear a little bit about what's going on in that world sure I'm spent a lot of time talking. Lp's over the past year. But i'll tell you high high level the two the two major themes as it relates to traditional energy our desire for yield. If you're you know the the the discussion of shale is growth in industry is like charlie brown's teacher around wire don't wanna hear that on a year how you're going to generate returns and then in january yield so very very much in line with with the public the sentiment around the public companies that in your take on that is it from existing assets or is there potentially new money available. If you had more of a yield approach my sense was it was more. Hey guys we've invested a lot of money with you. Please start giving it back to me. There's certainly an element of that. But i think i think you know also You know potential new money. It'll be a in in smaller quantities than what was available three three plus years ago But it's it's heavily overlaid with the s g so you know the. There's not a desire to go choir. Two thousand old well bores. That are not well well-maintained in just send me a yield. That's that is you know the they want to yield. But they want it done responsibly. So you know finding finding the right type of assets that You can have reinvestment can generate good returns but can also sore be self sustaining end in something that You know Checks all of the right. Es g boxes. I think that's kind. That's kind of what people have interest in if it if it falls out of that in any way it's going in you tell me what you're doing in in energy transition and then that's you know that's obviously very popular Growing place where capital seeking good opportunities. Yeah now that's i. You know. I had damn pickering on the podcast about three weeks ago and we were going back and forth just on investors and i was probably you know a lot. Part of it was just for a fact that But i was pushing dan just a little bit but it just you know. It's always been a cycle and i used to always joke with. Lp's that when you feel like giving me the money you really shouldn't but when you feel like you don't wanna give me the money that's when you should just kind of given the nature of cycles and And the like the the thing. I feel though is it just feels like this time. It's i mean they're are just members of boards of trustees and foundation board members in the like that have just said flat out no more hydrocarbons and it literally seems to reach to the point of if you're investing in something that makes a hydrocarbon cheaper or more easily available are answers no and so you know dance dance. Take on this was a. It's more the red problem than the green problem. When we show that we can make money for folks again then then investors will will come back but it. It'll be interesting to see how that that plays out. Because i mean you're right. The the energy transition world i mean it's a tidal wave. It's happening and it's it's not just government regulatory it is investors. It's consumers i mean it's my kids you know. My kids talked about wanting renewables and wind power and and the like so. Yeah it's it's it's it's a different interesting world definitely in in lp landon. It'll be interesting to see if we hit one hundred dollars oil. What is that actually do. Does that shake more money out are we have. We permanently changed the capital base. That's going to be available to the domestic entered in industry. And i just don't know that. Yeah i i think you're right. I think certainly the red problem Has been an issue for the past five five or so years But but there is. There's a desire by power powerful organizations to make to make traditional hydrocarbon based energy uninvested people. And there's there's things that are virtuous about that. There are things that are just not practical about it. i i'm a big proponent of alex epstein got philosophy of energy abundant cheap energy makes the world better in in our their trade-offs there clearly trade offs in lots of lots of things that directionally make the world better But but certainly there's there are pools of capital. The that say no. I'm not i'm not. i'm not going to do it. So what's going on out. In emanate world. I mean are people buying stuff again. It feels like people are buying stuff not in huge volumes. But certainly doesn't feel like a year ago. Yeah i mean this time of year ago for much of last year. The you know the assets that were trading hands or through some some form of bankruptcy reorganization Very very few high quality assets she coming available in the market Think now with gas about three dollars. Oil seventy dollars. There's a things things are turns acting. There's there's not as much capital out there. Certainly not the public companies are you know there's consolidation but not not a lot of appetite for cash cash purchases. So it's it's really private pools of capital that have come in some of the some of the well-established players and then others pop up. Where the vitale's stuff that the put up their their capital to acquire large assets. We've been active in but very selectively. There's a there's not as desire to get long just to get long. It's where do we have. Companies that are established in with the base foundations and an from a Making money standpoint and our there strategic bulletins that makes sense for them if so then then we may maybe president of not women Show up at all in any form. It kind of to your to your point. I was talking with Mike kinds the other day and 'cause he's still at kane and obviously more in touch with things than than than i am. And mike was saying that he felt that multiples being paid were traditional type multiples that united seen earlier in our careers. Pd ppv ten peavy. Twenty to twenty five for pud and the like and where we kinda disagreed and at least had had some argument on is is he said well those are the multiples we can see and i go. Okay fair enough. But i don't see a lot of transaction volume being done to your point not a lot of transaction volume being done with cash and where i see it with cash i can explain the buyers rationale by look. They had an unlevered balance sheet coming out of bankruptcy and so they went and did a high yield deal at four and a half or five percent so that was truly kind of their incremental cost of capital. So it's okay to pay. Pd ppv ten. Pud pv twenty. When you're incremental costs is five percent not an all in cost maybe fifteen percent or something that we might have used sorta back in back in the day. And then you can explain a couple of the acquisitions of maybe you know. Some funds had had some money burning the whole burning a hole in their pocket and the like but any thoughts on kind of the debate. We had a both of us wrong. One of us right it. I think there's civility on both sides. I i have seen a retrenchment to you. Know away from the n. a in a v. Every location too much more. You know start with pcp and then sort of build up what what is High certainty and keep increasing the discount. I think your point on that is valid. And i think whether it's mike's pointer your explanation mike's point Around deals traded to certain buyers because they had a unique dynamic be interesting interesting to see the bid. What what what all the banker which is here. Here's the top bid. And what is the the histogram look like the distribution of of the rest of the beds my guess is in a lot of cases. The the mean is is often me-meeting Often pretty pretty pretty far below the top buyer. Now that you you bring up something that i think's dirty little secret of our of our business and i purposely never am i time mccain went back and calculated it but it was always someone posed the question at one point. What if we had to sell to the second place better on all these transactions. We did the track record. Look like on that. And we. I mean we had some stunning times. Where literally the the number one bidder was three and four times number two. So yeah it's it's to your to your point. The selection bias on this one asset buyer situation and all that plays a big role and ultimately. What's get what gets paid. What's happening announce back land. Seemed like they were on fire. And now it slow. It's slowed up in when i spackman. It's one getting them done and then to backing them yeah I don't spend ton of time on our efforts but but You know we've been involved. We sold a couple of upstream companies over the past decade. Resolute in centennial suspects More involved in that more recently raising specs raised one upstream in seventeen. And then you had to deal with the qa payback and stuff in late. Eighteen in the market fell apart in. We let that deal fell apart. Escape the money back which might might be the best performing upstream back over that time. But it's the responsible thing to do rather do no deal than than a bad deal and then we we pivoted. We raise raised one in nineteen to really go after minerals when when the whole narrative around match shifted and in early twenty it was that they were out. There was a three hundred plus dollars back and available in in to back other businesses. And you know we were. We were credible sponsor in energy. Broadly on the stars aligned in the deal with chargepoint came along and And so that's you know that went down when public fear this back in has is traded up into the forties back down with sentiment. Now sort of performing ed's back in the in the mid mid thirties Yesterday so you sent me a picture of yourself. The other day and i noticed you were ball and had a striking resemblance to pit bull. That was a that was a picture. My wife and kids. And i did a a murder mystery at home and and we dressed up so i put on tuxedo but the lack of hair is a result of chemotherapy. As it as my my raspy voice I thought you were just happy to see me. But okay and started smoking during covid i. I finished basically two months of chemotherapy on on june eleventh discovered. cancer at the march and started chemo. on on april sixteenth. Did twenty one treatments over two months and got poked with Lot of needles. That as of right now. I'm i'm very pleased with with my status. Haven't been cleared. But if at least reestablish that what's detectable in my in my blood that was abnormal fifty times normal and is now back normal ranges so positive outlook and hope opened a move past it the now. Let's assume deal. Yeah that's that's really good to hear and you know when you when we were when we were texting and then we then we talked about. It was testicular cancer. My dad's a doctor in what he always said about medicine was when somebody would say what are my chances of living dad would always say it's either one hundred or zero binary you are. You aren't so they can tell you you have a ninety five percent chance of survival but at the same time. It's always scary going to go through what what do what did you learn in that. That may be kind of going through it that you'd want to share with other people that you know because unfortunately we're all getting to the age where stuff starting to break on all of us. Yeah you know. Like like. I had a doctor told me very early on. He said like every cancer is an emotional crisis. Years is not a medical crisis and the survival rate for testicular. Cancer is ninety ninety plus percent. It's it's a very high. There's there's something like ten thousand cases a year in the united states. now there's you know basically a death today but you know you think about about that and you know it's it's unfortunate but but the the of modern medicine is that it is very curable and it it's more much more common among its most common cancer among fifteen thirty five year olds. I'll be i'll be forty seven In about a month. But there's another wave there's another wave that's kind of early to mid forties to early to mid fifties. It's not as high as as the younger case. I think most people here. Here's somebody or know. Somebody has gone through this. They probably went through it in their call. It in their twenties or late teens But it but it is. It is a viable sort of in your in your mid fifty plus or minus five years. So i think when you're fifty. Plus or minus. You're you're more in tune with probably more responsible in terms of regular preventative medicine. Type things The i had that in the middle of covid at a full physical cooper clinic. And i don't this came up in between So i think it probably probably came about some time in october. November and i was scheduled at another full physical basically. You'll i may this year. And i was fortunate to detect it. Call it six six weeks earlier than that but but certainly you know for for younger people. I know you. You know when i was at merrill lynch for example i got the doctor. I think i didn't even go to dennis for at least one year right. I drink a lot of dr pepper. So at i two cavities at the lawyer. But you know not ignoring not ignoring small stuff But also not being hyper paranoid is kind of. There's kind of a balance but You know this cancer along with my brother-in-law who's four years older than i am. Almost to the day discovery a prostate cancer for years ago forty forty six years old and it was just kind of luck that his doctor checked his. Psa because a lot of doctors don't check your psa until fifty plus is doctor injected. He had stage for prostate cancer right now. He's you know he's he's in good shape but but a subsequent to that. I know i know anything about it. I know my grandfather had prostate cancer on his like eight years old but You know that's that's what you hear a lot more of you. Don't hear about these cancers happening well indicate prostate avenue earlier. A point being you know it doesn't take much for for the lab to check your psa when you're used ask them to it and if it comes with an extra fifty or one hundred bucks just pay it. Pay in in. Have peace of mind because early detection in for testicular. It's a bit of a myth that The physical detection is is kind of the first inning. it can. it can be present and not show itself physically which i think was true in my case And by the time it does show itself physically you can detect it or a doctor can detect it. You may be in baby in the fourth or fifth inning. Which is kind of kind of where i i was and but the detectable in your blood. In fact there's a there's a hormone called Beta h g which is which is president all humans but but it is it is the the hormone that is detectable in females. When they're pregnant so the the funny funny thing comes about this is. I think i would have failed. Pregnancy test In early early march. But you know that that that hormone isn't is is present in negligible quantities. Unless you have a tumor. Like i did. And so if if they detected in your in your blood they can say we got. We got problem. We gotta we gotta check on this so another early detection that i don't know what it takes for You know for the labs to do that. In normal course but knowing what i know now if i was twenty eight years old and being responsible and going in and getting physical in their drawn blood i'd say hey can you check. Check my beta h c g. I don't know that worried about psa but mayes will ask him at that to Some little things about that but at the same time these things are still relatively rare. It's you don't need to live your life in fear of cancer but does happen. I don't have any any cases of early cancer in my in my family history so it wasn't something that i was going to going and again my annual physical say you know. I've got a history of early colon cancer or some something that a lot of people do deal with family. Industry may have to be much more vigilant. I think i was responsible but not didn't have any reason to fear for the gene that was known to to cause early cancer. We you're really cold talk about that. I kind of chased you down to to make you talk about it. Because i think one of the things a lot of us have done Is with kovin the fact you couldn't go to hospitals except for covid related stuff. It's it's been a couple years since i've gotten A physical and so kind of the the call to arms of go get yourself checked out once a year because it's it's amazing what they can do in terms of drawing your blood and testing for stuff and you're right. Early detection is the key in a lot of things and Goes a lot of doctors. You know there's there's Inspections that none of us really enjoy. But they are important to detections. And i think some doctors like i'm not worried about this little. Skip that and in your. You know what you're there give give them to check it mutton likelihood but the benefits of early detection are are huge. My my dad. My dad always says is number one. It's your body so you're the only one that cares about it or cares about it the most so you need to take care of it and dad always says to. There is nothing wrong with asking anyone for a second opinion. And in fact if your doctor is upset they are asking for a second opinion. You have the wrong doctor because because exactly to your point i mean my my. Gp is great. I've known her since i Since we went to rise together and we've been friends and all but you know she gave me the heads up of. Hey you know the the guidelines now on on psa and all that is age fifty. And i'm like well. Hey i'm i'm just worried about that because catching that stuff early good and so she you know i don't know six or seven years ago. Sent me to urologists of made. Sure i get that stuff checked. Speaking of your unpleasant tests you have to take. Yeah yeah no. I found You know another another lesson chemo. Well it's different for every every cancer. Now the only real discussions. I've had about it in any adapter was a friend. Some work colleagues who who are either currently or have gone through breast cancer and compared notes but You know a a learning from from chemo. Was you have to be the after your own advocate. There everybody everybody involved as well intentioned. But they're they're kind of stretched thin and you've got you know for example on the hardest part for me was was getting an iv day in and day out. I had three times during chemo. Were where i went for five days straight For seven hours a day. And that's that's kind of a whipping but but The ivy processes is unpleasant. Because you got you gotta get creative and feel feel like a junkie you know. Where am i gonna or am. I going to get put the needle tomorrow. You're gonna worry about tomorrow but it's not the time to be a test dummy for for rookie rookie nurses I said they have to learn to just like you know you're not gonna learn. Made go with the veteran at a couple times early on where it was. You know four six tries and you know they were. They were as paid as i was You know try. They were trying hard but wasn't working in is call call in the vet and and you know here comes here comes that and design boop got it like god thank you make you make that mistake a couple of times. You're like know appreciate you. You know you're you need to learn to call him the vet now. Yeah now. I i could see that growing more prevalent each time you go in you know david hayes. You're very cool to come on in and chat and really appreciate you sharing that story. 'cause it's Like you said earlier you know a lot of us have put medical stuff on the side for the last year because of covid and quite frankly a lot of us put medical stuff on the side. Just because we're busy were macho males and you're right. Early detection means a lot and being. Your own. advocate means a lot. And so it's it's something we all need to think about and just accept responsibility for. Yeah well said. I'm a. I'm working hard to put it behind me but Obviously i'm a hold my firm in co workers in high esteem but You know this this experience in just kind of how how. They rallied around me Just just took work wherever wherever they were in multiplied multiplied by five or ten Same is true with my my wife and kids and family in a broader friend group which you among them For being a great support system and the the little things matter you know. Like i said every every every cancer is emotional crisis in his is rational as i was doctors. Tell me you know this is a ninety eight plus percent you still have kind of dark dark moments story I said i started chemo. On april sixteenth in. I think it was wednesday. The fourteenth i. I told the firm. At least you know the broader firm on monday and a lot of outreach. How can i help. What can i send e what can do at. I took my school driving driving home to start start work for the day and i was just kind of just kind of a bad emotional state. That was thinking a lot about about what does starting. They're starting in terms of chemo. And i was like you know i. I need to snap out of his funk and was about mile from hall. And i picked up my phone i said. Hey siri play paradise city those drums. They start in it like my stress level just immediately dropped in half and i said you know this is this is i what i can do. People wanna be helpful. I can i can give them the opportunity to participate and so i sent an internally. I said i said here's a way to help me. I said send me send me a song. That's either happy or or sort of inspiring as said and i'm gonna make a playlist for both in and you know depending on my mood What i kind of need it that day or that moment. I'm gonna. I'm gonna play one of those two playlist and people loved it and so many people from the firm. Sometimes they whole playlists but you know that it might have been one song or five songs or playlists and and i think it was really a way to bring people who otherwise that cared. But what can you do. You know you can't. You can't go in sub n. Say hey let me you know. Let me let me take. Let me take your ivy's for the day so you can't do that But the you know the emotional support is is key and just little things senate attacks saying how you doing It it makes a difference so if you know if you know people in everybody will know somebody who goes through hopefully a friendlier form of cancer. But but be you'll be available to support even if it's just little stuff. It makes a difference. Yeah now that's that's really good advice. Because i mean at the end of the day. I think we all sorta knew what human connection and i mean you. You knew this with your business partners. You know this with your wife you can read the person and go either not in the best mood anita do something or or whatever and i think kovin quarantine and that isolation really two things one. It caused a lot of despair and grief just the isolation but to it really nailed home. Just how important it is to have those interactions and so i think that's great advice and i hope listeners. Take that to heart and you're right just reaching out with a. Hey how you doing. Hey you wanna grab a beer on zoom. Hey how's this. Those things can mean a lot. I clearly didn't go through anything near as bad as you did. I just got fired and it turned out to be a relief but man the folks that reached out kind of after that. Hey just want to check see how you doing. It really does mean a lot. Well david hayes year very cool. I appreciate you coming on thing. It was every it was everything i could do. The for us not to repeat our duet of was it summer loving that we sang at the The ski fest was conditioned on you. Doing on olivia's olivia newton. John's but yeah and i did it. Well i'm just saying or as well as i good all right david hayes. Thank you so much for joining me thanks.

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Episode Fourteen: Billy Corben & Tony Bosch

The Dan Le Batard Show with Stugotz

00:00 sec | 2 years ago

Episode Fourteen: Billy Corben & Tony Bosch

"South beach sessions brought to you by T so official watch of the NBA shop at US dot T. So shop dot com. Hello. It's Dan laboratory. We've got a bonus episode of south beach sessions for you this week because we had Tony by and Billy Corbin talking about the movies screwball. You've seen Billy Corgan you cocaine Cowboys. He's made the rounds as a director for this movie screwball. Tony Bosch, you don't hear from so much. He's the biogenesis doctor who wasn't a doctor who was getting a hundred million dollar contracts for players while doing a bunch of cocaine and using black market techniques to get drugs. The whole thing was very Miami. It was crazy. The movie is on demand now screwball. We ask you to rate review. And subscribe on what it is. You're hearing. Now, if you want to hear more of it and screwball is something we're asking you to watch. If you just want to be entertained by stupidity or three as Billy Corgan calls that you'll find only in Florida before we go any further, though, we need to tell the people about our sponsors absolutely early need to Dan. And what you also need to do is pick up your attitude when you're talking. Ziprecruiter. Because it is the most exciting part of all these podcasts. I get a bunch of feedback on south beach sessions, and the number one thing I hear is tell me more about ZipRecruiter dot com slash beach. Is that right? That's number one thing that I hear. Hey, great interview with Chris Bosh and all that. But I loved her ZipRecruiter read, ZipRecruiter dot com slash beach. You know mean people are giving you a lot of acclaim for these reeds. Oh, everywhere you guide me so many people's lives easy because Dan, as you know, hiring is super challenging nowadays. And all these other websites out there make it so difficult to find the right candidates for your job. That's ziprecruiter. Does know ZipRecruiter. Makes it easy. Ziprecruiter, send your job to over one hundred of the web's leading job boards, but they don't just stop there with powerful matching. It would be so easy up there. They don't really. They would be number one there'd be industry leaders if they simply just stopped out there. But they take a next level because with powerful matching technology. Ziprecruiter scans thousands of those resumes. A fund people with the right experience and invite them to apply specifically for your job. How grand is that Dan? It's not as grand as the way, they analyze each one and spotlight the top candidates that you never missed a great match, Dan, the hottest thing you've ever said. Oh, it's all they eighty percent of employers who post on ZipRecruiter get a quality candidate through the site within the first day my within the first day damn day. Mike, you can't do better than that. Dan. That's why I always say ZipRecruiter dot com slash beaches. Where you go to try this for free ZipRecruiter. It's the smartest way to hire. Here's Billy Corgan. And Tony Bosch the biogenesis doctors screwball on demand right now. Let's get to it. Billy Corgan is here with us as well. As Tony Bosch was at the centre. I remember this. It made me sad for journalism. Pedro Gomez chasing. Tony Bosch through a parking lot somewhere in Miami. Montes asking, oh, a Montes parking lot. Nice. That's that's a distinctly Miami parking lot the Montes park. I didn't even realize that that was the Montes parking lot. It was Pedro Gomez chasing you down and your the steroid. Doctor. That's getting everybody hundreds of millions of dollars in contracts. Right. Correct. I prior to that I bet at him. He couldn't catch me in the Montes parking lot. That's what was going on. Okay. So chased you down in the parking lot, and Billy one attracted you to this story because it has to be the Miami elements of insanity here. I'll absolutely it was it was on a radar because in our opposite racking tour, we literally have a Google spreadsheet of Florida story that we just keep track of all of these stories that come up and usually takes awhile sometimes decades for a story to ripen p it's too sensitive. People are in the thick of. Which they were obviously in two thousand thirteen early in the year, the Tim L Frink from the Miami New times broke the story of the biogenesis scandal as it became known. And in November of two thousand thirteen Alex Rodriguez was in the midst of the arbitration, he was the only player involved in the scandal who actually appealed his suspension, and why not I guess he figured I'd nothing to lose. It was the biggest suspension in the history of the sport short of a ban. And so he was a call from a rod publicist, and he said Alex will be in town. He has an office in Coral Gables during a break of the from the arbitration in November of twenty thirteen he'd like to get together with you and Alfred spellman you're producing partner. So I said, yeah, sure that sounds cool. We'll meet with Alex I figure this is going to be like a quiet thing in his office right in Coral Gables. No. They say we wanna meet you at hill stone restaurant on pasta Leon and miracle mile like the power lunch spot in the Gables plate glass windows, open kitchen. Everybody can see everything happening. So we go in. High noon and we get escorted down the center aisle. Alex is holding court centre-back booth literally on an elevated platform, we stood up on a stage to meet Alex in this crowded dining room, where if anybody's going to recognize me, it would be two miles from UM there and. People looking around who the hell's this having lunch with Iran? And I actually I send my icebreaker was. So who's going to call a page six you or us and only the publicist laughed and sure shit two weeks later, it was in page six and and we sat there with Alex. And he lied to us for the better part of an hour, hour and a half. I thought some of the things he had to say we're pretty compelling, but Alfred spellman my producing partner who is a degenerate baseball fan. He said not everything was like everything he just told us was a total lie. He's not gonna like this movie. That part is clear. I don't know who looks worse than than movie. What did Tony what did you think of the movie once you saw everything put in the same place? You're telling the story it's crazy because some people still have questions about whether your legitimate doctor or not whether the believes university is it believes university. Yeah. I I think they referred to as what was it. The money school, the belief school the medical and performing arts performing arts, which was a little musing. You know, I got it. What do I think of the moving my my motivation to even do this movie or do this or collaborate with with billing Alfred in this in this project was was twofold, one this was going to be the first time that the public was actually going to hear from me prior to that? If you if you lay out the whole story, you lay it's the it's the most comprehensive look I've seen it exactly how this all happen, and what spectacular shit show it was because it's breathtaking. It's a breathtaking shit show that you're getting hundreds of millions of dollars in contracts with one of these you know, we've got all over Miami. People who are pharmacists to aren't really pharmacists. I and you're sitting here taking using that money on wild Miami cocaine fueled parties that sounds like a great deal of craziness. And it was it was it was crazy, and I have to be honest with and it was fun. And you know, the results were there, which was was amazing. The results were there. Everybody was happy the players were happy. They were performing. I was getting what what I wanted. I was doing what I love to do passionate had and the players were performing. It was a beautiful thing. And it was all the way around because what you saw at the end of which you experience was the pushback from the fallout. But it was a great deal. Everybody was in on it from team physicians to the team managers traveling secretaries to coach you name it. And then of course, it's almost like I got left without a chair when the music stopped, and you were doing something that was known as wrong, but was quietly accepted throughout the baseball circles, largely your trafficking in these human growth hormone areas that are grey areas, and everyone is wink, wink, right up until you get caught at which point it all falls on your, absolutely. And I get it. I don't I don't blame anybody. But myself, I guess if I was I was on the other side, I'd be doing the same thing. But going back to the question was. The two biggest motivations were were one. There's a first time that I'm able to say, at least my side of the story after you see the film, then you can make your own conclusion, you may like me you may not like me. But at least the truth is out there. And you heard it from me from the horse's mouth. Secondly, hopefully, and in retrospect, maybe we're raising the debate. And we're we're we're pushing this in the forefront about this whole PD use L. You don't get to be a pioneer on this tone cocaine and the club to make some of the money and stuff you don't get to be a pioneer on elevating the steroids discussion. Well, I think I think that be because of my experience and because of my journey. I think I'm part owner of it to be honest with you, let's go anywhere with belly. Because I didn't see him as a pioneer Billy. I saw him as a distinctly Miami universe creature that was able to profit off of something that a lot of people in Miami were doing in the anti aging. Community because he climbed through a wonderful loophole where there were hundreds of millions of dollars. Well, first and foremost as we told stories in the past with the drug industry or the illicit drug trade in Miami. If it hadn't been one guy, it would have been another guy as long as the demand exists the supply will exist, so when when the belco scandal occurred there was obviously a vacuum in the marketplace. You know, there was an opportunity for somebody to come and fill the void. Which was baseball players were looking to cheat were looking to work around the Mitchell report that had come out about steroids in baseball and the new regulations that have been agreed upon by the players union and and major league baseball and so- Joni fill that void in the marketplace, very often Miami is on the cutting edge of all sorts of schemes and scams. And it was only natural that someone that Miami pioneer would have would fill the void in the doping in the doping. Marketplace, obviously, can you explain to us when you're stumbling around through this story on the reporting and you're coming up with again. Detail after detail explained to the audience who hasn't seen this movie. What you think are the details that will be most ridiculous. Well, first and foremost movies called screwball. So it is a bit of a farce. It's a it's a comedy really is what it is one of our first sort of comedy, documentaries that we've ever made. And really, I think the to put it into perspective the fact that the highest paid baseball player of all time his career was ended over a four thousand dollar debt between a cocaine addicted fake, doctor and his fake tan addicted steroid patient, I think gives you some idea about era was just collateral damage in this. This was a beef between Tony Bosch and porter Fisher that that just brought down all of these major duty a baseball players along with him. But it is ultimately this Elmore. Leonard Carl hyacinth Coen brothers esque a botched kind of robbery it's a Carl hiaasen novel. It is something that is. Distinctly miami. It couldn't have happened anywhere else. But my did you see Tony wince when I said fake doctor? Did you see him wince as I said see him? Once you still don't like fake doctor. I mean, you had the lab coat. And it said Dr Tony about who think it's a comedy. Do you sit there because I watched and I'm like, this is a comedy. But did you think it was a comedy watching it? Or was it your way of being able to tell your story? And if you wanna laugh, you can laugh, but at least you're getting the details out there you want. Well, listen, it was a comedy. But the whole story was a comedy. I laughed all the way through over the years. I was I was laughing. So why not why not pick the right way in the movie? But were you laughing you aren't laughing once it was really coming down on you. Where are you? There was a dark period in there. So there was a very very dog period. Very Doug period for me, my family that lasted quite some time closer to years or more than that. And you asked me about the the common of fake doctor. And again, it is what it is. I'm not gonna I don't think my my purpose of being here. Today's really to defend myself, but I do have over twenty eight years of experience. I do have a doctor. Degree in allopathic medicine from the school performing arts like Tim O Frank like likes to say I did research for many years in this field. I worked with endocrinologist for many years in this field. Obviously that wasn't part of the movie, and I understand is a slanted lopsided filmmaker. Only interested in comedy didn't give your resume. Nobody wants to resume. Nobody. I know that I know that nobody wants my resume. It's all for entertainment purposes, to be quite honest. I don't get it. They say com- comedy is tragedy plus time. So I think that over time I think he's Tony's probably come to see the humor in it. And I will say this. He's not defending his resume, nor am I, but I will say that as Tony mentioned earlier the proof is in the pudding. He got results for his clients. This is not a business that Tony was advertising in the traditional sense out. There was no billboards. There were not commercials other no magazine heads it was word of mouth. So there were clients that Tony had that were getting the results they wanted that were coming to him to lose weight. Everybody was Ryan Braun. Manny. Ramirez the stories in the in the movie are hundred hundred cops hundred cop clients late people just in the community, and they were getting results, and they were telling their friends and their friends were coming to to be treated by by Tony Bosch that really happened. And so like, I said, I'm not going to sit here and defend myself, and I had two choices when I left prison when the second coming of Tony Bosch was going to happen. And I had to choice to run away from my password. Embrace my pass. I've never seen anybody grow from running away from their pass. So I made the choice to embrace what I did wrong. The short could site took who I was who I am now and move on and move. Also was there a -peutic for you to do it that way absolutely in this film, when when we were filming this film was very therapeutic because you weren't hiding anymore. You didn't have to be doing in the shadows. You could try and control some portion of your story or tried to or or try to. And a lease say the truth, and it's out there. And like I said after you see you made like me more, you may not like I want to ask Billy. I this is tough for documentarian. But I wanna like in the movie who do you think are the most interesting characters like who do you think are going to create the most polarizing opinions when people watch the movie well this incredible cast of characters right out of a Coen brothers movie. It's like, you know, Miami's America's CASA Blanca, so people flee here from all over the country and all over the world mostly from something illicit in their past, and they come here, and they almost create like the sort of like voltron of Florida career were they like they become like super criminal date like conspire with each other and come up with these cook these cockamamie schemes, which is what happened here when Puerto Fisher stole. Tony Bosch is records a a group of criminals than conspire to steal the stolen records. Not just sell them to the highest bidder. But sell them to every bitter, and any bitter who is willing to pay anything for that included. Major league baseball that include. Alex Rodriguez that included selling it back to Tony of necessary. Anybody willing to pay anything for it were very little moments of morality in screw and then feel like there were many in my opinion. I think who looks the worst in all of it is rob Manfred bud Seelig and major league baseball, in my opinion, the way they came down. Here reminded me a lot of like the NCW investigation involving university of Miami and Nevin Shapiro in high. We say like you come down to the swamp. You're gonna get dirty. You're going to get some mud of these these are enforcement arms that don't have any real power. Right. Like, no accountability. Apparently. And I mean, major league baseball started their own internal investigation division their own sort of FBI that would go out to the cities and investigate the chicanery. And they just they're a lot of them are ex cops from NYPD from Boston. And they just go do whatever they want. They seduced a former nurse of Tony's. They were sending flowers and gifts to Tony his girlfriend at the time. Well, not to me I wish there were to me if they would have. Send me flowers. I would actually public baseball was actually dealing in cash transactions. Something that was sweet. Sweet fund they have a slush fund, and they had they spent one hundred twenty thousand dollars cash in literally like a gym bag to a convicted felon in a diner in Palm Beach county. And are they going to ten ninety nine him? What what exactly is MLB doing running around with that kind of cash and paying for what they knew were stolen medical records from a convicted felon. I mean what what was the plan there? And we interview an investigator from the former investigator from the Florida Department of health who said that the behavior of major league baseball investigators in the state of Florida was illegal. They unquestionably engaged in illegal behavior broke the laws of the state of Florida with absolutely zero consequent nobody was behaving by legal motives like who was who was doing anything yet. We'll listen every time like someone's your these new stories like fake doctor found in Hialeah faked. Doctor found Little Havana, I'm like that's not news news would be real doctor found in Hialeah. He'll doctor. Well, it's like this is part of the culture. Down here, you know, like people injecting fix a flat into women's bottoms to give them Brazilian. You know bootleg Brazilian Butler. You know, and like this is just part of the culture. I think it's I think it's part of the multi-culture I should say down here. Part of the reason is that there are people who are doctors in their home country. And because we have such a diverse community p people do feel comfortable going to doctors who were who may not be licensed physicians in the state of Florida in the United States. But were in fact, doctors, you know, back in the in their home country, then there's also an idea that a lot of Miami exists in what I like to call the gray market economy. We expect that that everybody will have sort of a shady side. Speaking of the shadiness of Tony like once you were getting swallowed by this. No. But when you were getting swallowed by this, and you were suffering. It you were trying to you know, shell game it with dollars. Like, what was the worst of it when you felt oh, this is out of my control? Now, this has gotten away from me. Now, this is going to be a problem for me. I'll tell you what I'll tell you a specific story. That I actually said to myself. Okay. This is this is gotten to ridiculous. It's got an a out of control, and it was one time in and it would happen quite often. But this one time in particular, I remember leaving my house. I was living in the grove at that time. I think it was one of the safe houses that because I was being moved around. Right. So it was one of the safe houses that I use. It was in coconut grove, and I left and it was early morning. Hold on a second. Explain to people why it is that Unisem -tated safe houses. Well, I needed to save houses because I was getting daily threats you're talking about numerous, athletes and these athletes had their own people. And so the text messages in the phone calls were were ridiculous. They would they go twenty four hours. I would I would I would wake up at for him in the morning. I would see five text messages. Hey, you better. Not do this better. Not tell us you testify or not testify who's doing this who's sending you these texts. Well. The the these were all different people. From Alex is Cam there was there was numerous numerous people and other athletes, also, so I don't know, they're they're they're they're entourage. If you will. Okay. So I'm sorry. I interrupted you're coming out of your home and go. Yeah. Some coming at coconut grove, but but I'm coming out of my house in the grove. And I think I told Billy the story ones. I don't know why didn't make the film. But but anyway, interesting story some coming out, right? And it's early in the morning and get in my car. And of course, as I'm walking towards my car. I'm suit MC. I know the neighborhood. So I know what cars belong there. What cars don't belong there to probably a little paranoid at this? And I'm very paranoid at this point cocaine doesn't help that by the way. No, it doesn't it doesn't it doesn't. And and and by I was I was using at this point in time. Although that say, yes, yeah. Well, I would like to state I've been five years clean, so actually. Okay. Thanks. And so going back to story. So. Some sitting Mike I'm getting my car. I'm looking around. And there's all these cars in thinking myself. Oh my God. There's like five cars there with people inside cameras inside the the car. So I had the DA in one. I had a good fellas. All of a sudden, it was crazy shitty. Good foul. Shitty. Could develop in a way. Why should a good because this happened to me? So anyway, wondering rather helicopter I go right around. I was looking I was leaving with Alec out. There was you know, so anyway, another coat with a rubs people official people. Okay. 'cause then you got you got the wannabes that that when you want to get in good grace with a rod. You know what I mean? So they could collect on the on the reward their your air. Reward. Right. But there's a lot of money. There was a lot of money. Okay. But this is before I even said anything that's crazy part about it. Nobody knew I was going to testify new. Nobody knew I was planning on festival. I was planning to, you know, make a left Mika arrived. Make all the threats made you want to testify all to get out of the whole well that and now you got undercover DA you got undercover cops freaking out that I'd testify against him. You got Aras official people a unofficial people all the and so I got five six every time. I leave. I would have numerous cars follow me wherever I went. And this one time I said, listen this is enough. You know, I think I had like five or six cars following me. And I said I'm done I you know in order to fight this fight. 'cause I was ready in it wasn't like if I could just take off, you know. And I imagine you considered it. I imagine you consider trying to get away from your entire. Life. Absolutely, absolutely. Like hiding is a fugitive because that can't be fun all of that that you're experiencing. It was terrible. And to be fair though. There was somewhat of a financial incentive in that this this lifestyle that Tony was leading as you just described was very expensive one that in. You're not make generating any revenue at the time. But yet had to move from house to house had to take care of his on occasion child support payments in Alamo knee, and what have you and then rent and vehicles and security and to be realize you said seriously monied interests, you had a multimillionaire in Alex Rodriguez a multibillion dollar monopoly in major league baseball who not only had their official investigation. But what they called a shadow investigation. They hired PI's locally. This was a whole cottage industry in Miami. And in a town that subsists hustle on. Yeah. It was an economy in a town that, you know, subsists from hustle to hustle and everybody side-hustle has got side hustles. You look for these types of opportunity. So everybody was bathing in this or feeding in this trough of MLB and Alex. And be old Tony I mean, MLB covered your expenses when when when you decided to cooperate they covered you had legal expenses, you had security expenses, you had personal money to party in New York with some of that money. No. They covered that too. Craft services. Service actually invoicing major league baseball expense reports. Well, my security invoice, my lawyer invoiced and all the other individuals that to pardon this whole thing. I think we did the math at total just over four close to five million close to five million now, wait a minute. What we actually added up in the documentary beat we do the math right on camera. Right. And so your dealing with how many people who are doubling in criminal behavior here as or all of them, really. I mean every single one of them arguably, including the whistle blower, including major league baseball, including a rod who actually it was. It was reported only in passing that Arafat had a Queen for a day meeting with the feds with the DA Aucoin for a day meeting is is when you basically get to come in tell the feds everything, you know, and they agree not to prosecute you for everything but lying to them. That's not covered. In fact, George popadopoulos. One of the president's men famously got prosecuted for lying in his Queen for a day meeting. The whole point is not to live the whole point is we're not going to prosecute you for anything. You say we will not use anything you say against you, and Alex famously lied in that Queen for a day meeting and was not prosecuted so everybody in some to some extent was engaged in criminal behavior. Here it was pretty sensational in that way. I wanna get to how you go through five million dollars in expenses here in a second. I want to get to that with Tony. But when you talk about a Iran and the original meeting with him and him lying to you the entire time. You felt like are you didn't feel like you. It was your film partner told you. He was lying. Yeah. What is it that was happening in that meeting that you were believing before he told you that it wasn't true because I'm not a baseball fan? And in fact, don't give a shit about steroids in baseball. Literally don't care. I mean, the baseball hall of fame is filled with racists and drug addicts and cheaters and alcoholics indigestion. Madison. Hateful horrible people so players whose bodies are their fortune whose livelihood or contingent upon healing faster. I mean, Tommy John surgery, isn't that a performance enhancing procedure. Like, I don't really understand it you give your kids Admiral. Throughput morality stupid sports, morality integrity ethics all of that. I think it's hip ankle. And all of us would choose a fountain of youth later in life. If we could course, and these guys are I mean, they're relying upon that, you know, their bodies and their physical health. So I don't really give it give a crap about about really any of that. I was interested in in this insane sort of true crime story that this was and that's what I really was interested in. So Alfred who is much more interested in the purity in the sanctity of the game. In fact, it was a pitcher in high school at north Miami Beach, senior high go chargers. And in fact, interestingly I don't know if he wants me to tell the story, but I'll do it. Anyway, Alfred pitched against a rod probably about his senior year in high school. Everybody already knew that Alex was going to be was Alex. You know, he was going to be drafted and make some big money really soon. And it was some sort of summer. I think it was on Frazier's camp, actually, and they had some sort of summer league game or whatever and Alford pitched against him and Alfred's claim to fame. There was that he held Alex to a triple. And I thought what a cute story to tell at this lunch remaining Alex Rodriguez when when you get this chance, I thought it would just be a fun way to create some common ground. We're all Miami boys right now Alfred actually pitched against you yet. So I told Alex the story. Alfred looked embarrassed, you know, and I told him the story like any held you to a triple like, here's the highest paid baseball player when most famous guys one of the greatest in the history of the game he wins. He looked like he grimaced when I said that Alfred held onto a triple like like like there was a a sensitivity. There was he was so fragile about that. And like this was twenty years ago, whatever it was acute funny. Little story here about these two guys you've met before you know, that kind of thing and he looked sensitive to that. And and I was that told me a lot about. But that's what made me think he was an interesting character. Like a compelling character. He was making points about like, I never met. Tony bosch. Of course. This is he was telling everybody at that time to fear. He was in a battle of the legacies. He was trying to preserve his career. And is integral he was riding the lie right till the end three hat tricks through Commissioner's meetings, all of that stuff. Oh, he was going to go down fighting, or at least lying that was fat. And he didn't fact, but like he I he made the point like you notice that my game stats didn't improve after the time that this Bosch character claims that he was treating yada yada. So I like he was making these points at I couldn't verify contemporaneous. Look in the moment. I'd actually have to leave and confirmed, but he was making a very good case for himself. And I thought a compelling case for himself. I thought he was sympathetic. I thought he was an interesting I thought it was a complicated guy didn't have much of a sense of humor at at the time for perhaps obvious reasons. But I just thought I thought this is an interesting guy. I'm like, I thought he made some good points offer. It's like no way. He's like don't. He's totally full of it. He's lying about everything, of course, in January of two thousand fourteen they settled the arbitration of the I think he wound up with one hundred sixty four game suspension. It was quote unquote reduced, but I. It remains the highest suspension the history biggest suspension history of the game. And then I kept emailing the publicist and emailing. You guys want to do this interview you want to do this? And for like, seven months, I interview I emailed them in the and Alex wasn't wasn't interested in doing this story. But in October of two thousand fourteen we heard from Tony Tony was interested. And once you meet Tony and then the following year. I met Puerto Fisher who reached out through Email via Tim L Frank which was kind of wild. When the three main figures in this extraordinary scandal, reach out, independent of each other to you you kind of feel like the universe is trying to tell you something. So we decided to do it. And when you meet, Tony, and you meet Puerto you realize, oh, this is the story. These guys are the story. Alex, Alex, isn't the story. He's a supporting character in this story. And and these guys actually were we met them, and they told us the truth. You know, they give us verifiable facts. Whereas, Alex, of course, everything he said, you know, daleks tells you the sky's blue you gotta look. Outside and talk to six scientists for before you publish that information. You know? So these guys told us the truth dirty guys told you the truth the guys who were a little orange the guys who were doing the unscrupulous things. It's not unlike Consejo coming through. He's the one who had all the information. He told the truth about every game. But he also had a credibility problem because he was doing things like you end up in jail over this you end up in jail in bef- racing. Yeah. Prison excuse me. And you can you explain to us how you get to the point of something that felt like relief where on on what side of this. Did you get where you were? Finally, like, okay, I'm past the darkness. Wow. The there was so many 'em phases throughout this whole thing. But where I felt the most relief was as crazy as it sounds. It was when I was sentenced to forty eight months. It was okay. It's over. That's it. This is my punishment. Did you think it was going to be worse than that? Or did you fear? It would be worse than that. After going through all the shit. And all the publicity that I'm going to be honest with. I'm very optimistic. I thought I was going to get a slap on the wrist oldest. Yeah. I thought I was going to. But you know, what in retrospect, and and it's funny. You know, we plan in and the man upstairs laps, and it it almost saved my life. I believe it really saved my life. Because my my diction was out of control. My lifestyle was out of control, and my moral compass was way off and so I needed this time out if you will. And so in in retrospect, I I have to in a weird way. Thank the prosecutor thing the jar. You cold Turkey in prison is that how that happened or Turkey. But that that is how you were able to get off of. Well, I did I did go to rehab before. I I did a detox program, and then I went on and did a behavior modification program for addicts. And so on and so forth, but the monkey was stolen my back. You know, I had all all that pressure. I know I d- if I was going to go to prison or not, and you know, while I was in rehab. They told me we'll do this this way. We, you know, we'll get we're going to help you not not not go to prison, and you adopt point in time. My biggest fear was was going to prison. I've never been to prison before never even got an a DUI in my life. So it was this weighed on me, and and waited on on on my family, and I was hoping for for the best. But, you know, sometimes we don't we don't know what's best for us. And so I I truly believe that when I got those forty eight months, it's when I was able to breathe that Sira leaf. It was like, well, I'm gonna prison. I'm going as crazy. That's how crazy and out of control my life was where hey you going to prison. It was like, wow. Okay. Thank god. No cars waiting outside my house. No paranoia will not that kind of paranoia. I mean, there are all sorts of different. Now paranoia is that would arrive in prison. It doesn't feel like it would be very safe now twenty up in a camp in Alabama federal prison and was like low security. It was Campos. Minimum right. Minimum. Minimum. Yeah. So Tony is they're teaching. I believe in nutrition course, Thira I was well it was a working camp. You know, you had to work. I started out teaching the. GD courses like math science reading for those that were there that needed to passer g the and we've it within that time. I did teach a little nutrition here and there, and then he was also in prison with Jeff skilling from the Enron scandal. Who is teaching business, correct? At the prison end. Jesse Jackson junior who is teaching policy in prison for political. This wasn't as dangerous as I imagined in my head. This was a little it was an educational it was educational, but that. Listen, the whole experience was terrible. When I was sentenced I didn't surrender to the camp. They didn't let me just go to camp I was held immediately. And so I went through the whole process where I was you know, incarcerated immediately, and then really have time and say vita my family, although I I was already prepared for something like this. And it was a little surprising that you know, I was held immediately. And then I had to go through the whole transfer system. So it was about three or four months later that actually got to my camp once there, I you know, I settled in and accept my fate tone. You said something earlier about like, you would aknowledge that you you did something wrong or took shortcuts. What is it that you think you did wrong? Why do you think you went to prison, or why did you think you deserved or needed to go? I mean other than of course to detox, but like an kind of reboot your life. Why do you think you went to prison? Well, the obvious reasons call what it is when I was doing was completely legal whose criminal in many aspects just the way that that it was done the whole method. What about the kids your high? School clients and the children and the kids and the parents, well, that's what got you in the real trouble. If you would have gotten a slap on the wrist of it had only been athletes, but once you do it with kids. That's what I thought. That's what got you into the real trouble. I agree with you. I agree with you. And I you might have gotten a slap on the wrist. If it had just been Manny, and Alex and not I don't think it would have ended up forty eight months, even though there were questions about whether or not you were a doctor. I'm I'm going to agree with you. I'm going to agree. I think that the my moral compass should've said, listen, I don't care if you're the parent, I'm not gonna treat your seventeen year old. Oh, but the doctor was making everybody great you're making everyone feel good. You're the guy who's getting everybody a little bit healthier a little more money, and the parents want it to it's funny. Most of these guests in the parents wanted it is crazy most these parents that brought me their kids wasn't so much to put him on a protocol to put him on a program. Ram? No there really had been drafted. But they had been using some type of performance enhancing substance from before and say, hey, can you clean up my kid 'cause you know, he's getting ready for the June draft, you know, help him mass. And I'm helping mask the situation, and I would say about sixty sixty five percent of the of of those underage kids. It was like that that that that was the cause. And then you had the other ones that. Yeah. Listen, I want to grow. I wa I wanna into the June draft. But nobody's going drive to five five five six scrawny. Little kid. No matter how good you are in baseball. And that's the truth of the matter. It's all eighty percent of visual. But nonetheless, that's where I should've said, listen, this is where I draw the line. No kids. All you had no line though. Right. There wasn't because they all went up his nose. Yeah. Tell me about how the five million dollars get spent explained to me how it is that major league baseball ends up with a five million dollar twenty bucks or something like four point two four point three somewhere in between four and five billion dollars. There was multiple attorneys that that you had Tony right? There was multiple Tournus the majority the majority of that money went to attorneys, and the story security, well second would be security and then with insecurity. There was also a lot of the other angst Larry bills or invoices, which is basically the hotel travel rental travel, the big lion's you're living a pretty big life yet. Yeah. But I I was living a much bigger life prior to that, you know, this life. I was this. Was you slowing down? I'm slowing down. All right. I'm slowing down. Why do you need security though? Like how much security do you need at this point is this because baseball's fearing that they can't have their chief proof being harmed by somebody like. Why not so much security? I think that well I didn't ask for so much security, but they gave me security. I think part of it was let's keep the sky safe. And I think the other part was, hey, this guy's a little crazy. Let's babysit this guy everywhere he goes. And that's the honest truth. You were a problem for everybody. You everybody was a little afraid of what you're going to reveal. Everybody was waiting outside of the house is a little bit afraid of who you're going to take down with you disguise a loose cannon. I don't know what what this guy's going to do tomorrow. You know, what he's going to say tomorrow? And so so I think that it was partly because of my safety and the safety of my my immediate family. But I think a lot of it also had to do with babysitting. I remember that one story in particular that, you know, we just exited A M O B offices, and my head of security says okay, now, we're going to go to this bar go. Why do I wanna go to a bar actually want to go to another Boris like a sink Carioca love singing karaoke? Okay. So anyway. Which is song. Are you going to if you're if you've got one song that using karaoke d- what you choose this living, and I got I got sweet home Alabama. I think is what I'm going. What is your what are you using Quintana Merrill? What he's saying? What's go wrong? But using London. True. I'm good when I'm good and drunk. I certainly do. Sweet caroline. There you go. There you go. You know, why it's easy? I can pull it all. That's that's my first one everybody sings along. Right. I actually sound good in it. So anything else after that? It's okay. But I remember this one time. It's like, okay. I wanna go this way is a no, no, no. They told us to go. The other way, I said who's us says, well, I'm OB says we have this tequila bar for you. And these are the two kilos we're gonna change. And so do and it was great. It was awesome. And I thank him today because there was this underground tequila bar, and and they took me there. It was crazy thinking about it. Now, it's almost like disguise crazy enough to go on its own. Let's manipulate the situation. Let's try to control him and the protesters and a redhead paid protesters to demonstrate outside of that one of 'em Melby headquarters in New York. It was quite energy. Hold on a second. Hold on. I want it before I get you guys outta here. I want to get Billy just to tease the people because again screwball. I'm telling you here. I haven't seen anything quite like this because it's truth. But it feels like fiction it feels a bit. Like a cartoon the when you say a rod paid some protesters. What are your three favorite goofy details from the movie, if I make you just wet the appetite because there are a million of them, but there's three goofy details where you're like. For example, when I think to myself baseball paying Tony Bosch five million dollars to just take care of him is crazy to me. It's not and there's like a million of those morsels spread all paying cash out of a paper bag for the amateur -ness of the investigation was stupefying to me. So some of my favorite things. Manny Ramirez is what a fascinating character. In fact, Tony refers to him as a cartoon character at times in the documentary. Manny didn't like to sleep alone. Tony is that right? Yeah. He didn't like to sleep alone. He was he was scared to sleep with the lights off and by himself. Yeah. So you'd have like a twin beds. He'd have twin bed in a hotel, and you would sleep on the neighboring bed and tell him a bedtime story. Right. And he wanted a bedtime story. It's like many why can't we just go to sleep. And so no. But you have to tell me a story. I okay. So what kind of story do you want? It says, well, do, you know, just an entertaining story, and I wouldn't mind if there's a couple of girls in the story, you know, and interesting, so so yeah, Krystof obey crazy only in Miami story. Tony actually has his last name. Bosch is a very famous and prominent name in the Cuban exile community going back. Very many decades. Your father is related to Orlando Bosch cousin or there's a first cousins of Madonna. So Orlando Bosch was a famous call it Cuban exile freedom fighter slash terrorist who famously stood in the late seventies. Stood on the MacArthur causeway with a bazooka on his shoulder and fired a missile at the side of polish freighter. Fortunately, the missile did not arm. It struck the side of the boat and rolled into government cut. But he was very eccentric. Only in Miami kind of kind of figure that's in the documentary, which is just bizarre the whole tanning subculture in a sunshine state. The fact that we get more sunshine probably a year than any other state in the union yet, we had this huge. I think more tanning salons per capita than any state in the union, and this sort of subculture of people who hang out in and around the fake tanning world. Of course, the fact that the reason why the state of Florida never really the department of health crackdown on these gray market anti-aging clinics is because not only are we hustle economy who needs businesses like this just keep the money going around in this economy. But of course, the governor of the state of floor. Twice elected governor now Senator from the great state of Florida is the largest Medicare fraudster in the history of America. So there wasn't exactly a priority. Put let's say on cracking down in the medical field on this community when you're executive of the most powerful government official in the state is in fact, the largest Medicare fraudster in the country. The fact that rob Manfred was the head of the biogenesis investigation as the second in command under bud. So I'm gonna cut you off because it's more than three things that you've given us there. If people want one hundred things they're all in the movie, they're all interesting. Go ahead. Keep going do wanna tell one one last thing. I do in say though, is and this really bothered me not as much as the high school patients that are clients that Tony had that really bothered me. But what bothered me almost as much what? And we address this in a single shot in the movie and this to me when I talk about I don't care about steroids in baseball. It's what's the saying? It's not something worth making a federal case of and they made a lot. A federal cases out of steroids in baseball including dragging players to testify before congress prosecuting them for perjury in front of congress. Now, I get the MLB is a monopoly, and that congress dozen joy a certain level of oversight over them as a result. But let's be real here. Tony had nearly one hundred cop clients from departments all over. I would assume at least two counties, certainly Miami. If not Broward if not Monroe of not Palm Beach and talk about a public health and safety crisis that congress should be holding hearings about that local prosecutors police departments commissioners mayors should be interested in I'm curious to know. Did anyone get in touch with you the feds the local authorities the state authorities mayors police chiefs, anybody say, hey, I want to hear about some of these police officers who are coming in doing steroids, and then going out and protecting and serving our communities than anybody. Come to you to talk about that. No never never have. That's a little frustrating. I would think okay. Well, we'll see what the movie reveals to people because I'm telling you was really good, and you should watch it. It's screw all the new documentary. The directors Billy Corbin the star. I think is Tony Bosch, although many people are trying to come after your place in that movie in terms of stardom as a rod and Manny some of the details. They're pretty strong. And I look forward to Dave Samson's review. I'm sorry. David samson. I like how you just tackled a lot of different layers because it's not beyond Miami. All that stuff. That's just the federal regulations all of it. The the idea that we're a Medicare that Miami is great at this kind of fraud. Tony, I appreciate you coming through here, Billy. I appreciate you coming through here spending the time with thank you. Because we gave you a bonus episode this week, no south beach session next week, which means it's not really a bonus episode. It's just us changing of the schedule in a way that disoriented you regardless it was all brought to you by T. So the official watch of the NBA Mike Ryan tell the people what they need. To know about T. So I love t so the official watch of the NBA. It's graduation season. You want to get that special graduated in your life the perfect gift? Well, I have a recommendation for you is that really recommendation so much as I order you to go to US Dottino shop dot com and check out the tea, so krono XL. It's the best whisk time piece. There is I know that's my personal preference. But you'd agree with me that's objective. But it also feels like a fact it feels like a fact because one I put one of these t- so watches on even though they haven't given me one yet. They've given you Greg Cote. Instagram's I'm a little jealous, especially since I'm carrying the nice Rogers, their incredible incredible watches, you can't beat the tea. So especially you can't be the tea so krono excelled in. This is the part where I'm supposed to tell people what's coming up next week, but we're off next week on south beach sessions, and I don't know what's the week after that isn't Mike sure from the office, and it could be Mike. Sure could be Ariel Hawan could be any of the great people that we have lined up to talk to. It's a lot of work. And we wanted to get you this bonus episode not onto. Because hey, screw balls out on demand this week right now. So this is supplemental listening for your screw ball needs. But it's not really a bonus episode if we're not doing one next week. It's just the same amount of south beat sessions with a change in schedule. It sure is how wasn't the same amount of work.

Tony Tony baseball Alex Rodriguez Miami Tony Bosch Billy Florida Manny Ramirez cocaine MLB official United States Mike Ryan Alfred spellman Billy Corgan NBA Pedro Gomez Billy Corbin Dan
Episode Fourteen: Billy Corben & Tony Bosch

Le Batard and Friends - South Beach Sessions

00:00 sec | 2 years ago

Episode Fourteen: Billy Corben & Tony Bosch

"South beach sessions brought to you by T so official watch of the NBA shop at US dot T. So shop dot com. Hello. It's Dan laboratory. We've got a bonus episode of south beach sessions for you this week because we had Tony by and Billy Corbin talking about the movies screwball. You've seen Billy Corgan you cocaine Cowboys. He's made the rounds as a director for this movie screwball. Tony Bosch, you don't hear from so much. He's the biogenesis doctor who wasn't a doctor who was getting a hundred million dollar contracts for players while doing a bunch of cocaine and using black market techniques to get drugs. The whole thing was very Miami. It was crazy. The movie is on demand now screwball. We ask you to rate review. And subscribe on what it is. You're hearing. Now, if you want to hear more of it and screwball is something we're asking you to watch. If you just want to be entertained by stupidity or three as Billy Corgan calls that you'll find only in Florida before we go any further, though, we need to tell the people about our sponsors absolutely early need to Dan. And what you also need to do is pick up your attitude when you're talking. Ziprecruiter. Because it is the most exciting part of all these podcasts. I get a bunch of feedback on south beach sessions, and the number one thing I hear is tell me more about ZipRecruiter dot com slash beach. Is that right? That's number one thing that I hear. Hey, great interview with Chris Bosh and all that. But I loved her ZipRecruiter read, ZipRecruiter dot com slash beach. You know mean people are giving you a lot of acclaim for these reeds. Oh, everywhere you guide me so many people's lives easy because Dan, as you know, hiring is super challenging nowadays. And all these other websites out there make it so difficult to find the right candidates for your job. That's ziprecruiter. Does know ZipRecruiter. Makes it easy. Ziprecruiter, send your job to over one hundred of the web's leading job boards, but they don't just stop there with powerful matching. It would be so easy up there. They don't really. They would be number one there'd be industry leaders if they simply just stopped out there. But they take a next level because with powerful matching technology. Ziprecruiter scans thousands of those resumes. A fund people with the right experience and invite them to apply specifically for your job. How grand is that Dan? It's not as grand as the way, they analyze each one and spotlight the top candidates that you never missed a great match, Dan, the hottest thing you've ever said. Oh, it's all they eighty percent of employers who post on ZipRecruiter get a quality candidate through the site within the first day my within the first day damn day. Mike, you can't do better than that. Dan. That's why I always say ZipRecruiter dot com slash beaches. Where you go to try this for free ZipRecruiter. It's the smartest way to hire. Here's Billy Corgan. And Tony Bosch the biogenesis doctors screwball on demand right now. Let's get to it. Billy Corgan is here with us as well. As Tony Bosch was at the centre. I remember this. It made me sad for journalism. Pedro Gomez chasing. Tony Bosch through a parking lot somewhere in Miami. Montes asking, oh, a Montes parking lot. Nice. That's that's a distinctly Miami parking lot the Montes park. I didn't even realize that that was the Montes parking lot. It was Pedro Gomez chasing you down and your the steroid. Doctor. That's getting everybody hundreds of millions of dollars in contracts. Right. Correct. I prior to that I bet at him. He couldn't catch me in the Montes parking lot. That's what was going on. Okay. So chased you down in the parking lot, and Billy one attracted you to this story because it has to be the Miami elements of insanity here. I'll absolutely it was it was on a radar because in our opposite racking tour, we literally have a Google spreadsheet of Florida story that we just keep track of all of these stories that come up and usually takes awhile sometimes decades for a story to ripen p it's too sensitive. People are in the thick of. Which they were obviously in two thousand thirteen early in the year, the Tim L Frink from the Miami New times broke the story of the biogenesis scandal as it became known. And in November of two thousand thirteen Alex Rodriguez was in the midst of the arbitration, he was the only player involved in the scandal who actually appealed his suspension, and why not I guess he figured I'd nothing to lose. It was the biggest suspension in the history of the sport short of a ban. And so he was a call from a rod publicist, and he said Alex will be in town. He has an office in Coral Gables during a break of the from the arbitration in November of twenty thirteen he'd like to get together with you and Alfred spellman you're producing partner. So I said, yeah, sure that sounds cool. We'll meet with Alex I figure this is going to be like a quiet thing in his office right in Coral Gables. No. They say we wanna meet you at hill stone restaurant on pasta Leon and miracle mile like the power lunch spot in the Gables plate glass windows, open kitchen. Everybody can see everything happening. So we go in. High noon and we get escorted down the center aisle. Alex is holding court centre-back booth literally on an elevated platform, we stood up on a stage to meet Alex in this crowded dining room, where if anybody's going to recognize me, it would be two miles from UM there and. People looking around who the hell's this having lunch with Iran? And I actually I send my icebreaker was. So who's going to call a page six you or us and only the publicist laughed and sure shit two weeks later, it was in page six and and we sat there with Alex. And he lied to us for the better part of an hour, hour and a half. I thought some of the things he had to say we're pretty compelling, but Alfred spellman my producing partner who is a degenerate baseball fan. He said not everything was like everything he just told us was a total lie. He's not gonna like this movie. That part is clear. I don't know who looks worse than than movie. What did Tony what did you think of the movie once you saw everything put in the same place? You're telling the story it's crazy because some people still have questions about whether your legitimate doctor or not whether the believes university is it believes university. Yeah. I I think they referred to as what was it. The money school, the belief school the medical and performing arts performing arts, which was a little musing. You know, I got it. What do I think of the moving my my motivation to even do this movie or do this or collaborate with with billing Alfred in this in this project was was twofold, one this was going to be the first time that the public was actually going to hear from me prior to that? If you if you lay out the whole story, you lay it's the it's the most comprehensive look I've seen it exactly how this all happen, and what spectacular shit show it was because it's breathtaking. It's a breathtaking shit show that you're getting hundreds of millions of dollars in contracts with one of these you know, we've got all over Miami. People who are pharmacists to aren't really pharmacists. I and you're sitting here taking using that money on wild Miami cocaine fueled parties that sounds like a great deal of craziness. And it was it was it was crazy, and I have to be honest with and it was fun. And you know, the results were there, which was was amazing. The results were there. Everybody was happy the players were happy. They were performing. I was getting what what I wanted. I was doing what I love to do passionate had and the players were performing. It was a beautiful thing. And it was all the way around because what you saw at the end of which you experience was the pushback from the fallout. But it was a great deal. Everybody was in on it from team physicians to the team managers traveling secretaries to coach you name it. And then of course, it's almost like I got left without a chair when the music stopped, and you were doing something that was known as wrong, but was quietly accepted throughout the baseball circles, largely your trafficking in these human growth hormone areas that are grey areas, and everyone is wink, wink, right up until you get caught at which point it all falls on your, absolutely. And I get it. I don't I don't blame anybody. But myself, I guess if I was I was on the other side, I'd be doing the same thing. But going back to the question was. The two biggest motivations were were one. There's a first time that I'm able to say, at least my side of the story after you see the film, then you can make your own conclusion, you may like me you may not like me. But at least the truth is out there. And you heard it from me from the horse's mouth. Secondly, hopefully, and in retrospect, maybe we're raising the debate. And we're we're we're pushing this in the forefront about this whole PD use L. You don't get to be a pioneer on this tone cocaine and the club to make some of the money and stuff you don't get to be a pioneer on elevating the steroids discussion. Well, I think I think that be because of my experience and because of my journey. I think I'm part owner of it to be honest with you, let's go anywhere with belly. Because I didn't see him as a pioneer Billy. I saw him as a distinctly Miami universe creature that was able to profit off of something that a lot of people in Miami were doing in the anti aging. Community because he climbed through a wonderful loophole where there were hundreds of millions of dollars. Well, first and foremost as we told stories in the past with the drug industry or the illicit drug trade in Miami. If it hadn't been one guy, it would have been another guy as long as the demand exists the supply will exist, so when when the belco scandal occurred there was obviously a vacuum in the marketplace. You know, there was an opportunity for somebody to come and fill the void. Which was baseball players were looking to cheat were looking to work around the Mitchell report that had come out about steroids in baseball and the new regulations that have been agreed upon by the players union and and major league baseball and so- Joni fill that void in the marketplace, very often Miami is on the cutting edge of all sorts of schemes and scams. And it was only natural that someone that Miami pioneer would have would fill the void in the doping in the doping. Marketplace, obviously, can you explain to us when you're stumbling around through this story on the reporting and you're coming up with again. Detail after detail explained to the audience who hasn't seen this movie. What you think are the details that will be most ridiculous. Well, first and foremost movies called screwball. So it is a bit of a farce. It's a it's a comedy really is what it is one of our first sort of comedy, documentaries that we've ever made. And really, I think the to put it into perspective the fact that the highest paid baseball player of all time his career was ended over a four thousand dollar debt between a cocaine addicted fake, doctor and his fake tan addicted steroid patient, I think gives you some idea about era was just collateral damage in this. This was a beef between Tony Bosch and porter Fisher that that just brought down all of these major duty a baseball players along with him. But it is ultimately this Elmore. Leonard Carl hyacinth Coen brothers esque a botched kind of robbery it's a Carl hiaasen novel. It is something that is. Distinctly miami. It couldn't have happened anywhere else. But my did you see Tony wince when I said fake doctor? Did you see him wince as I said see him? Once you still don't like fake doctor. I mean, you had the lab coat. And it said Dr Tony about who think it's a comedy. Do you sit there because I watched and I'm like, this is a comedy. But did you think it was a comedy watching it? Or was it your way of being able to tell your story? And if you wanna laugh, you can laugh, but at least you're getting the details out there you want. Well, listen, it was a comedy. But the whole story was a comedy. I laughed all the way through over the years. I was I was laughing. So why not why not pick the right way in the movie? But were you laughing you aren't laughing once it was really coming down on you. Where are you? There was a dark period in there. So there was a very very dog period. Very Doug period for me, my family that lasted quite some time closer to years or more than that. And you asked me about the the common of fake doctor. And again, it is what it is. I'm not gonna I don't think my my purpose of being here. Today's really to defend myself, but I do have over twenty eight years of experience. I do have a doctor. Degree in allopathic medicine from the school performing arts like Tim O Frank like likes to say I did research for many years in this field. I worked with endocrinologist for many years in this field. Obviously that wasn't part of the movie, and I understand is a slanted lopsided filmmaker. Only interested in comedy didn't give your resume. Nobody wants to resume. Nobody. I know that I know that nobody wants my resume. It's all for entertainment purposes, to be quite honest. I don't get it. They say com- comedy is tragedy plus time. So I think that over time I think he's Tony's probably come to see the humor in it. And I will say this. He's not defending his resume, nor am I, but I will say that as Tony mentioned earlier the proof is in the pudding. He got results for his clients. This is not a business that Tony was advertising in the traditional sense out. There was no billboards. There were not commercials other no magazine heads it was word of mouth. So there were clients that Tony had that were getting the results they wanted that were coming to him to lose weight. Everybody was Ryan Braun. Manny. Ramirez the stories in the in the movie are hundred hundred cops hundred cop clients late people just in the community, and they were getting results, and they were telling their friends and their friends were coming to to be treated by by Tony Bosch that really happened. And so like, I said, I'm not going to sit here and defend myself, and I had two choices when I left prison when the second coming of Tony Bosch was going to happen. And I had to choice to run away from my password. Embrace my pass. I've never seen anybody grow from running away from their pass. So I made the choice to embrace what I did wrong. The short could site took who I was who I am now and move on and move. Also was there a -peutic for you to do it that way absolutely in this film, when when we were filming this film was very therapeutic because you weren't hiding anymore. You didn't have to be doing in the shadows. You could try and control some portion of your story or tried to or or try to. And a lease say the truth, and it's out there. And like I said after you see you made like me more, you may not like I want to ask Billy. I this is tough for documentarian. But I wanna like in the movie who do you think are the most interesting characters like who do you think are going to create the most polarizing opinions when people watch the movie well this incredible cast of characters right out of a Coen brothers movie. It's like, you know, Miami's America's CASA Blanca, so people flee here from all over the country and all over the world mostly from something illicit in their past, and they come here, and they almost create like the sort of like voltron of Florida career were they like they become like super criminal date like conspire with each other and come up with these cook these cockamamie schemes, which is what happened here when Puerto Fisher stole. Tony Bosch is records a a group of criminals than conspire to steal the stolen records. Not just sell them to the highest bidder. But sell them to every bitter, and any bitter who is willing to pay anything for that included. Major league baseball that include. Alex Rodriguez that included selling it back to Tony of necessary. Anybody willing to pay anything for it were very little moments of morality in screw and then feel like there were many in my opinion. I think who looks the worst in all of it is rob Manfred bud Seelig and major league baseball, in my opinion, the way they came down. Here reminded me a lot of like the NCW investigation involving university of Miami and Nevin Shapiro in high. We say like you come down to the swamp. You're gonna get dirty. You're going to get some mud of these these are enforcement arms that don't have any real power. Right. Like, no accountability. Apparently. And I mean, major league baseball started their own internal investigation division their own sort of FBI that would go out to the cities and investigate the chicanery. And they just they're a lot of them are ex cops from NYPD from Boston. And they just go do whatever they want. They seduced a former nurse of Tony's. They were sending flowers and gifts to Tony his girlfriend at the time. Well, not to me I wish there were to me if they would have. Send me flowers. I would actually public baseball was actually dealing in cash transactions. Something that was sweet. Sweet fund they have a slush fund, and they had they spent one hundred twenty thousand dollars cash in literally like a gym bag to a convicted felon in a diner in Palm Beach county. And are they going to ten ninety nine him? What what exactly is MLB doing running around with that kind of cash and paying for what they knew were stolen medical records from a convicted felon. I mean what what was the plan there? And we interview an investigator from the former investigator from the Florida Department of health who said that the behavior of major league baseball investigators in the state of Florida was illegal. They unquestionably engaged in illegal behavior broke the laws of the state of Florida with absolutely zero consequent nobody was behaving by legal motives like who was who was doing anything yet. We'll listen every time like someone's your these new stories like fake doctor found in Hialeah faked. Doctor found Little Havana, I'm like that's not news news would be real doctor found in Hialeah. He'll doctor. Well, it's like this is part of the culture. Down here, you know, like people injecting fix a flat into women's bottoms to give them Brazilian. You know bootleg Brazilian Butler. You know, and like this is just part of the culture. I think it's I think it's part of the multi-culture I should say down here. Part of the reason is that there are people who are doctors in their home country. And because we have such a diverse community p people do feel comfortable going to doctors who were who may not be licensed physicians in the state of Florida in the United States. But were in fact, doctors, you know, back in the in their home country, then there's also an idea that a lot of Miami exists in what I like to call the gray market economy. We expect that that everybody will have sort of a shady side. Speaking of the shadiness of Tony like once you were getting swallowed by this. No. But when you were getting swallowed by this, and you were suffering. It you were trying to you know, shell game it with dollars. Like, what was the worst of it when you felt oh, this is out of my control? Now, this has gotten away from me. Now, this is going to be a problem for me. I'll tell you what I'll tell you a specific story. That I actually said to myself. Okay. This is this is gotten to ridiculous. It's got an a out of control, and it was one time in and it would happen quite often. But this one time in particular, I remember leaving my house. I was living in the grove at that time. I think it was one of the safe houses that because I was being moved around. Right. So it was one of the safe houses that I use. It was in coconut grove, and I left and it was early morning. Hold on a second. Explain to people why it is that Unisem -tated safe houses. Well, I needed to save houses because I was getting daily threats you're talking about numerous, athletes and these athletes had their own people. And so the text messages in the phone calls were were ridiculous. They would they go twenty four hours. I would I would I would wake up at for him in the morning. I would see five text messages. Hey, you better. Not do this better. Not tell us you testify or not testify who's doing this who's sending you these texts. Well. The the these were all different people. From Alex is Cam there was there was numerous numerous people and other athletes, also, so I don't know, they're they're they're they're entourage. If you will. Okay. So I'm sorry. I interrupted you're coming out of your home and go. Yeah. Some coming at coconut grove, but but I'm coming out of my house in the grove. And I think I told Billy the story ones. I don't know why didn't make the film. But but anyway, interesting story some coming out, right? And it's early in the morning and get in my car. And of course, as I'm walking towards my car. I'm suit MC. I know the neighborhood. So I know what cars belong there. What cars don't belong there to probably a little paranoid at this? And I'm very paranoid at this point cocaine doesn't help that by the way. No, it doesn't it doesn't it doesn't. And and and by I was I was using at this point in time. Although that say, yes, yeah. Well, I would like to state I've been five years clean, so actually. Okay. Thanks. And so going back to story. So. Some sitting Mike I'm getting my car. I'm looking around. And there's all these cars in thinking myself. Oh my God. There's like five cars there with people inside cameras inside the the car. So I had the DA in one. I had a good fellas. All of a sudden, it was crazy shitty. Good foul. Shitty. Could develop in a way. Why should a good because this happened to me? So anyway, wondering rather helicopter I go right around. I was looking I was leaving with Alec out. There was you know, so anyway, another coat with a rubs people official people. Okay. 'cause then you got you got the wannabes that that when you want to get in good grace with a rod. You know what I mean? So they could collect on the on the reward their your air. Reward. Right. But there's a lot of money. There was a lot of money. Okay. But this is before I even said anything that's crazy part about it. Nobody knew I was going to testify new. Nobody knew I was planning on festival. I was planning to, you know, make a left Mika arrived. Make all the threats made you want to testify all to get out of the whole well that and now you got undercover DA you got undercover cops freaking out that I'd testify against him. You got Aras official people a unofficial people all the and so I got five six every time. I leave. I would have numerous cars follow me wherever I went. And this one time I said, listen this is enough. You know, I think I had like five or six cars following me. And I said I'm done I you know in order to fight this fight. 'cause I was ready in it wasn't like if I could just take off, you know. And I imagine you considered it. I imagine you consider trying to get away from your entire. Life. Absolutely, absolutely. Like hiding is a fugitive because that can't be fun all of that that you're experiencing. It was terrible. And to be fair though. There was somewhat of a financial incentive in that this this lifestyle that Tony was leading as you just described was very expensive one that in. You're not make generating any revenue at the time. But yet had to move from house to house had to take care of his on occasion child support payments in Alamo knee, and what have you and then rent and vehicles and security and to be realize you said seriously monied interests, you had a multimillionaire in Alex Rodriguez a multibillion dollar monopoly in major league baseball who not only had their official investigation. But what they called a shadow investigation. They hired PI's locally. This was a whole cottage industry in Miami. And in a town that subsists hustle on. Yeah. It was an economy in a town that, you know, subsists from hustle to hustle and everybody side-hustle has got side hustles. You look for these types of opportunity. So everybody was bathing in this or feeding in this trough of MLB and Alex. And be old Tony I mean, MLB covered your expenses when when when you decided to cooperate they covered you had legal expenses, you had security expenses, you had personal money to party in New York with some of that money. No. They covered that too. Craft services. Service actually invoicing major league baseball expense reports. Well, my security invoice, my lawyer invoiced and all the other individuals that to pardon this whole thing. I think we did the math at total just over four close to five million close to five million now, wait a minute. What we actually added up in the documentary beat we do the math right on camera. Right. And so your dealing with how many people who are doubling in criminal behavior here as or all of them, really. I mean every single one of them arguably, including the whistle blower, including major league baseball, including a rod who actually it was. It was reported only in passing that Arafat had a Queen for a day meeting with the feds with the DA Aucoin for a day meeting is is when you basically get to come in tell the feds everything, you know, and they agree not to prosecute you for everything but lying to them. That's not covered. In fact, George popadopoulos. One of the president's men famously got prosecuted for lying in his Queen for a day meeting. The whole point is not to live the whole point is we're not going to prosecute you for anything. You say we will not use anything you say against you, and Alex famously lied in that Queen for a day meeting and was not prosecuted so everybody in some to some extent was engaged in criminal behavior. Here it was pretty sensational in that way. I wanna get to how you go through five million dollars in expenses here in a second. I want to get to that with Tony. But when you talk about a Iran and the original meeting with him and him lying to you the entire time. You felt like are you didn't feel like you. It was your film partner told you. He was lying. Yeah. What is it that was happening in that meeting that you were believing before he told you that it wasn't true because I'm not a baseball fan? And in fact, don't give a shit about steroids in baseball. Literally don't care. I mean, the baseball hall of fame is filled with racists and drug addicts and cheaters and alcoholics indigestion. Madison. Hateful horrible people so players whose bodies are their fortune whose livelihood or contingent upon healing faster. I mean, Tommy John surgery, isn't that a performance enhancing procedure. Like, I don't really understand it you give your kids Admiral. Throughput morality stupid sports, morality integrity ethics all of that. I think it's hip ankle. And all of us would choose a fountain of youth later in life. If we could course, and these guys are I mean, they're relying upon that, you know, their bodies and their physical health. So I don't really give it give a crap about about really any of that. I was interested in in this insane sort of true crime story that this was and that's what I really was interested in. So Alfred who is much more interested in the purity in the sanctity of the game. In fact, it was a pitcher in high school at north Miami Beach, senior high go chargers. And in fact, interestingly I don't know if he wants me to tell the story, but I'll do it. Anyway, Alfred pitched against a rod probably about his senior year in high school. Everybody already knew that Alex was going to be was Alex. You know, he was going to be drafted and make some big money really soon. And it was some sort of summer. I think it was on Frazier's camp, actually, and they had some sort of summer league game or whatever and Alford pitched against him and Alfred's claim to fame. There was that he held Alex to a triple. And I thought what a cute story to tell at this lunch remaining Alex Rodriguez when when you get this chance, I thought it would just be a fun way to create some common ground. We're all Miami boys right now Alfred actually pitched against you yet. So I told Alex the story. Alfred looked embarrassed, you know, and I told him the story like any held you to a triple like, here's the highest paid baseball player when most famous guys one of the greatest in the history of the game he wins. He looked like he grimaced when I said that Alfred held onto a triple like like like there was a a sensitivity. There was he was so fragile about that. And like this was twenty years ago, whatever it was acute funny. Little story here about these two guys you've met before you know, that kind of thing and he looked sensitive to that. And and I was that told me a lot about. But that's what made me think he was an interesting character. Like a compelling character. He was making points about like, I never met. Tony bosch. Of course. This is he was telling everybody at that time to fear. He was in a battle of the legacies. He was trying to preserve his career. And is integral he was riding the lie right till the end three hat tricks through Commissioner's meetings, all of that stuff. Oh, he was going to go down fighting, or at least lying that was fat. And he didn't fact, but like he I he made the point like you notice that my game stats didn't improve after the time that this Bosch character claims that he was treating yada yada. So I like he was making these points at I couldn't verify contemporaneous. Look in the moment. I'd actually have to leave and confirmed, but he was making a very good case for himself. And I thought a compelling case for himself. I thought he was sympathetic. I thought he was an interesting I thought it was a complicated guy didn't have much of a sense of humor at at the time for perhaps obvious reasons. But I just thought I thought this is an interesting guy. I'm like, I thought he made some good points offer. It's like no way. He's like don't. He's totally full of it. He's lying about everything, of course, in January of two thousand fourteen they settled the arbitration of the I think he wound up with one hundred sixty four game suspension. It was quote unquote reduced, but I. It remains the highest suspension the history biggest suspension history of the game. And then I kept emailing the publicist and emailing. You guys want to do this interview you want to do this? And for like, seven months, I interview I emailed them in the and Alex wasn't wasn't interested in doing this story. But in October of two thousand fourteen we heard from Tony Tony was interested. And once you meet Tony and then the following year. I met Puerto Fisher who reached out through Email via Tim L Frank which was kind of wild. When the three main figures in this extraordinary scandal, reach out, independent of each other to you you kind of feel like the universe is trying to tell you something. So we decided to do it. And when you meet, Tony, and you meet Puerto you realize, oh, this is the story. These guys are the story. Alex, Alex, isn't the story. He's a supporting character in this story. And and these guys actually were we met them, and they told us the truth. You know, they give us verifiable facts. Whereas, Alex, of course, everything he said, you know, daleks tells you the sky's blue you gotta look. Outside and talk to six scientists for before you publish that information. You know? So these guys told us the truth dirty guys told you the truth the guys who were a little orange the guys who were doing the unscrupulous things. It's not unlike Consejo coming through. He's the one who had all the information. He told the truth about every game. But he also had a credibility problem because he was doing things like you end up in jail over this you end up in jail in bef- racing. Yeah. Prison excuse me. And you can you explain to us how you get to the point of something that felt like relief where on on what side of this. Did you get where you were? Finally, like, okay, I'm past the darkness. Wow. The there was so many 'em phases throughout this whole thing. But where I felt the most relief was as crazy as it sounds. It was when I was sentenced to forty eight months. It was okay. It's over. That's it. This is my punishment. Did you think it was going to be worse than that? Or did you fear? It would be worse than that. After going through all the shit. And all the publicity that I'm going to be honest with. I'm very optimistic. I thought I was going to get a slap on the wrist oldest. Yeah. I thought I was going to. But you know, what in retrospect, and and it's funny. You know, we plan in and the man upstairs laps, and it it almost saved my life. I believe it really saved my life. Because my my diction was out of control. My lifestyle was out of control, and my moral compass was way off and so I needed this time out if you will. And so in in retrospect, I I have to in a weird way. Thank the prosecutor thing the jar. You cold Turkey in prison is that how that happened or Turkey. But that that is how you were able to get off of. Well, I did I did go to rehab before. I I did a detox program, and then I went on and did a behavior modification program for addicts. And so on and so forth, but the monkey was stolen my back. You know, I had all all that pressure. I know I d- if I was going to go to prison or not, and you know, while I was in rehab. They told me we'll do this this way. We, you know, we'll get we're going to help you not not not go to prison, and you adopt point in time. My biggest fear was was going to prison. I've never been to prison before never even got an a DUI in my life. So it was this weighed on me, and and waited on on on my family, and I was hoping for for the best. But, you know, sometimes we don't we don't know what's best for us. And so I I truly believe that when I got those forty eight months, it's when I was able to breathe that Sira leaf. It was like, well, I'm gonna prison. I'm going as crazy. That's how crazy and out of control my life was where hey you going to prison. It was like, wow. Okay. Thank god. No cars waiting outside my house. No paranoia will not that kind of paranoia. I mean, there are all sorts of different. Now paranoia is that would arrive in prison. It doesn't feel like it would be very safe now twenty up in a camp in Alabama federal prison and was like low security. It was Campos. Minimum right. Minimum. Minimum. Yeah. So Tony is they're teaching. I believe in nutrition course, Thira I was well it was a working camp. You know, you had to work. I started out teaching the. GD courses like math science reading for those that were there that needed to passer g the and we've it within that time. I did teach a little nutrition here and there, and then he was also in prison with Jeff skilling from the Enron scandal. Who is teaching business, correct? At the prison end. Jesse Jackson junior who is teaching policy in prison for political. This wasn't as dangerous as I imagined in my head. This was a little it was an educational it was educational, but that. Listen, the whole experience was terrible. When I was sentenced I didn't surrender to the camp. They didn't let me just go to camp I was held immediately. And so I went through the whole process where I was you know, incarcerated immediately, and then really have time and say vita my family, although I I was already prepared for something like this. And it was a little surprising that you know, I was held immediately. And then I had to go through the whole transfer system. So it was about three or four months later that actually got to my camp once there, I you know, I settled in and accept my fate tone. You said something earlier about like, you would aknowledge that you you did something wrong or took shortcuts. What is it that you think you did wrong? Why do you think you went to prison, or why did you think you deserved or needed to go? I mean other than of course to detox, but like an kind of reboot your life. Why do you think you went to prison? Well, the obvious reasons call what it is when I was doing was completely legal whose criminal in many aspects just the way that that it was done the whole method. What about the kids your high? School clients and the children and the kids and the parents, well, that's what got you in the real trouble. If you would have gotten a slap on the wrist of it had only been athletes, but once you do it with kids. That's what I thought. That's what got you into the real trouble. I agree with you. I agree with you. And I you might have gotten a slap on the wrist. If it had just been Manny, and Alex and not I don't think it would have ended up forty eight months, even though there were questions about whether or not you were a doctor. I'm I'm going to agree with you. I'm going to agree. I think that the my moral compass should've said, listen, I don't care if you're the parent, I'm not gonna treat your seventeen year old. Oh, but the doctor was making everybody great you're making everyone feel good. You're the guy who's getting everybody a little bit healthier a little more money, and the parents want it to it's funny. Most of these guests in the parents wanted it is crazy most these parents that brought me their kids wasn't so much to put him on a protocol to put him on a program. Ram? No there really had been drafted. But they had been using some type of performance enhancing substance from before and say, hey, can you clean up my kid 'cause you know, he's getting ready for the June draft, you know, help him mass. And I'm helping mask the situation, and I would say about sixty sixty five percent of the of of those underage kids. It was like that that that that was the cause. And then you had the other ones that. Yeah. Listen, I want to grow. I wa I wanna into the June draft. But nobody's going drive to five five five six scrawny. Little kid. No matter how good you are in baseball. And that's the truth of the matter. It's all eighty percent of visual. But nonetheless, that's where I should've said, listen, this is where I draw the line. No kids. All you had no line though. Right. There wasn't because they all went up his nose. Yeah. Tell me about how the five million dollars get spent explained to me how it is that major league baseball ends up with a five million dollar twenty bucks or something like four point two four point three somewhere in between four and five billion dollars. There was multiple attorneys that that you had Tony right? There was multiple Tournus the majority the majority of that money went to attorneys, and the story security, well second would be security and then with insecurity. There was also a lot of the other angst Larry bills or invoices, which is basically the hotel travel rental travel, the big lion's you're living a pretty big life yet. Yeah. But I I was living a much bigger life prior to that, you know, this life. I was this. Was you slowing down? I'm slowing down. All right. I'm slowing down. Why do you need security though? Like how much security do you need at this point is this because baseball's fearing that they can't have their chief proof being harmed by somebody like. Why not so much security? I think that well I didn't ask for so much security, but they gave me security. I think part of it was let's keep the sky safe. And I think the other part was, hey, this guy's a little crazy. Let's babysit this guy everywhere he goes. And that's the honest truth. You were a problem for everybody. You everybody was a little afraid of what you're going to reveal. Everybody was waiting outside of the house is a little bit afraid of who you're going to take down with you disguise a loose cannon. I don't know what what this guy's going to do tomorrow. You know, what he's going to say tomorrow? And so so I think that it was partly because of my safety and the safety of my my immediate family. But I think a lot of it also had to do with babysitting. I remember that one story in particular that, you know, we just exited A M O B offices, and my head of security says okay, now, we're going to go to this bar go. Why do I wanna go to a bar actually want to go to another Boris like a sink Carioca love singing karaoke? Okay. So anyway. Which is song. Are you going to if you're if you've got one song that using karaoke d- what you choose this living, and I got I got sweet home Alabama. I think is what I'm going. What is your what are you using Quintana Merrill? What he's saying? What's go wrong? But using London. True. I'm good when I'm good and drunk. I certainly do. Sweet caroline. There you go. There you go. You know, why it's easy? I can pull it all. That's that's my first one everybody sings along. Right. I actually sound good in it. So anything else after that? It's okay. But I remember this one time. It's like, okay. I wanna go this way is a no, no, no. They told us to go. The other way, I said who's us says, well, I'm OB says we have this tequila bar for you. And these are the two kilos we're gonna change. And so do and it was great. It was awesome. And I thank him today because there was this underground tequila bar, and and they took me there. It was crazy thinking about it. Now, it's almost like disguise crazy enough to go on its own. Let's manipulate the situation. Let's try to control him and the protesters and a redhead paid protesters to demonstrate outside of that one of 'em Melby headquarters in New York. It was quite energy. Hold on a second. Hold on. I want it before I get you guys outta here. I want to get Billy just to tease the people because again screwball. I'm telling you here. I haven't seen anything quite like this because it's truth. But it feels like fiction it feels a bit. Like a cartoon the when you say a rod paid some protesters. What are your three favorite goofy details from the movie, if I make you just wet the appetite because there are a million of them, but there's three goofy details where you're like. For example, when I think to myself baseball paying Tony Bosch five million dollars to just take care of him is crazy to me. It's not and there's like a million of those morsels spread all paying cash out of a paper bag for the amateur -ness of the investigation was stupefying to me. So some of my favorite things. Manny Ramirez is what a fascinating character. In fact, Tony refers to him as a cartoon character at times in the documentary. Manny didn't like to sleep alone. Tony is that right? Yeah. He didn't like to sleep alone. He was he was scared to sleep with the lights off and by himself. Yeah. So you'd have like a twin beds. He'd have twin bed in a hotel, and you would sleep on the neighboring bed and tell him a bedtime story. Right. And he wanted a bedtime story. It's like many why can't we just go to sleep. And so no. But you have to tell me a story. I okay. So what kind of story do you want? It says, well, do, you know, just an entertaining story, and I wouldn't mind if there's a couple of girls in the story, you know, and interesting, so so yeah, Krystof obey crazy only in Miami story. Tony actually has his last name. Bosch is a very famous and prominent name in the Cuban exile community going back. Very many decades. Your father is related to Orlando Bosch cousin or there's a first cousins of Madonna. So Orlando Bosch was a famous call it Cuban exile freedom fighter slash terrorist who famously stood in the late seventies. Stood on the MacArthur causeway with a bazooka on his shoulder and fired a missile at the side of polish freighter. Fortunately, the missile did not arm. It struck the side of the boat and rolled into government cut. But he was very eccentric. Only in Miami kind of kind of figure that's in the documentary, which is just bizarre the whole tanning subculture in a sunshine state. The fact that we get more sunshine probably a year than any other state in the union yet, we had this huge. I think more tanning salons per capita than any state in the union, and this sort of subculture of people who hang out in and around the fake tanning world. Of course, the fact that the reason why the state of Florida never really the department of health crackdown on these gray market anti-aging clinics is because not only are we hustle economy who needs businesses like this just keep the money going around in this economy. But of course, the governor of the state of floor. Twice elected governor now Senator from the great state of Florida is the largest Medicare fraudster in the history of America. So there wasn't exactly a priority. Put let's say on cracking down in the medical field on this community when you're executive of the most powerful government official in the state is in fact, the largest Medicare fraudster in the country. The fact that rob Manfred was the head of the biogenesis investigation as the second in command under bud. So I'm gonna cut you off because it's more than three things that you've given us there. If people want one hundred things they're all in the movie, they're all interesting. Go ahead. Keep going do wanna tell one one last thing. I do in say though, is and this really bothered me not as much as the high school patients that are clients that Tony had that really bothered me. But what bothered me almost as much what? And we address this in a single shot in the movie and this to me when I talk about I don't care about steroids in baseball. It's what's the saying? It's not something worth making a federal case of and they made a lot. A federal cases out of steroids in baseball including dragging players to testify before congress prosecuting them for perjury in front of congress. Now, I get the MLB is a monopoly, and that congress dozen joy a certain level of oversight over them as a result. But let's be real here. Tony had nearly one hundred cop clients from departments all over. I would assume at least two counties, certainly Miami. If not Broward if not Monroe of not Palm Beach and talk about a public health and safety crisis that congress should be holding hearings about that local prosecutors police departments commissioners mayors should be interested in I'm curious to know. Did anyone get in touch with you the feds the local authorities the state authorities mayors police chiefs, anybody say, hey, I want to hear about some of these police officers who are coming in doing steroids, and then going out and protecting and serving our communities than anybody. Come to you to talk about that. No never never have. That's a little frustrating. I would think okay. Well, we'll see what the movie reveals to people because I'm telling you was really good, and you should watch it. It's screw all the new documentary. The directors Billy Corbin the star. I think is Tony Bosch, although many people are trying to come after your place in that movie in terms of stardom as a rod and Manny some of the details. They're pretty strong. And I look forward to Dave Samson's review. I'm sorry. David samson. I like how you just tackled a lot of different layers because it's not beyond Miami. All that stuff. That's just the federal regulations all of it. The the idea that we're a Medicare that Miami is great at this kind of fraud. Tony, I appreciate you coming through here, Billy. I appreciate you coming through here spending the time with thank you. Because we gave you a bonus episode this week, no south beach session next week, which means it's not really a bonus episode. It's just us changing of the schedule in a way that disoriented you regardless it was all brought to you by T. So the official watch of the NBA Mike Ryan tell the people what they need. To know about T. So I love t so the official watch of the NBA. It's graduation season. You want to get that special graduated in your life the perfect gift? Well, I have a recommendation for you is that really recommendation so much as I order you to go to US Dottino shop dot com and check out the tea, so krono XL. It's the best whisk time piece. There is I know that's my personal preference. But you'd agree with me that's objective. But it also feels like a fact it feels like a fact because one I put one of these t- so watches on even though they haven't given me one yet. They've given you Greg Cote. Instagram's I'm a little jealous, especially since I'm carrying the nice Rogers, their incredible incredible watches, you can't beat the tea. So especially you can't be the tea so krono excelled in. This is the part where I'm supposed to tell people what's coming up next week, but we're off next week on south beach sessions, and I don't know what's the week after that isn't Mike sure from the office, and it could be Mike. Sure could be Ariel Hawan could be any of the great people that we have lined up to talk to. It's a lot of work. And we wanted to get you this bonus episode not onto. Because hey, screw balls out on demand this week right now. So this is supplemental listening for your screw ball needs. But it's not really a bonus episode if we're not doing one next week. It's just the same amount of south beat sessions with a change in schedule. It sure is how wasn't the same amount of work.

Tony Tony baseball Alex Rodriguez Miami Tony Bosch Billy Florida Manny Ramirez cocaine MLB official United States Mike Ryan Alfred spellman Billy Corgan NBA Pedro Gomez Billy Corbin Dan
REShow: Billy Corben. Hour 3 (03-27-19)

The Rich Eisen Show

00:00 sec | 2 years ago

REShow: Billy Corben. Hour 3 (03-27-19)

"Orig- is on demand. Your show your schedule. Fifteen minutes after ball dot com. Check out the casts at richeisenshow dot com. Lows knows you do it right to take advantage of a good deal. Now, the dig into spring projects the first chance you can we do it right to with savings every day. Like twenty percent off. Select Scott's fertilizers one helps prevent weeds now and the other feature long later step of your backyard by adding a new patio and get Holland pavers three for one dollar whatever's on your spring to list, do it right for less. Start with Lowe's. Offers valid through three twenty-seven pavers offer valid in Hawaii letting varies by location. See store for details. US only. Hour number three of the rich Eisen show. We are on the air. Dave Roberts of the Los Angeles. Dodgers Cody joints manager dodgers opening day right here. Shabas ravine road across town and lovely Los Angeles, California tomorrow against the Arizona Diamondbacks. Boston Red Sox open tomorrow in Seattle. Great. Hey, man. Congratulations. Raise that banner. Now, I'm just excited home opener Fenway. They always have the patriots come out when they win the Super Bowl. So I'm guessing that's going to happen. Gronk will come out there with all the trophy the trophy six. Dean blandino the head of NFL refs before our river on the current NFL refs. Now Dini Fox News analyst came on our number two and said that he he's Jimmy's concern about last two minutes of football game. Doesn't know how it's gonna work what he called it. The most significant replay changed since they brought replay back in nineteen ninety nine and that in terms of unintended consequences in the same way that you could right now before the rule that was passed yesterday challenge. Whether a ball was tipped or not thus negating pass interference call 'cause you can hit anybody down the field. You want with the ball in the air. If it's been tipped already so ball's tipped defensive back in just do what he wants to. We can push receive a right over ball in the air. And if it's called pass interference. You could throw a challenge. Vikes ahead of ball was tipped you need to pick up that flag. And now what you can see is. Let's say it was ruled that the ball was tipped. And there was no pass interference on the play. Ruled you can go and replay and say the ball was in fact, not tip at all. And that should be. Pass interference. That's one way that you might see this rule rear its head. If you don't like it another way is somebody says, hey, you called defensive holding not wasn't. We're going to go underneath the hood and say ball's actually in the air. So it wasn't a defensive hold. It was pass into Fearance. So you need to give us yardage all the way down field or you could basically say it was pass interference. You call the pass interference against me. But it really was defensive holding because the ball wasn't in the area. Let's review that. And now you're team had had passed interference call against you. Can't have defensive holding called against because that's not reviewable. But it is reviewable that the ball was in the air. And thus. Mostly just wondering so much stuff. During games the defensive back is going to go over it as head coach. And be like I was interfered throw the the challenge five it was offense of interference on this. We will see it. But it still is something that coach will have to be judicious about because it has not brought the number of challenges has not been broadened. It's still to get a third for. And if you've already missed your first, you might wanna make sure that the second your damn sure about because you don't wanna be without challenge of the rest of the game. That's for sure. And I'm glad they added the two minute part. Because can't you see someone challenging hail Mary because everyone gets interfered with a hammer. I know so you'd better be careful too. Right. Then as offensive pass interference. All that said if it gets rid of what happened in the NFC champ game right now all four. We'll see how it works. I also just think the chances of that happening. What we saw in the championship game happening again are zero because we all saw what happened, and we also the consequences because of it that then again, I'm not willing to take that chance anymore. It was so bad. I mean, how the hell does that? How the hell did that happen? Right. Just to spend another twenty seconds on how they held that happen. How did nobody see that come on? So there has to be something in place to make sure that that doesn't happen. Again. I see I think the embarrassment of what happened is enough. I don't think they needed to make a rule change eight four four zero four rich number to dial our poll question is what's the best basketball move all time and honor of he got being today anniversary today who's running away with the correct forty six percent hoosiers. And I say it's the best sports movie of all time now. The American Film Institute. The venerable af in two thousand thirteen listed the best sports movies of all time. Right. Correct. And who's is fourth on the list for the Hine raging bull. Rocky and the pride of the Yankees. Now, you could say proud of the Anki better than hoosiers. I have not seen it in forever and a day may okay? Maybe I should look at it again. But you know, my stance on Rockies, not a sports movie. It is a love story and raging bull is not a sports movie come on. It's about Jake lamotta who happens to be a boxer and some of the boxing scenes are incredible. But that's not like, hey, you wanna see a sports movie tonight? Sure put on raging bull. Shack. Raging bull reading tough rewatch raging bull is somebody tweeted out while I was whilst I was out of office. Okay, about if you're on an island like what's your five movies at you, you you'd have your three of them three of my father, deniro movies, goodfellas, goodfellas and midnight run. Okay. So that's the way feel about deniro. Even I'm saying hoosiers, the best sports movie ever. Was Rudy on that list? No Rudy nominally. All right. Billy Corbin is joining us sports documentarian of note to say, the least he is here to talk about his new documentary on the biogenesis steroid scandal that cost a rod two hundred eleven games. Eventually just the two thousand fourteen season four hundred twenty two million dollars. And and also his reputation that he has remarkably restored and rebuilt. Crazy. All right. Billy corbin's joining us here in in in short order. Let's let's get in a news update. Brought to you by our friends at Hauge. Brockman with a live report. Rock men with the new brought to you by the hundred dream garage spring about where you can get a great deal on the Honda of your dreams. Available Honda sensing loads of hi tech features. You don't wanna miss out on these deals headed your local Honda dealer today. What do you have over there? Christopher. So we heard some hilarious quotes yesterday from the coaches brunch from Bill Belichick and Jon Gruden. Well, this one really made me laugh. Freddie kitchens. New browns. Coach was asked about what he's going to say to Odal Beckham when they finally meet. What would be the first thing you say win. I love you. Like show me how to catch the ball. I don't know. I mean, just I mean introduce myself and get rolling on getting know him as a person he is the anti Hugh Jackson. The anti Hugh. He it really is. I know it's great. So del responded. So del responded the Browns posted out that exchange that we just saw del couple of crying faces Dun, Dun, Dun, Dun. He's again if he handles the in game. Coaching decisions. Well, the Wenda challenge not to challenge Wendy us timeouts clock management if he handles that with a Plum. The the Browns are I mean, they're they're they're set because the way I it's it's he's the as I said the anti Hugh Jackson does not appear to be a political power crazed bone in his body. He's a member of the dog. He does not appear to be that at all. He's just a guy that's gonna grind tape. Make sure the Baker Mayfield gets what he needs make sure that these guys are fed and happy and go to work. Can't wait to see it. Can't wait to see a play off two one win the Super Bowl. That's nuts. That's positively insane. That's craz-. All right. Speaking of insane. Dave Gettleman continues to defend E Y manning. Good morning football today said quote, I really believe there's been a false narrative out there that E Y is finished. He's done. He had a heck of a year talking about twenty eighteen he lies still quality NFL quarterback. It wears me out of really does. Here's the deal. This is the guy said that to keep defending Eli manning. Maybe there's something to know what the context of the question was could have been brought up. We have no idea if he was the one that starts having this on his lips. But he's the guy who said we did not resign Odell to trade him. And then they traded him. So he's a guy that could be literally within twenty eight days of acquiring Josh Rosen on a draft night. Maybe. Okay. He's also really on the hot seat this year who get on. I think so I mean, he's the guy that that. If if the the Washington Redskin secondary balls out this year and picks off ally. Manning. There's Gilman's fingerprints all over there by recinding. Josh norman's. Franchise tag and not giving when Alantic college is letting him walk. But else you have over there. Saw this rumor yesterday dolphins tried to make a blockbuster trade before last year for Matthew Stafford I heard that too brother who reported that finally went out and said something like that thought in the Miami Herald the Detroit Free Press. Okay. The line said, no how about cliff Kingsbury. How? Yes. So we got this story so quit Kingsbury thirty nine year old new head coach there Zona cardinals. He says he's going to implement cellphone breaks during meetings this year. He says I think coming from the college ranks these young men that got to be quick hitters twenty minutes at a time. Give them a break and get them back in. We wanna make sure we have them they're focused their walked in. And we're maximizing that time, and if we've got us put it up for shorter meetings. That's what we do. Okay. So how long will the cell phone breaks? The meeting time is going to be twenty to thirty minutes. And then they're going to take a little break if he can tell that attentions are awaiting because they. Can't figure out how to last longer than a half an hour show Twitter phone checking Twitter, go without checking your phone. Not that often. I mean, not that long. It's pretty attached. The you know that apple the new update has that screen time thing, I know checking your stash, I get it. I get it. I get it. I always feel good. When I when the new week comes out and it says down before good. Oh, I'll I'm I'm more than happy to share with my screen. Do right now. I think it something like eight hours, eight hours something like that. But I, you know, I need to keep up on things and you keep abreast of percents. It's part of the job. Our how how accurate? Oh, what what is your time yours double digits? Could you imagine imagine del tufo a screen time break on the rich Eisen show? Mic. Check it right now need one if jacket right now, if we told you that you can't look at your Twitter feed during the show while you're on the air as I'm judging be able to handle it might what's your screen time for today, if I lost interconnectivity with social media like during the screen during the show, I actually panicked when Facebook and Instagram went a couple of weeks ago. I know it happened. I know I was like oh my God happened on that happened on on the day of the new league year. I was always on the NFL network, set and Instagram was down. And I said on the air. I'm like if Instagram was down. Two weeks ago? Would it be possible that Antonio Brown is still the Pittsburgh Steelers? The Steelers are like now Instagram goes down couldn't happen while he was on the elliptical with his big chest. How would we have known where you went on vacation? Good. Reggie that and your nobody baby nobody baby couple of things a lot of people wanting the raiders on hard knocks. I know we're all one of them and our Davis still the SPN yesterday. It would be disruptive. Boy, we've got a lot of business to take care of getting ready for the season. I appreciate that. They might think we'd make great TV. But we got something to accomplish. Okay. The other eligible teams for hard knocks. The raiders are one of them lying forty Niners. Giants redskins. What guess what raiders hard knocks happening? And I'll tell you what Mark Davis. You don't like it. Here's part hard knocks. I want cameras NFL filled cameras going to the barber shop with you. I want to see how that thing. I wanna see what happens. It was. Then that the ball. It was right then that the mob took out a bowl place to the top of the head of our Davis's son and began cutting around the conference onto we got one of the EPA cast aisles of all time. All right. You gotta take a break early. Corbin's waiting. He knows about he knows how to make a documentary. Billy Corgan is on the rich Eisen show green room couch. Getting ready to join us there. He is. He is the director of the new documentary on biogenesis, and it's scandal. What an incredible story. This is in the way, he tells it is even better screwball and theories near you coming up shortly. That's next on the rich Eisen show. Every car comes with its share of stories that dang in your bumper. When you nervously picked up your first date the luxury package, you got after a big promotion or the mild you say by riding your bike all summer while you can't put a price tag on your stories now with truecar you can at least find out what your car's worth when it's time to sell or trade it in just go to truecar simply enter your license plate number and watch. How your car's details up then answer a few questions navigation and moon roof watches, they bump up your value. High mileage you already knew it was gonna cost you. But now, you know how much danger while it's you can plan ahead. 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No. I can't believe how easy it was to save hundreds of dollars on car insurance with guy. Go. Projected increase in organic three revenue. Believe it. Geico could save you fifteen percent or more on car insurance. I welcome back to the rich Eisen show. Not just to our listeners viewers on our radio stations and audience and be our live dot com for those just to our show on live dot com. I guess has been on the show before when he was promoting the documentary cocaine Cowboys a few years ago, his thirty for thirty on the u is some mossy stuff so is screwball. The documentary film about the biogenesis scandal from his native, Miami, Florida. Good to see a Billy Corgan. How are you brother? Great. Thanks. So let's get into this thing right here this documentary about the Tony Bosch scandal that got a rod year's suspension. Manny Ramirez got popped and milky Cabrera GOP popped. Why did you make this documentary? Billy actually in November of twenty thirteen. We were pitched by Alex Rodriguez. The oh, okay. So. This. You're laughing ready at that was okay. Because they can this documentary is not very what's the word for. It's not very complimentary to Alec getting an invitation to the wedding. If that's what you mean. Right. Yeah. So, but it's also extremely accurate. It's all very true. It's all exactly how it happened. Well, I mean the stories are being told by Tony Bosch or Dr Tony Bosch. Doctors quotes in quotes. Who was the one who is at the center of all of this. And his dad was the one was writing the prescriptions for these drugs and an also the fellow porter Fisher who was the one who leaked the documents so blower, the whistle blower, and these guys are telling the story from their own first person and your unique way in which you have them tell their stories we'll get to in a second. But this is absolutely straight from the horse's mouth that we're seeing right here. Yeah. Person. Why did Alex Rodriguez pitch? You this November of twenty thirteen. He was in the midst of the arbitration with an be he was the only one. Of the players involved in the biogenesis scandal that appealed his ascension. I guess why not what do you have to lose? It was the longest suspension in the history of the game. So when an eleven games you went for it. And so each took a break from that arbitrator and came down to his office in Coral Gables in the suburb, very affluent suburb of Miami, where the university of Miami's actually located Alex Rodriguez field is located and his publicity up and said, Alex would like to meet with you to discuss the possibility of doing tell all documentary, and I was like hell, yeah. I'll take that meeting. I thought we were going to do it real hush. Hush quiet at his office. And it turns out they wanted to meet us on a weekday at high noon at the most popular restaurant in town like the power lunch. Spot of Coral Gables, which is like two miles from UM, which if any anywhere, I'm gonna get recognized because of the documentaries. It's going to be a place that proximity UM. And so it was very clear that my producing partner. Alfred spellman I attended that event as like. Pawns in Alex's kind of PR offensive against MLB at the time. You remember it was like they were in a battle of the legacies C-league and Alex. Yeah. There is a whole story about how the protesters outside were actually paid for by Rodriguez on earth that was ever absolutely ultra mentored. Okay. So guy, and it was it was ugly. There was no other way to describe it. I think major league baseball has become like, I think everything else in American life, including politics. It's the WWE and back when C-league the steroid Commissioner was on his way out the door on the eve of his retirement was kinda like, well, maybe I should do something about this. Now that the scandal has erupted in two thousand thirteen talks to a second command. Rob Manfred says let's look like we're doing something about this. So they come down to Miami had this farcical investigation that involves the MLB investigators. They have like this internal FBI of like former cops they go. They sleep with a former nurse of Tony Bosch. One of his clinics. They're paying people off. They've got a slush fund of a hundred and twenty five thousand grand that they're buying stolen medical records in diner. From a convicted felon, the whole thing is just utterly absurd. And then they nail Alex is what bigger scalp can you get out Rodriguez, and then bud retires Rodman for takes over. And he goes, well, what's the story line? Now, what better than to make a he'll a hero and bring back not only a-rod, but Charlie hustle to to the game to become commentators and Pete Rose and who's out there anymore, of course. But like I worked I mean, it's a bottom line company. And it's a brilliant storyline. Are you saying major league baseball was orchestra has orchestrated to to? Well, what used to be two fifths of the people on the set of FOX baseball. What you're saying? I'm saying that it's awfully convenient. And it's awfully brilliant. I think Alex is spectacularly good at that job, his hustle at all. And so he's he's earned that position. Certainly lightened up. He's a lot funnier. Lot more self effacing, certainly more. So than the guy net for lunch in November of two thousand thirteen who was in a battle for his life. His legacy his career his livelihood, and who spent an hour and a half just lying right to our faces about everything ever meeting. Tony Bosch ever cheating or using performance enhancing drugs at that stage of his career. It was a pretty wild meeting and needless to say after that we didn't hear back much from them. I was gonna ask you ability, the director of scruple about the Genesis scandal. Again in theaters Friday and numerous streaming platforms the following Friday after that how did the meeting with Iran finish up. What happened would just more lies, basically? And so we walked away. I thought he was a fascinating guy really fragile guy a sensitive guy at the time not much of a sense of humor or any sense of self awareness. But I thought what a compelling character to be able to examine to interview. Emailed them for the next six seven, eight months. The the arbitration resolve in January of two thousand fourteen he got a sentence reduction if he will but still a season long suspension. And so by the middle of two thousand fourteen it seemed obvious that they were not really interested in participating in an interview or documentary. And and why not the strategy has paid off this whole kind of head in the sand ignored. And it'll go away strategy has certainly worked for them. I think it's both one of the most remarkable imagery ability in the history of public relations. Not just that though. I mean, he had he did come out. And when he did show back up with the with the Enke's he came out and threw himself, basically on on the the sword. I mean, he did come out and give a complete total may culpa. He went made fun of himself on the stage of the SP's. I mean, he has had as you pointed out, you said, no sense of humor about himself or anything like that. He has seen to take a total reverse pivot on how he has portray. Trade himself or how he has taken on what he did. Absolutely. I don't know who. Okay. Say taking I wouldn't say he did much of a may co tour. He didn't really acknowledge what he did. Or didn't do what he lied about. The other players like Ryan Braun that he threw under the bus that his camp deliberately leaked in order to take some of the attention away from him in the thick of the scandal. I don't think he really fessed up to it. I don't think did he has to. I mean, obviously doesn't have to. But I'm just saying I don't think he really did any kind of comprehensive apology our discussion about I think how profoundly disappointing it was for legions of young kids who look up to these athletes heroes and role models. So then somebody who did speak with him when he was at a low point. And as you point out, you think you were used as a prop or used in a certain way until cool with that they spent my name, right and pay six it was in bold. I know the Jews to make that happen. Thank you. Thank you. She was publicised. This is all just setting up the question. I think a lot of fans are wondering hearing this. If they already. Weren't wondering to begin with who's the Alex Rodriguez that we're seeing today, I think a liberated man I think this was a guy who was kind of trapped by his own kind of failed persona in baseball. Who was booed by his own fans in baseball, never really beloved pop culture figure a guy who was almost in a way liberated when he hit rock bottom in this scandal. And now feels free to I hope this is him. Meaning like, I think maybe that this is the, you know, the person he was always supposed to be always wanted to be but felt constrained by fame and fortune. And of course, when you're generating that kind of revenue over four hundred million dollars over a career, you have so many people around you rely on you. And so you don't really have a chance to kind of free yourself and go out in public and feel like you could joke around and just be you. And I think I think it's liberating for someone to be out of the game. Like the only game. He's the only thing he's ever known. The only thing he's ever been told these good at and the interesting thing about screwball as it turns out. It's. It's not about Alex Rodriguez. Don't tell him that. But it's not about a rod. It's about these bizarre Elmore. Leonard Carl hyacinth almost Coen brothers esque characters secre way to put an habit. This only in Miami kind of world, and it's the weirdest birdcage of ever seen. Bizarre. And you can't make it up because it's it's it's nonsense little family, ending, you know. Goes down, and you're an exhaust who's in drag whose Gene Hackman, you're you're you're talking about Tony Bosch who is at the center of all of this. Who's the one who is dispensing all of the the steroids using his dad's scrip paper pad to Dr legit doctor? And then this fellow porta Fisher. Who is just a I don't know. What what what do you describe him the one who is the one who gave the who stole the he sensually took the documents from Tony Bosch, just let it lying around the biogenesis office took them and sent them to the press because he was pissed about not getting four thousand dollars back. It's you know, it's a chunk chain nice chunk of change. But even Tony Bosch and your documentary said he wishes he had paid that money to avoid everything else that it happened. It's insane. I just didn't hearing how you describe Puerta Fisher. After having watched it. This one will be a sad figure who's just looking for some sort of relevance. You know, I that's what I any founded be in these documents, and he took these documents from so he still the documents from Tony Bosch, and the documents were stolen from him and sold not just to the highest bidder. But every bitter. I mean, anybody willing to pay anything for them, and including major league baseball who's paid one hundred twenty five thousand cash in a diner out of some slush fund, I presume, I don't think we're going to ten ninety nine. The convicted felon that they were buying these knowingly still in documents from I don't know where Moby gets a slush fund from. But so be it. I don't know hustle either. Rob Manfred was in charge of this entire investigation. But listen go down to Miami. I mean when you roll around on the swamp, you're gonna get some mud on you. Down there. If you gotta you gotta root this thing out. I mean in a way to because everybody was saying, you know, how does how does the NFL not get the TMZ tapes of all these players that TMZ has the tapes on and the reason they're they're not gonna take some sort of could you imagine if the NFL trusts on what it is this could you imagine if the NFL took a slush fund and gave it to somebody who for whatever their reason wanted to leak this tape when they had no right to could you imagine you're assuming that they don't are the ones that Billy? They don't because otherwise they'd have the tape and here. Well, here's eleven does. Well, here's what what they did these convicted felons while they're selling MLB stolen documents for cash in a diner. They had a buddy at another table with an iphone filming the transaction. So that they can sell the video of the transaction two. A rod to say like, hey, you can then release and they wound up creating route one of getting scared about this. And they deleted it from the hard drive. And but but a-rod bought a blank hard-drive from them for six figures, we have the wire transfer. It's in the documentary and the an era allegedly spent thousands more sending the hard drive around the world to data recovery services to try to get this deleted footage back and unfortunately couldn't. And so we got footage America's sweetheart Alison hundred hysterical. Like, listen. I don't he was desperate. And he grew up in Miami. It's like sunny place for shady people. You know, he's going to it rubs off on you, and the type of characters you surround yourself doing the fact that when you think about it. The career of the highest paid baseball player in history effectively ended over a four thousand dollar debt between a cocaine addicted fake doctor and his fake tan. Addicted steroid patient just kind of wonderful, by the way, Billy Corgan. I mean fine point on stuck the landing on that one. And that's why you're documentaries called scruple. And I guess we kind of buried lead, which is a great way to finish up. Our conversation here is there's so many stories that required reenactment because you don't have the footage. Obviously of Tony Bosch talking to port Fisher Puerta Fisher to who was a rod sky. Right. I mean, you don't have these these these moments documented with film. So you recreated them using children. All my God. I can't I mean, wh why did you think I have a theory white? I guess you set it at the very beginning. But it could some of the things these guys are saying it sounds like they're five years old and use us kids who were literally what age. Eight ten twelve years ten. Yeah. Around there the most foul things. Yeah. You know? Mouthing now mouthing. Yes, you're using Tony bashes. Sit down interview off camera. But on camera the kids mouthing wearing hairpieces and dressed up facial hair. Yeah. And we have to remember like we make sports documentaries. The U thirty for thirty for example. It's I don't mean to knock our hustle. It's still documentaries are challenge to make. But the formulas clear, you talked to sportspeople sports people talk to you about sports games, you go get footage of sports games and put sports game footage on top of sports people talking about sports. That's that's how it goes here. This wasn't about sports. Yeah. It was baseball Jason, but all these events occur in some shady doctor's clinic in a locker room at a hotel at a bar and nightclub for example, live in Miami Beach, the fountain blue, and so what do you do? There's no footage. So we did recreation when you were going to have to and I was listening to the character's talking during the interviews. Tony importer who don't like each other. Spoiler alert. But they have very similar way of talking talking dialogue there like I walked into his office. And I said, where's my money? And he said, I don't have your money. And I said you better get my money. And he says what are you gonna do about it? And I said I'm gonna break, and I'm like appreciate you cleaning up the conversation. Than that. But I realize we could drunk history this because they're talking I log so we had Gers lip sync the dialogue, but the actors will be eight nine and ten years old. And not only did did it strike me that they all acted like children, but he kind of works for me on multiple layers. Not the least of which is is that Tony Bosch ultimately. And rightfully so went to federal prison for not only treating professional athletes, but high school kids as well, whose parents and coaches brought them to Tony Bosch to try to get advantage in the in the draft. And so that combined with the fact that like I said in the end we deal with this a little bit. The these athletes are heroes and role models to young children, and they're sending a message loud and clear and the kids are getting it because I do QNA's with some of the actors the young actors from the movie who answer the question of the audience when they say, what is the moral of the story. What did you learn? What are we supposed to glean from all this and Brian Blanco the young kid who plays? Tony Bosch in the lab coat and every. He says, oh, I know. I know you don't have to raise your hand. It's a Q and A. It's all yours. Do the floor is yours. He's ted. What are you going to do? He said lie cheat and steal. And that's how you win on. No. And I'm like, and when it comes from him, it's a little more depressing than when I say it, but the truth matters. This is these are the lessons that were teaching our children. Now, I mean who wanted this? I know obviously, Alex is a totally new life in a new reputation and he's living at and he's living at well. But Tony Bosch is a convicted felon. I didn't see I didn't look at anybody in this movie and say these people have one, you know, I mean, and and I honestly not not a single person comes off like. Anything positive in a way in this whole situation. Although again, I don't blame baseball for doing whatever the heck it needed to do this thing out. That's that's my belief. But just seen at the end of this thing Pedro Gomez came off. I guess I guess. I guess he's the only one the child who plays him. Well, so look Billy, this is this is just this is truly something else, man. But last one for you here, did did you believe Tony Bosh mean because guys using still referring people he was treating his patients. I mean, come on. Now, the did you did goes to jail, obviously, he's got a story to tell. But he also has I'll tell you one person who believes in Tony Bosch is Tony Bosch that man has a lot of self confidence. And despite the fact that he went to medical school in Belize, what one of our interview subjects refers to as the belief school of the medical and performing arts. He very much is true believer in his own ability. I will tell you this guy didn't do at traditional advertising because this was very much gray market business at best. He he's thrived on word of mouth, and he got that word of mouth because he got results for his clients. So he was doing something right now. Tell you one of the logs we didn't get to do in the in the movies ran at a time and money, but Tony winds up in minimum security federal prison camp in Alabama. And his there. Teaching nutrition to his fellow inmates. Jeff skilling from Enron is. They're not gene business to their fellow inmates. And Jesse Jackson junior is in prison their teaching political science and civics to fellow inmates. And yeah, I mean, listen, we're just trying to Mago trying to make rod great again. That's what we're trying to do. Dr Hannibal Lecter is teaching a class on yards. Oh my gosh. Billy, thanks for coming on. And you make a great film checkout. Screwball in select cities this Friday, and then on snoop streaming platforms the Friday after that at Billy Corbin on Twitter and Instagram. Get to see your brother back with more in a moment. It happens to the best of his right before big deadline or just when you're printing handouts for a key presentation. The printer runs out of ink. Are you tired of frequent expense in hassle of replacing ink cartridges with an internal Inc? Storage tank? Larger ink cartridges and intelligent page gauge that displays Inc levels, brother, Inc. Vestment tank printers can literally change the way you Inc. Brother inc. Vestment tank color ink jets, all in one printers deliver ultra convenience along with a low cost per page and affordable upfront price. Enjoy uninterrupted printing with your choice of up to one or two years of ink including inbox Inc. 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Stay tuned for sixty seconds of eight news headlines right after this podcast. Let me tell you about Pete who loved hockey and always wanted to play in the NHL Pete played since he was three and begged his mom to let him stay on the ice quite some nights. He even slept in his hockey skates. Pete practiced and practiced unto one day when he was forty seven Pete realized he just wasn't that good. So he threw his gates in the trash, but then you heard how DIKO proud partner of NHL good save money on car insurance. So he switched and saved a bunch. So it all worked out. Welcome back to our show. I mean that was just a great interview with Billy Corgan right there, man, not to go, all roaming hair. And Pat myself on the back for good interview. But I mean that was really intense because it's just it's it's a it's an interesting way of presenting the whole story. Yes. And it's it's it's really remarkable how as he pointed out one of the greatest baseball careers 'cause had biogenesis not come out had again, this fellow porter Fisher who gave four thousand dollars to Tony Bosch to try them buys west as an investment. Okay. Had he been paid back his four thousand dollars. And his documentary shows at Tony Bosch had two residences combined twelve thousand dollars a month mortgage. I mean, what he said he had forty K month and expense. I mean, so if he had not lived that life, right? And just decided, okay, I'm gonna pay this guy off because pay payments money back just give his money back. And all of that, not come out would Iraq be in line for the hall of fame. Or what is his previous steroid transgression counted against him. Because he in the biogenesis thing on top of what he had already admitted. I think you're looking at a rod eight hundred home runs. I think you're looking at all time number Risi all time numbers because he's only four short of seven hundred now as he said a fake tan addicted individual wanted his four thousand dollars back, but didn't get it. Because of as he said some cocaine addicted fake doctor didn't pay him back brings down. Alex Rodriguez and Ryan Braun Manny Ramirez, toll Colo's guys. Those guys are already milky and Ramirez at already popped, but they were part of this. They were part of it. I know what a story in the way, he tells the kids to the mouths of kids like you said the tragedy and all this is that he was he had high school high scores. It's really it's a serious. It's a serious of business. And and again, you know, we we are going to focus on the positives of baseball tomorrow is opening day, it's allied or one of our favorites will join us on the program tomorrow. I do believe he's given up his yes Yonki calling duties to be on a road more with his his son who's beginning to get into the major leagues. But he's doing some MLB network in house one of our favorites. I'm sure he's got a ton of opening day stories. And Pat Williams will be here from the Orlando Magic who have won six in a row now. The great storyteller the first variety at her son pitches at Vanderbilt, ego and. Coming to an institute. Tomorrow, one of the many people that we vanquished in the touch of the vermeil's fantasy football victory tour. We won right yet. We won because Fabio no posted a picture while you were gone. No. He's of the new trophy texted me the trophy. Okay. Guys, say when do we get a Windsor come an inch going to we're gonna we're gonna put where we'll have a very special place here in the rich Eisen show studio. He said that they he hasn't gotten the names of the previous winners up on the trophy. It's a work in we need to have him in doing fischel trophy army. We need Cantrell in too. But tomorrow with Duff MacKay gin big time mariner fan the day that the Mariners put it on the line against the defending World Series champion Red Sox. Mariners opening day game matters to know. Right. And that's true. Lost. It's really they're they're already a full game in front of the rest of the American League West, but all tied in the Walsall loss. One of those rare instances tied in the laws but a game in front. So there you go. That's on tomorrow's program. A final poll results over there. Christopher would. We have best basketball movie on the anniversary of white man can't jumps release in nineteen Ninety-two hoosiers, forty seven percents, and I kind of feel good about myself. Okay. Just in general just about hoosiers. And how I feel about it. And I went on a little bit of a rant and the right in the middle of the show sort of like a man spread centerpiece or like the Andy Reid of this show. Centerpiece. In for a last minute baseball fan spread centerpiece. Although Andy Reid is the avatar kind of a man spread would be would be what Cecil Fielder probably some sort of Tigers one team photo from good one back in the day. Prince fielder just some sort of big old man spreader who just does not care. What one right foot? One left foot is going down. And we are just gonna take up space. When was the last time, you think Andy Reid sat in the middle seat of anything. You know what I'm saying? And I'm just so proud that I trashed Rudy while while elevating hoosiers. Seriously. Why do you always have to bring Rudy down? I mean because it's fake story fake story. It's maybe a real guy. But the thing is it's not like Michigan's not in the movie at all. So it's not like he's got a leg up on. They beat joy he has a sack against Georgia Tech. Okay. So doesn't matter doesn't matter. I mean when you when you have a rivalry against somebody. It never ends. Do you have a rivalry scene? Have you seen proud of? The course not would you see anything of the Anki. So no, of course, not. No, okay. So just practice. What you preach. That's all. I before we before we end today show. I wanna send a shout out to our good friend and compadres Micheal Irvin who scared to heck out of everybody yesterday. Posting photograph of himself and a hospital gown, and he you know, he went through throat biopsy. We don't know the results yet. But he's he he Instagram doubt that he is scared out of his mind. He lost his dad two throat cancer fifty one he almost had we almost had to sit him down on a game day morning or two this year because his throat his voice was shot. If you remember he was going crazy after the Cowboys beat the saints Thursday night running around who's running around. And we've just thought that he yelled so much and his voice gave way. This is scary stuff. Didn't return voice didn't return. He did. He did. I think require a steroid to get his voice back and he sounded great. I spoke to him yesterday. He sounded great had him on speakerphone. My son's Zander came over asked. If it was Michael on the phone. I told him. Yes. He said, hi, Michael. How you doing? He's like fine, buddy. And he says how you doing? He goes. I'm just here with my mom and dad, they're old. I don't know why he said that he ran out of the room and Irv could not stop laughing for like sixty to ninety seconds. And then he asked why why when I was out of town. He didn't coming guest host the show on like, do you wanna do it anytime? So, wow, we may have him in studio, you know, and I just wanted to say to him in this micro. I told him yesterday. I'm sure it's all going to be just fine. In the meantime, he said he wanted prayers on his behalf and his family. And so we are giving it to him and tell him the Irv your your loved, man. And as you know, that's the way and my interviews with them pretty much every time to tell him. I love him. He's. Best. I do feel that way about Michael Irvin. So all of us here at the show were sending our prayers, and we look forward to hearing Mike the news that you just check the box and everything's fine. Again, tomorrow show, allied, Pat, Williams, and Duff MacKay gin, and you write your own Biard live dot com every day. What do you got over there? Fake news. Hashtag fake news Rudy the enemy of the people. Podcast. One's coverage of March madness runs on diesel. Alright is March which means it's time for the men this. So you know, we got it all covered on the big podcast with meat shut the legendary kid about the game. Maybe but how you doing? Doc, which. Will weigh more than just sports Shaquille to be prepared to laugh as we bring. You. The best basketball coverage big podcast shack. Shook us out with new episodes every Monday at podcast one dot com. Let's consider the secret life of the Imos nesting doll living, most of her life in the dock inside the other nesting Dole's. She has plenty of time to think if could Saturday she has no brain, however, an in most nesting dole, his gyco not only saves people money, but also has been providing great service over seventy five years. She thinks it's obvious. You should switch because. Yes. Switching to Geico is a no brainer in a most nesting Dollond lot in life. Venezuela support, I'm Ed Donahue with an AP news minute at the White House. Today is the wife of Venezuelan opposition leader one Guido Bianco Rozal. We're getting reports that a horrible speaking through an interpreter Rosella says her country's in trouble. How crisis is very serious. Children are dying are dying in hospitals. Children are dying because they have no food hospitals in duck. Nece the crisis is trying to rally support for the ouster of Venezuelan President Nicolas Maduro in court today in Washington federal prosecutor, David good hand says the grand jury that was involved in special counsel, Robert Muller's Russia investigation is continuing robustly Muller officially wrapped up investigation, but he referred some matters. He discovered to US attorney's offices the commander of American and allied forces in South Korea's North Korea's work on nuclear weapons and missiles is inconsistent with its intention to move toward nuclear disarmament. I'm Ed Donahue. Hugh.

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The Swing Trader on Chuck Yates Needs A Job Podcast

Oil and Gas Startups Podcast

59:22 min | 11 months ago

The Swing Trader on Chuck Yates Needs A Job Podcast

"Jay steed planned manner texted again. He said the interest gotta be shorter. We knock a whole lot less time. Just make it sure okay. Like how short dude. Like colin short. What frank slapped shore. I thought it was at least six. Four hoople lupus short. Okay chuck job episode eight. Take four chuck rice silver hill. And this is going crazy. Depends on so that we don't need to do bathroom breaks and i'm an old man i would. This is evident bandyopadhyay tape running on that. Because that's clearly where the pod to start woke up everybody to episode eight of chunky needs a job as you were eavesdropping in. I was visiting with tonight's guests. Sarah catalin and we need to hear the story on the middle name there But very excited. You're in here. So sarah say hi to folks. Hi folks than hi chuck. Yates and south thrilled to be here very excited to have you here so i start with the middleman called you kate one or months. Yeah and probably half the people listening who by emi. Most of the people follow me. Probably say caitlyn but no it's catalan. My parents just made it up. My mom made it up it's katherine hepburn and my grandmother's name caroline mashed together so yes so My daughter my middle child is named. Sarah kath waned and the funny part about that story is my oldest child is charles the fourth so i got to name my son after me after my dad after my grandfather we have the fourth needless to say when i suggested his nickname of cash i got cut out of all future naming rights for any kid. I was put to the sideline so number two rolls around. It's girl nothing. I'm not allowed any input which is probably fair from kim's point of view so she names sarah catherine Which love the name. And that the funny thing we we go back to the high school reunion and i'm sitting there talking to kathleen pittman. Who is an ex girlfriend and talking to her best friend sarah steffi who was my best friend mike finley's girlfriend and all and we're just catching up on old times all that good stuff. I'm telling him the names of my kids and i go. Yeah my daughter is named sarah kathleen and they both looked at me. Like i was the biggest freak in the world and started slowly backing up. That's absolute creep address. Speaking of this my whole life you left such a mark on me. That i just had to name my kid with another woman after. It was like screaming from across the room really really. I had no input. I love blocked. Lee on follow mute stood next to the security guard all night. Police watch that man for check exactly so sarah. Thank you so much for coming on. This is really cool. And here's the deal you kind of as we're doing these podcasts. This is number eight. We've been sort of all over the place trying to figure out what to do. And it's kind of Bringing our guests. That i'm really interested trying to figure out things with i wanna learn about what you do investing wise. 'cause i've been obviously following. You were caught four months now trying to understand what you do. And i'm just fascinated by this because two things one of always been inefficient market guy so i had no idea how people make money investing in the public stock market. That's number one and then number two is a private equity guy. We sit there and invest in these companies in their private mark tomorrow on any given day we have control. We can tell them what to drill. Not drill all sorts of stuff and you have nothing like that. How control full control but you can bail it any sort of point so yeah wait on me so late on me. What do you do yes. So i'm what they call a swing trader mainly although i do day trading. I'll go in and scalp just depending on my mood. But that's not my sweet spot as i'm talking to you. I'm coming off a really bad day trading day. Because i just i posted about this and i think a lot of people could you know resonated with them because everyone's been there hit wall after wall and i was trading like absolute trash and it's just not my thing and day trading is just when you're going in and out and Taken prophets small profits in and out all day long for either the same ticker different. One swing trading. Which is what i do is when you're holding something for a week or longer so for me. Typically it's several weeks and sometimes several months. It depends on what it is and my sector overall that i find myself consistently trading is biotech and small microcosmic biotechs companies comic safa trash panda bottom feeder. Which is really just the age old buy low sell high. But i'm coming into these little beat up. Sub twenty small microcosm tickers that are oversold beaten up in. They're kind of line at the bottom of the dumpster. And i go in and i look through all of them at any given day and try to find a gym and sue. How are you doing this. Is this your money. Do you work for a firm or a cat cap yet just capital. We're just this big huge now. It's just me it's just me and my computer. Just i'm just a retail person. It's my money and it's Yeah think that confuses a lot of people. Because i i really have a difficult time. Articulating to family and friends. What i do like studio clients. I mean what are you. Are you making money. I'm like it's just it's it's my money it's just it's it's my favorite thing on that was when i was at an investment bank and i got promoted vice president. My mom asked me if the president of the company dis. Does that mean you get to take over to ask the same question. This is you so this. Is you your money. You're sitting in computer yet. Just me. I i started Is not always been my thing. I was in the corporate world. And i worked for an environmental firm both tampa and then i moved to miami. Had my son Shortly after that. I had spied injury. And it was just compounded in several surgeries. A lot of people don't know that i live with severe chronic pain and I think it's something and just talk about constantly because who wants to hear somebody complain. But i've seventy five percent nerve damage to on my left lake about thirty yet and my right and on any given day it just depends but there's plenty of times where i'm just i'm in my bed. I can't get out of bed in and a lot of pain. So more goes. Yeah so finding something that. I could do from home with hard and chuck. I just loved it. There's a train has asked the So we kinda valley like. We know that you don't have a job. Are you living under the train tracks. Do you need a place to let exactly exactly the. It's warm here at night. And now it's so. I live in small town richmond texas and the issue is normally. I go into the studio which is right down the street but I've got covid right now. So one day. I think nine or dane of quarantine in gotta make it to tack or to the cdc efforts. Fortunately i don't have much in the way of symptoms so knock on wood have been a been really blessed on that front but this small town i live in has a train track. That runs right through the middle of downtown. We literally have the good side of the tracks and the bad side of the tracks. Just like small-time texas does but the interesting thing is. There is a stink law. That says a train. Hasta honk if railroad guards at come down to block the over where you go over the tracks and the city of richmond passed a law. That says a train or ordinance. I guess that says the train cannot honk when it comes through town. So there's been this battle for juice years. The train companies. I will put the railroad crossing so the arms will come down and we won't honking richmond's i well. We're not gonna do that. You can't honk in our city Anyway chain yeah we get the passive aggressive train coming through. And i think they honk extra loud as they come through. Sorry about no. It's okay. I just got a three off. Your rhythm didn't it. That's okay so we are talking about kind of how i ended up trading. I have some friends in the industry and they were just like with your mind with the way that you work you know just i guess emotionally and how how. I am the kind of person that i am. They're like you could totally do this. And there was never something that crossed my mind because to me. Somebody who trades like you were saying there on the floor. The new york stock exchange there Running a hedge fund or they're they have millions of dollars. It never crossed my mind. I didn't even know it was a possibility. I think a lot of people are in that same situation or were before these platforms with. There's no fee. There so commissioned trade like robin hood we will. I think pretty much. Every platform now is free s. They kind of had to to compete but it opened it up to the everyday person. Yes so i just kind of found my way into it and If you've read my bio on my page. I'm a bibliophile. I love to read. I love absorbing knowledge. Actually have an identity memory. So i kinda just whatever i read and taken it sticks and i can memorize things really easily and i found that i loved it like i am not a math person. I am not a you know charting person and all that and so a technical so but i found that i really loved it. I enjoyed it. And i found that i just had a knack forward and so how long you been doing this for a few years not long. I'm a baby. Avian the streets. But i love it and Yeah i don't ever really see myself doing anything else. I don't even on days like today where it was just a really bad day. I mean i'm not gonna just throw in the towel the bell rings tomorrow and start again and got so like you know an fascinated by this. The because i could i would suck at this. I mean i would panic. I would put. I would buy something in tune and put a stop loss in at nine dollars. Ninety eight cents you know a one person trailing stop-loss. He's taking no chances and he'd be exactly the same on the upside. go up. Two percents sell sells go. You know. I could always so what what what we three. Maybe an example. Kinda like how your mind works. I know that there's probably no standard example but just walk me through kind of a maybe trades you did that was good or bad or whatever. Yes i i guess. I'll kind of tell you how. I find my train by get us a lot. Would you use to scam. 'cause i'll on sundays. I like to kind of share and can kind of talk about you. Know what am i looking at. What are possibly some good swings. Setups i go. And i used to finn biz. Which i've always just loved his platform and i'll go in and i always will put in the relative strength index and i'm looking for something that's Oversold which is anything reading a thirty or below which will indicate oversold which is basically just undervalued condition. And it's the other way around. If it's above seventy it's overbought it's over valued at looking for maybe a reversal on pullback would you say you know reversion to the mean which is basically what it is right. I mean it's all just a heartbeat on the chart that you're looking at So basically just dump it down for me. So i'm going back to business school. Which as you like to make fun of my age in school was business. School was a long time ago. Almost thirty years exactly exactly. I love john. Wb rich. i was on the. I was in the online classes at yale in nineteen forty six so almost thirty years ago as i recall oversold. Just i think it means they're more sales at a loss or so many some certain percent of the last you know hundred trades or whatever been losses relative strength is of the last hundred trades or whatever it is so many of them have been bought at a premium to the last trade is that is that kind of ballpark. What we're talking about ballpark. I mean there's the whole formula and how it you know they come up with the rsi. But the relative strengthen index and they. It's a whole. I am not good at that at all. I just have found my way and again. I've done this all pretty much on my own I didn't have twitter. I think you you were like one at one point. How do we even come to meet each other. Because you're on energie your efg. And i'm over here on fin twit and our pads just kinda crossed. If you just take me up on my offer to actually go get a drink and we can have a pleasant day. We even call it a non day we might wind up married and if we wind up married we to unite the two kingdoms energy finance twitter finance twitter. United be like game of thrones like yeah and we all know what happened in the weddings. In game of thrones into that did night. Yeah you're good at doing that. Check so circling back. I do a really good effort. A for effort really effort. I'm circling back. Tell you about how. I found my way onto twitter so i was not on social media and or in any groups or anything like that was just. It was just me and the computer. I was doing it on my own. I took probably a year office social media facebook instagram type thing. Not a big social media person anyways just to read and learn and figure out how to do this for me. It was sink or swim. I really it was like i could not fail at this. I needed this to work in. So i was just eighteen hour days and figuring out how to make it work but it's a lonely game because you know coming from the corporate world you're in there you're having coffee with your co workers or you're going out to lunch or you're going to get some beers chicken wings and you know you have people to hang out with and talk to you and when your trading and your solo retail trader. You're you really. Don't have that sense of community. So i went looking for it. I did not know. Stock twits existed. So i found stock twits. I which was really cool. Kind of connecting with some people like on specific tickers. That i was trading. We hit back and forth with some. Dvd's just due diligence and are researching. Why are we trading the stock. And what do we thank and that type of thing And then from there i kind of migrated onto twitter. I had opened a twitter. When trump became president. Because i just wanted to creep on his tweets because the guy is what does he call himself a stable genius or samantha. So but i never did anything with it. So in january of this year. I pop back on and just started connecting with people In the industry and just trying to grow a network. Because that's what twitter is just network and networking and i found finn twit and it was just like this little sub universe that these amazing people full of characters. I mean you have the anonymous and some of them. Are you know but some of them are really funny and they're actually very smart. Brilliant people and i assume that they're non because they're in the industry of them just they're brilliant So connecting with everybody has been really fun. And just carving out my little neck of the woods And i think just Espn tweet are kind of intertwined and somehow we got interconnected we ended up on. Brokaw can be chairman. Jimmy shout out. I mean yeah and he did these videos that it was wild but it was fun because it was. You know it was like we're gonna go with co workers and people we hang out with and we're going out to drink or whatever but it's all cyber which is so weird but it's fun. I mean i really ended up carrying about some of these people that we connect with. And i i love the community. I think it's a great little community and no is it is. It is pretty cool. It's you know. I've got to kind of funny stories on that one you know. There's this running joke about chilies out on twitter in energy finance twitter and i don't even know the exact genesis of it but the real jeff skilling at some point made chili's joe glide That trader couldn't be a waiter chili's or something or i might as well. Just get it chilly. So this whole thing about chile's jokes and all this and what's so funny is anytime we come across a chili's i'll get out and take a picture in front of it. Make my daughters take it. They're like we're doing this for twitter. Yeah and then. The other thing is Now you're right about the community. It's really cool. I was on twitter way back in the day. I mean when it first started a question. Yeah well and you know i. Dm's with chad. Johnson he actually sent me is cell phone number at one point but of course he's changed it sent a trade a trade tweets which shaquille o'neal one time that's also fun it's really a fun platform and it's unique and it kind of stands on its own versus you know facebook and instagram. I'm not one to sit in. I don't wanna look at what you made for dinner. And you know i don't have time for that my life. I'm not interested in that. So twitter is its own different animal. And i love that and then of course now we have fleets which was like okay. But that's pretty fun too. I guess it's another way to connect the people that are in the community. So i've enjoyed it. I really like it. And i. I mean here i am on a podcast check. Yates needs a job. Podcast why i don't know yet. You should aspire to more but anyway okay so what knows through like an example of a trade. You did so i. I'm i'm dummying this now for me. But you're sitting there you're screening tool is oversold. Stocks says stock says people have been dumping. So you're digging through that you're getting your screen of front of that and like you said earlier that that sounds like you're looking for potentially opportunities revert to the main. Yeah bounce back so walk you through one. Yes how i can. This is an interesting one actually very popular now because it just went absolutely balls to the wall screaming oversold but i mean overbought. Fuel-cell actually had fuel cell last year last june at thirty cents. It was just this little beat up company. But i was fascinated by the technology and to me i feel like fuel cell and hydrogen. All of. that's the future. I mean we're moving away from although of course gas oil and gas is never going to go away. I mean we could have that conversation but of course fuel cell and hydrogen. They're coming in. And i was like well. What's this company about. But the more. I dug into it the more i was like wow and jason few took over and he really just restructured the whole company and they had a lot going on and so i just walked crap out of it and because that's what i do i come in at the bottom and i just wait. I just lie in wait. Because i have patience and time on my side and i try to stack my swings for different Catalysts that are coming up especially with biotech like different trial dates and things like that and was fueled so it was a year. I mean it had little bumps and we pause here. Yeah here comes the train. The trainer rolling round the bend. Whow okay okay. It's really hard to so so okay. So fuel cell energy is this the molten carbonate fuel so company out of danbury connecticut. Yes yep well. I guess i can't talk now sorry Okay this is what i. Yeah i think the i say i say if they're trained in the back i don't care so long as people can hear what i'm saying i will leave that to the powers that be so no so this is interesting so you feel so thirty cents last you on hold for about a year well typically with my swings all book my trade so a lot of them you know the day trading groups will come in or different pr drops or things will happen and the price will go up maybe even twenty percent thirty forty it depends on what it is with penny stocks and moves can be Pretty big and i'll just sell a quarter to a half of my shares to recoup my initial investment. and then. just leave the rest of them to ride house. Basically they're free chairs at that point And then i'll just if it's a company that i'm really interested in. I know there's different titles coming up. I'll buy the dips. And kind of bolster that position. And i just set it to the side because it just you know grow on its own over there while i go and do other things so i was in and out at the risk of you making fun of my age again interesting fuel so energy story so latin so the last you know almost twenty years last eight months or seven months. Whatever it's been been of course unemployed but Before that i spent nineteen years. At cain anderson both were that i was at stevens inc. A little rock arkansas investment. So not to interrupt you but for people who are maybe yeah no but for people who are maybe following me. They don't know. What is cain anderson. What did you do at cancer. So kenny anderson's a money management firm headquartered in los angeles california they have various silos of money investment strategies at a real estate group credit platform But for the most of the time i was there the bulk of the money was devoted to energy and there were really kind of two buckets. An energy one was m. lp's so kane on any given day would be the largest and best. Ps they did it through various publicly traded bbc's slash closed in funds and then they also had private partnerships that did it and then for the most until the last couple of years the one big private equity strategy we had was in oil and gas so doing was kind of early stage assets. We'd go in back a small little company. Lisa page drove down. Yeah yeah yeah. We called it. Five guys in a rusty pickup truck was kind of how we described our companies. We drill the first horizontal wells and a county and stuff so we have big huge wins. But we'd also we're much more venture capital early bassett's but before i was at kane i was at stevens and when i was at stevens i actually had an engagement to do a private placement for fuel cell energy except this was when they were still called energy research corporation. This was like okay. This was the only fuel cell energy fuel cell was out back to their plant in danbury connecticut. You could walk out back there. It's quiet and it made enough electricity to like white. A light bowl up go started on. Yeah crazy add. Pray the another doing micro grids and you know the whole thing with toyota and the whole feeling thing the port of long beach. That's crazy so what was this thirty years ago thirty years ago. It was the late nineties so it s call it twenty two years ago. I bet we we took him around. We entered his to enron dynegy and all the el paso g. e. we introduce them to all these folks we had a term from enron. And we're kind of working on it and then power technology just took off like with the whole rest nasdaq stock price like quadrupled and six weeks. And they went out and did a big public offering. Let let me on the sideline. but anyway i've been to danbury the the one other weird thing about danbury connecticut is you'd fly into manhattan and flew in having a business dinner and then i'm driving a rental car up there and here's kind of the small world so this is late nineties. I think this is. this may have even before. The show started but canvas bush. Now who a sex in the city. The book and the she wrote a recurring article for the new yorker Cult sex in the city at the tv show is based on. She actually went to rice university. And if you listen to the intro. I'm proud to say. I went to rice university. She was only there a year but anyway she was on an. Am radio station sitting there talking about sex in the city her but it was coming out or in the tv. Show coming up and she was talking with for years. I thought it was sean hannity but actually a went back and looked just two weeks ago. Just i don't even know why was doing candace. Bushnell's name come up. came up. But it was marco mira who's a radio talk show guys supposedly in new york big famous one. They went to prom together. How does so on your way on your way to danbury connecticut to fuel cell to fuel so energy in which i was able to complete a private placement and i shouldn't bought the stock. I did right well. You know who knows what it's going to be. And then so i actually took profits went up to three fifty at one point that show the timeframe 'cause i you know so many different things but Just within the last few weeks a once biden was elected the highly contested election Trump will say that he is elected but anyways products out of that But once they you know he was elected. There was this massive influx into marijuana and Ev plays anything that was clean. energy So fuel saw this massive influx of day traders and swing traders. And i think they went up to A billion volume at one point in the day they were just trading absolute insanity went up to like eleven fifty. Maybe even more. I don't know but yeah really crazy. Just doing offering like in the last a curse. Are you crazy. That's the other thing that you know when you're swinging. You have to be careful. Like that's one of the things i check when i'm scanning for a new play as when's the last time they had offering are they well funded especially on these small microcosm because they don't have a ton of cash on hand so that's one of the main ways that they're gonna race funds by throwing out and offering in diluting the shit out of their stock everyone on there's like wale the management preservation actor. Yeah it's interesting. it's there's definitely lots of stuff that you have to dodge and you learn especially with sub twenties that if you know reverse split is always something that you have to think about. And there's always recently. I would when you were talking about. How if you were trading you have such a tight Stop loss in order to preserve your capital right That's i actually rarely break my stop-loss roles keep it within five to ten percent depending on how you know what the historical pattern of the stock with the dips is this just a dip or is it actually crashing on something. Because i don't wanna get stopped out on a dip. If i'm swinging so there was a play. Recently that the phase three was coming out and i knew it was coming out and it didn't meet its primary safety and points and so within our probably ten minutes at crash p percent but i had my stop-loss so you know it saved me on that but yeah it there's always there's always that fun stuff so that's wild in it. Sounds like what you do. You've got a screening tool. You're looking for oversold things but then you actually get do quote unquote fundamental analysis lately. Yeah there's both sides to it so for me you can't just go off of the tax and also you can't just go off the funds the fundamentals to me. It's you take the tax. Then you take the funds and numeiri them together and you get holy matrimony menu. Get little money babies so observed just having a visual of tackling fundamentals having sex. And i'm not really sure how that would work. Who's on top. I don't know all the quantum the tech people say it's the tech the other people would say you know it's the fundamental analysis depends the day traders. Say you know. The fundamental analysis is completely pointless f.a.s.t as pointless. Because that's not what they're looking at. You just going in and out on momo on momentum and who cares what the ceo you know. What's his history and what you know. What's the cash on hand. It doesn't matter you're just playing momentum so yeah no that's it. There's a million ways to play. So yeah no. It's it's interesting kind of talking about momentum We were having that discussion around kane anderson early on when i was there so call it. Nineteen twenty years ago and It was interesting because we were basically making a case for momentum and why you should be investing momentum and bob sinatra who was the ceo of cain time said. Let me tell you about momentum. My grandmother got up every morning and she was eighty eight years old and she would eat breakfast and then she would walk around the block for an hour and a half comeback. Get on with their day to asleep and do it next day. There was a lot of momentum on that until one day she got up ater breakfast walked around the block had a heart attack and died right there. Oh okay and it was always like yeah. Momentum can end in really. Can how fair enough bob get the train. Stop somewhere speaking of trains but yard. There's a wall somewhere. I mean anything. Can you know that. That's that's the hard part i think about it. Is that what you know. We're always looking for the land mines and you got to be on your toes and pay attention. And that's where you know today I was posting about how i ended the day early. Because i was just. I haven't traded this shitty in a very long time. I was just trading like absolute trash. I was paying attention to process. I was raking on my own rules. I actually removed us. Plus at one time which i never do on a day trade especially so and i wasn't paying attention to the south signal when it really hit the top the day and i just i made a bunch of asinine choices and the bottom line was in hindsight. Was i from. The beginning of this day should have stayed out of the market. I was not in a good mood at a lot. Going on personally and i wasn't i wasn't prepared a have to you. Have to be focused. And if you carry all anything in with you you know once the emotions take over. You're screwed so. But i think a lot of people can relate to that because it's it's not easy to and you can't just erase your motions. Were emotional human beings. i mean. that's what drives us. That's what drives markets right. I mean why are people trading with their trading. It's all driven by our base human nature in one way or another but it's about harnessing that and controlling that versus just letting it control you. Which is what happened to me today. I hope the the anxiety surroundings spending forty five minutes to an hour with me was not the cause. I'll check it totally was you're on my mind all day. I couldn't think i can't sleep. I can't eat only makes it. Worse glutton for punishment really hard really are. You're like my dad though check. It's like pretty sure i'm pretty. I'm pretty sure you know your your guy appreciate you taking the time to want to talk to me because i. I always like when you told me that. I'm like i mean nobody. I don't know who wants to hear from me. Had to convince me i. I don't think you're a nobody at all. You've got what eight thousand followers on twitter. They seem pretty. You got a big fan following over on energy finance twitter. I get a lot at. Dm in terms of haiti hers. Actually going to go out with you and always have to text back. Yeah i don't think so. R.i.p check their rooting for you. Got some great wingmen out there. I'll tell you that it's a group of people. I'm i love the platform. And i love the community that i built and i hope every day to add value in some way. Whether it's just talking about you know emotions or life or something encouraging racial or funny just trying to add some value. So so here's my dad's story. So so i'm going to name drop totally on this. Sorry but that's kind of my thing. It's like the wine flex. Let's check eight scott affleck's so so thomas rhett the country singer. I dare say he's a friend of mine and So anyway we're we're out. We've hung out a few times. Great guy great guy and you know he. He says something to the effect of you know somebody says something to the affect of. Yeah you're like his father. I'm like what father maybe the cool uncle or something like that. But father no way me. And thomas were boys mean t are hanging out. We have some champagne. And so good yeah. Do you know how old thomas red status now. Eighteen months younger than i am. Check our eight now. Rent was eighteen years old when he had tr so there is a little bit of that going on there. But yeah yeah that was still waiting. So thank you for bringing that up the that you had today. I'll have tomorrow now. As i sit up all night. Count your gray hairs. At least you have hair check. I mean thank you have hair. You don't have a job but you have hair. And i don't have a lot of gray gray and the beard but but the hair state pretty blonde. So i've got that going for matt thank goodness so okay get back to so you're sitting there computer. You're on what platform do you train on again. Weeble and his at like robin hood. Amid i downloaded the app open an account and trade and yeah yep absolutely you can try to after hours and and you know premarket an after hours and they just have a much. It's just a much better platform you can see. All the level twos The buys and the ass and you can see it. It's just it's a much better platform. Also it's never just shut down for a day and ruin people's lives so there's that lincoln. How was the play josh. No yeah i mean. I think i try not to denigrate anybody former anyway. A traitor begins. Because i think that it's something that is open to anybody. And if you want to take the time to learn and i'm not talking about just yolo in your money. Just just coming on twitter and trying to follow. Because there's these trading gurus or they call them food ruse fake gurus who have these hundreds of thousands of followers and they throw out tickers chart no fundamentals no technical analysis and they just all pile on it and you know they have discords and things like that and i think some of them are wonderful. People i've talked with some of them and they really just want to help others out and making money And then you have some. That are just absolutely morally. Reprehensible they leave these people They basically are making money off of them. So they're buying a stock Low like i would and then they pump it on. Twitter stock twits in their discord. And then they have their hundred thousand followers that go onto that stock drive the price up and then they cut their bag and they run and their followers and all these other people are like. Oh my god. What do i do. 'cause they don't know how to trade because they haven't spent time learning the ins and outs of the markets and they're not looking at the level tuesday have no idea what's going on behind the scenes. Like with robin hood. I mean i don't know. But i'm guessing you you're just looking at the number. I guess the stock price. I'm not sure i just know. There's not like access to a broader picture of what's going on behind the scenes so interesting about that. Because i think at least in my lifetime there have always been traders. Listen and the light but were day. Trading started in. My lifetime was back in. Let's call it a. It was the early to mid nineties. Nasdaq set up. Something called the small execution system. What it was is it was basically almost a separate market so that somebody could buy one hundred shares two hundred shares all that but technology being what it was there was a time delay between those soros system in these guys were called so strangers and the actual nasdaq and so it was quote unquote real time but there may be a fifteen second delay. Sit there literally sat there at a computer and you watch the saas market and the nasdaq and you would see is being seventy two and then at seventy one ninety on the other and you just arbitrage the hell yeah and that was no that was i mean there were big huge businesses houston had momentum block all these different companies and the business model. Actually is you know you if you were a cabbie or you owned a furniture store or whatever you showed up at the office and you rented a terminal for the those guys dang see. I never contemplated that. What day trading would've looked like when we didn't have an app on our phone or you know yeah it was. You literally had to go into the place you'd trade your own capital but that was true arbitrage you literally were seventy two buying it seventy one ninety until it disappeared and i mean like like high end technology at the time with light up stocks in different colors if they were different numbers while you were manually typing down right right. That's fascinating that's fascinating. Started you right and i'm sure none of the people that i mean. I probably couldn't go on the floor of the stock exchange. And you know. Do anything i mean. What most retail traders cat. I just know my process. I know what works for me. I know sitting at my computer. Which me and my screens. What i can do and i know what doesn't work and it's all just been through trial and error. They call market tuition yay. You're gonna pay. It's not an overnight thing anybody who says it is is full of absolute shit and or you long only. Will you ever go four or yet. I've tried i it. I've tried options. I've tried. I've tried on all the shoes. Nothing felt right to me. I just it didn't feel right to me. I'll probably go back to it if i get bored. But honestly i just love what i do. And it flows really well an intimate with it intimate with process. And it works for me and it's one of those things was kinda like if it ain't broke. Don't fix it so are you. Are you dependent. And all of this on kind of the bull market going or do you periods of downtime. Where you're actually still able to make money. Yes but i mean it's on and off. I was just talking to one of my girlfriends about this the other day. Because you know i have times where yeah. I'm hitting a thousand percent Runner off of some great trial data. Or you the company got bought off or whatever it is or you know fuel cell that was massive trade all these different things. It's just kind of have to. It's a snowball right. You just kind of have to protect your snowballs. you roll it around. And i'm not going out. Buying lamb bows and a bunch of giant properties. And go into nobu I'm not doing major wine. I'm not doing major wine. Flexes it my base said just living. So i hold on the word. Say anything for the record number one when you live on the gulf coast. The water table is at about two feet. So we don't have any basements st- i never been to texas out. Oh you're missing out. If you if you down. I don a two feet my backyard. It would be all wet so it's not a wine cellar santa basement. It's just a closet. is that what. This is actually kind of an offsite storage deal. That i have and i want to clear this up so no i feel very of now offensive now fish. You have to let me finish. Were making fun of me. No i just. I just happened to get the the the wine collection in the divorce. My monthly wine expenditure is zero. I haven't asked that. I am slowly depleting overtime so when you see. A major wine flax in somewhat tongue in cheek because i didn't pay years ago dot it no i. I'm teasing you chuck. It's i'm teasing you. The okay just using an example of you know just being fiscally conservative when this is how you make because of course. There's going to be downtime. there's plenty of times. There's been weeks where i'm just like you know nothing and i'm juggling around or i'm just hitting walls because again i'm not a day trader. So that's what i hope to get better at it. I'm always learning and growing But i just. I find myself hitting walls with data lake. Which is scalping in and out all day long okay. But it's just. It's not my thing. I prefer to swing. So yes sometimes you you hit home runs with your swings and sometimes you don't and you just have to go spend you know. Spend all the money. Make on trade on a lamp or something. Yeah we're all one trade away from humility. But vox. We're all one away from anything. Yeah it can all be taken in a blink of an eye. The market teaches you. That i've had plenty of times where i've learned the hard way of not installing a tight. Stop or not paying attention just plain old not paying attention and watched everything go down the drain and just stare way that entire chunk that you had is just evaporates in the market. Just takes takes its dues. It'll get you the big lesson. And i've talked about this kind of odd ad. Nauseam on various podcasts. I'm not going to belabor it here. But i mean i think the biggest thing that i learned kind of having some distance from investing As sit around and just watch things and way way oversold. The ability to create alpha has some unique knowledge. Be able do better than everybody else. I actually think looking for that kind of stuff. Causes you to take more risks than you normally should way way way freaking under soul the risk of the beta the oil price. I mean yeah you know making the call of those chevron outperformed exxon by one hundred basis points. But i missed the oil fell fifty percents taking my up just being myopic. And you're not seeing the full picture you can get caught up. Thanks simple as simple. You should kind of simplify it. I think the more convoluted you make it. Yeah no cassia cassia interesting thing. Just put myself in your shoes kind of trying to think through it is and i don't wanna make things any more complicated and trust me. I don't know what i'm doing. I've never been a public sock person but you almost wonder if you know you find your winner the way you normally do and then if you short white multiple alike amount of same industry stocks then it doesn't you don't care. The the general biotek market goes up. Goes down so long as your personnel. Performs your sock does. Yeah yeah no exactly It was interesting at the beginning of the year Everything that was in january. I saw this corona virus thing happening before here think people were like. Oh it snagged. But i mean people were literally falling out in the streets in wuhan. And you're seeing these videos. And this was in january. And i just diversified heavily out all the small microcosm bios that speculated that could be a covert play so anything that's therapeutics vaccine all that type of thing And i did really well in the first quarter of the year because of that. So yeah. there's yeah there's times where. Obviously the tide lifts all boats right. And i think that in the biotech industry as a whole everybody wanted. Peace of the rona pie every biotech. I don't care if they're working on cancer If they had lake herpes cream. Whatever it was they were like. We have a a cova test. We have a pcr kit. We have you know we're now we're working on therapeutics. Were working on a nasal spray. And it's like whoa okay. Yeah everyone did that to pad the the pooch. I guess our stay relevant. And did you invest in creams cream. Now you even know what yes. That was unfair. Idea was a jingle on your last but the last one or the time before. Yes pre buddha gate. So i don't even. I don't even understand buddha khushab not. I'm not an energy person. So i don't even understand that i like the people who are in energy but i don't even understand all of it. I don't even understand. Eighty percent of the stuff. I'm still learning and growing. I just feel privileged to be in the space and that the people of into twit and espn have just been so kind to me. i. I haven't gotten anybody that's like well you know. Besides other people think i'm a catfish from the beginning like who is this girl. She's must be a catfish like i've not just me. The found the same thing. Because what's been interesting is got off twitter. Eighteen months ago. Something like that. The whole thought being yeah kane always wanted to get rid of me but the The i didn't need to give him the rope to do it. Thanks just kind of felt a little hotter than normal you know. Keep your head. Yeah careers vice. Do not go on twitter as yourself. If you want a private equity firm little pointer there from me to you. Probably why they're so many a non exactly so anyway so after. I got unser. Ammonia asleep publicly humiliated shown the curb. I went back. gone in my name and what was cool about it is a lot of shots. Were thrown my direction. I was made fun of a lot but a lot of folks were sending. Dm san hated it across the and i'd just thought it was funny and i'm like really cool penalties or something. Yeah the space that you have to have thick skin to be. I think probably in this industry as a whole but definitely on twitter you gotta have thick skin. People like to poke yeah. I can't believe i didn't make a joke there. I'm so losing my fast fall. He's days wait a joke. Oh i lost that to that one over my head till jesse sat. Poke is what exactly. It's old. I'm dan blanca. I guess outlive that. I'm going to have to transition to dad jokes because right now i'm still teen year old boy mode data. That's never going to go away as any. I have been surrounded by men my entire life. That's ever going to go away. I don't care a professional they are. I don't care what kind of they just boys. I think perpetually stunt thirteen when it comes to certain things. So i cannot. I cannot say the word bubis without giggling of course. Not what are you going to do a check. No well i will I'll try what's the what's the difference between a bond in chuck. Yates matures chuck dad point. That was super dad joke. That's great waitstaff drive home. Save second chose always different than the i. I'll be here all night over here sarah. You very very cool to do this. Thank you thanks for having me on i again. You had to pretty much convinced me. Because i was like but i think it was fun and hopefully somebody got some value off of it was when i promised to be fourteen hundred and eight miles apart from you. That was kind of the okay. Maybe i'll do to make sure you're not serial killer check. Yeah yeah yeah. Yeah no. I get squeamish around blood so you don't have to worry about me. Serial killing anybody or killing period. Not just theory not. It's not even once ninety one day. Never really had the urge anyways. All right guys. you're very cold sir. Thank much thank you said bums rich feet sprawled no mold. Ritchie point kareem.

twitter cain anderson thirty years danbury Jay steed richmond colin short chuck job Sarah catalin caroline mashed Sarah kath sarah catherine kathleen pittman sarah steffi mike finley sarah kathleen connecticut Yates nine dollars chuck
Jody Plauchet Pt. 2

The First Degree

42:17 min | 2 months ago

Jody Plauchet Pt. 2

"Thank you for listening to this. Podcast wine production now available on apple. Podcasts podcast one spotify and anywhere else you get your podcast. I want to tell everybody about slumber cloud you wanna sleep like an astronaut. Because slumber cloud betting uses technology that was originally used in nasa space suits to keep you cool and comfortable. Here's what it does. It absorbs and stores heat. When you're too hot. I sleep hot then releases heat when you're too cold so you get the right temperature all night long now. This is different than those fancy eucalyptus or bamboo bedding. Those only work after you sweat and they wick away the heat which kinda gross when you're thinking about it. So slumber cloud temperature regulating betting products from sheets to mattress pads. I got the sheets. They're great and it can be found online at. Www dot slumber cloud dot com and save ten percent on your purchase with our exclusive code bursts degree. Ten that's first degree. Ted slumber cloud dot com warning. Today's episode contains descriptions of crimes being committed against children. Please proceed with caution. I agree i agree. I agree i agree. He thinks they're supposed to happen. In movies we'll show. How minding was. I mean. My dad like i said he was prepared to die. And when you're when you're there you're dangerous the first degree. The true crime podcast. You might end up on my name. Is jack fianna consenting far away from alexis link gutter and billy johnson before we get into the show. This is part two of the jodi push story. So if you haven't listened to last week go ahead and listen and get a bench this one. So you'll have like two hours of the first degree on this glorious wednesday so you guys were recording at eight thirty in the morning. This is the earliest we've ever recorded the first degree. We usually love nighttime recording. It's also eight thirty in the morning on a tuesday on a tuesday. We're not sitting here with no. This is not like a fun weekend vibe. We're all struggling a little bit right. Yeah so we apologize. If we're less zippy of unusual regino we gotta get it in when we can't. It's hard to correlate three people's busy schedules to be able to record this little fucker. It really isn't. It's going to be hard to keep the energy up. If we're not there to spontaneously tickle attack one another to to boost morale so as one another shit ever. Jack usually bring the energy. Just find billy we. We don't need to like blundell of richard simmons editor this morning. Smart downing not really. We're all struggle. Stand to be tickled billy. What day is it today. Or today's august eleventh and it is and i just got to do this. I'm sorry lacks national raspberry tart day. There's too many cooked fruit holidays. It feels like a conspiracy. There really is so many days. Because i feel like we have these conversations several times a year. No we have them at least once a month. And that's just a random wednesday that these fall upon so imagine all the other days that are you know fruit cheesecakes and fruit tarts pies. Jam maker's lobby is just strong. It's red what else we have. Billy it's there's not much world calligraphy day home. Something lost art. I don't even think kids are being taught a cursive anymore. Now they're not and this one's for you. Jack play in the sand day. You're jack seems like a beach thing playing this and do you not. Yeah i feel like it's probably catered more towards children. But i'll take it why the picture of play in the sandy has a bunch of toys in locadia I'll go play in the sand today. That sounds actually very glorious annual medical checkup day too. So i know i know you millennials. You think that you're indestructible but you should get a check up. Yep go one one year guy no appointment one year getting your body mapped for skin cancer or they check for scoliosis. You remember those awkward checkups in the closets of your gym classes like let me see your spine. I'm like where's my mom. Seen questionable looking back on it very was the point of this survey well. I think that that is enough of that. So let's turn down the lights and turn up your because this could be you last week. We took you through the abduction of jodi play which occurred on february nineteenth of nineteen eighty-four when jody's june let jody's cries instructor. Jeff two-set borrower. Carter run some errands with joanie but they never returned and by the next day a manhunt was underway to find them. Jeff taken jody to los angeles and after a few days the fbi track them down while the induction seemed rather sudden. The truth was jeff. Doucet have been grooming jodi for nearly two years. Jeff disguising himself as a carrying karate teacher. In front of jody's parents. June gary was actually cutting predator in disguise. Jeff was arrested and charged with kidnapping as jody. He was sent back home to his very distraught. Parents does it. Turns out jody's rescue is only the beginning of a harrowing ordeal which was far from over after jody's rescue. He was examined by doctors and the truth about the abuse that he suffered adjusts. Hans was revealed. Jody recalls what it was like returning to school after his kidnapping while remember the first day of school came walking in the gym and everybody was real quiet and they're watching me walk across a gym and i walked up to my friends and they're sitting on the stage and like a couple of the girls. I can see like tears forming in their eyes. And everyone's just kind of sitting there looking at me. And i'm like what y'all look at me like i've been kidnapped or something and then they just start laughing. They realized that okay. I'm the same personnel. Was before i was kidnapped and and they didn't have to worry about me. I was going to be okay. Meanwhile johnny's parents were in the throes of processing the events. the had unfolded. And if you're calling from last week's episode. June and gary push were on the verge of separating have to imagine the anger the sadness and the guilt that they must have been feeling after learning what had been going on in. What jodi had been subjected to jody's dad. Gary took the news especially hard and while we're on the subject. There's more that you need to know about jody's dad gary push my dad. When he was younger he worked at channel two. Wbrc embattled sets the abc affiliate here in baton rouge and so he knew all the people that worked at the tv station. So where are we in the story at this point. Okay well jodi has been rescued. And jeff is still in california and it would take two weeks to extradite him to louisiana the media who is fully engrossed in this tale. Wanted to do a follow up piece to accompany the story. They did about jodi being reunited with his family. And as we explained jody's gerry was very dialed in with the local news. So by dad knew all these people so when i was kidnapped and i was going to be returned. Daddy told him he said. Hey jodie coming back. So when i was returned to new orleans on more it's first they had a camera crew. They're building me being returned and being reunited with my family. So when jeff was ultimately extradited the news planned on covering his return and they intended to capture footage of him arriving at the airport so a couple of weeks later the police went out to california to get jeff to bring him back to baton rouge and channel was going to do a follow up story of the kidnapping and gary being the well-connected guy that he was found out through the grapevine. What time jeff's flight would be landing in baton rouge will one of the program directors. Hold my dad. They're bringing him back tonight at nine and so my dad had this knowledge. So now judy's father knew exactly where jeff was going to be and he knew exactly when he would be there now. The guys didn't think daddy was going to do anything but baby confront him or yellow punch him so channel two the crew up to the baton rouge metropolitan airport and there was two police officers. Mike boorda and bud connors might have been involved with jody's case from the moment june realized jodi had been abducted. The mike burnett is the one that was with. My mother listened to the phone calls. He came walking around the corner and they had the camera setup and there were people that gathered behind the camera to see. Oh what's what's about the happen. What are we going to see. So by this point jody's parents had a report with wti. Mike barnett and he had sat there. With jody's mom helped record the calls. When jeff was still on the run and holding jody. Captive and deputy burnett would also be present when jeff was slated to be delivered to the baton rouge sheriff's department to face charges in jody's abduction and it was this huge scene. There is a massive crowd of people. News cameras everywhere and cops everywhere. So on march sixteenth. Nineteen eighty-four jeff. Do said walked off an american airlines flight flight. Five ninety five from dallas it was escorted by baton rouge deputies. They walked through the airport lobby. And i want to remind our airport security in nineteen eighty-four was nothing like it was today. It was kind of a free for all. You need a ticket to get to the terminal gates and it's really crazy to think about what it was like and how potentially dangerous it was Anyway just to let you know it was a different time. Deputy mike barnett is one of the guys escorting. Jeff doucet and naturally. He's keeping a lookout for anyone in jody's family especially jody's dad gary who've called from our last episode said this to debbie barnett when he found out what jeff had done to his son. My best. kill the motherfucker and mike gary. Look i understand. That's how most parents respond and that was a reaction that was decry upsetting. Just so you think you own. So deputy barnett wants to make sure gary's not there in the crowd for obvious reasons for mike looking for my dad. He's looking at the people in the crowd looking for my dad and he was looking for other parents of some other kids at jeff had admitted to molesting on the on the plane ride home. Yeah there were other victims. According to defense attorney foxy sanders. Half a dozen parents called him with similar stories of abuse involving their children. And jeff doucet anyways back to the airport and this crowd of people gathering to catch a glimpse of this admitted pedophile. Finally jeff was back in. Louisiana was handed off to two police officers one of them being my cornet who keep referencing the other officer named bud. Connor there's a crowd there's cameras as he's being walked in little. Did anyone know jodie's father garry. Was there too. Will mike jeff. Bud come walking around the corner answer coming. The camera filming them resumes on just face and asked curious parallel with the payphones that my dad was on. Jody's dad gary was standing at a payphone in the background. He was actually on the phone with a friend of heads and he was armed by there was a little payphone. He had a baseball cap sunglasses. He had a thirty slows revolver tucked in his boots. And when my dad saw his face he reached he grabs the gun. He told his friend. He said you're going to hear the shot as jeff was being walked through the airport. A wbrc news crew followed behind and the cameraman caught. What happened next suspect through there. Were already my camera. Raced it up to get close up shot of them as i got a close up shot and has he got parallel to me and turned around and shutting. You don't mess with people's kids and we don't want to condone vigilante justice or violence but fucking with someone's kids is a risk to your own safety. Gary prochet had wrapped a newspaper around his thirty eight caliber revolver and he eventually snuck the gun into the airport by putting it into his right boot. There was approximately eight three feet gap between jeff and gary when he aimed and the bullet was fired. Point blank at jeff's right ear. Right after the gun went off the deputy standing next to jeff pin gerry against the line of payphones and grabbed the gun out of his hands. It was later revealed. The friend who was on the phone with gary had actually attempted to warn police about gary's plans and that collagen made about ten minutes before jeff walked off the plane and for whatever reason wires were crossed. Nobody could be warned in time about what gary intended to do. When he was not intercepted. And you actually hear what deputy mike barnett said to. Gary in the seconds immediately following the shooting gary's response. If somebody did it to your kid you do it too. So what do you guys think about this. And if you watch the footage it really is crazy. First of all how close gary was to jeff when he shot covert sneak attack. It was nuts to watch while he was also so he was on the phone facing away from them so he is facing the wall with a hat on so he's pretty much in disguise up until the moment right before he shot the gun like there wasn't even a moment of him turning around that anybody would have even recognized to intervene in the situation whatsoever so and then the way that the news people caught it literally looked like it was the scene of the movie. Yeah and it it it. It had shays of jack. Ruby shooting oswald because you have a prisoner coming in. The prisoner is in chains. Guy should put but it was different because oswald came out of a crowd. Gary was sitting at payphones. Like you said in disguise waiting for that exact moment timed it kinda perfectly turns around right at the right moment and then shoots him and then kind of turns back around to the payphones almost a high. Maybe hang up the phone and Maybe to put the gun down to. I'm not sure what he was doing there but but then then he gets tackled by the police. Yeah it's it's crazy. And obviously i mean we've referenced this footage now several times. An implication here is that it was caught on tape. So what does the news going to do with the tape. What is the camera cameraman going to do with this tape. The tape becomes sort of a character in this whole story. The camera got all the cameraman. One minute after the shooting happened he had the wherewithal to take the tape out and put it in a bag and put a new tape in so if the police want us confiscate the tape he was gonna give him the tape. That didn't have the shooting on it and he was going to take the take with the shooting back to the new station. Police arrested gary on the spot and they didn't take the tape but now the new station had to decide whether or not to air this footage. The police didn't ask for the faith but they had the project the shooting back to the station to decide whether or not they were gonna put on air that night and they decided to go with the news ran to footage uncensored and no surprise but it made national headlines elite story tonight a bathroom van arrested for the recent kidnapping of a ten year. Old boy has just been gunned down as detectives brought him back from california. What do we think about. The news is decision to not give the tape to police but errand is it sort of like they knew it would sell like. Is it ethical to do this. I mean what are thoughts on their decision to to run this footage nationally. When i was taking a look at this. I didn't realize that this was the case. I had seen this footage before back in the day but Knowing that the cameraman hit the tape like that. That's a cameraman are trained to do things like that if they do something potentially and and a lot of times particularly now when you're catching. It's it's catching police. Doing bad things but i completely understand what the cameraman was doing as long as it gets out there. You know The one thing about this crime being caught on camera is that you don't see the moment of impact you don't see it's not like seeing jfk's head explode or something like that you don't see the moment of impact but you hear it and you see right before and right after. Yeah i mean. Is that not a legal for him to not give it to the police. Isn't i would assume that's considered evidence to prove it and it could be like. Oh we didn't know there's all ways around it and it happens all the time. I mean a great example is jinx right like their story is like it was found way deepen posts. They didn't know it existed. They held onto that shit for months convenient but again prove it like we can't pre. They held it back on purpose. But whatever whatever all right so you can google this like we're talking about and you can see it all for yourselves. Whole thing is shocking. But like billy said you don't see the moment of impact so just enough i if you do want to watch it So at this point when he gets shot jeff do sets. Hands are still in. Handcuffs and youtube actually warns viewers before the press play. The video could be inappropriate or offensive early as wild story. After all of this went down. Gary was booked and taking a jail while jeff was rushed to the hospital and once he arrived to his put on life support. Despite all the life saving efforts jeff ultimately died around noon. The next day was friends with everybody. Loved everybody but don't cross it. You screw around with one of his kids so so i. I wasn't shot a little shock. But no my dad no you don't you don't cross my dad. But that's because he. He put so much trust in the jet he was hurt. He was hurt by jeff. And in the find out with jeff had done the me jeff across that line and it was either going to be my dad or jeff. That was going to die that night. There's no denying that this is a shocking case and even more shocking example of vigilante justice. And maybe not so. Surprisingly the community reacted with strong support for gary for the most part people believe jeff got what he deserved and immediate interview. One woman even said that if it were her she would have tried to shoot. Jeff more than once said jeff got justice gary saved taxpayers money by quote blowing do set away unquote. Many people not only thought about jodi but thought of the other children that jeff had abused to. Now let's shift the focus back to jody's mother june. What on earth was she thinking during. All of this about my mother had just gotten home. She knew jeff is calling the home that night. They walked through the house. And you know how they preview coming on the news. The guy goes unnoticed sale at guns down alleged kidnapper details at ten well. My mother knew exactly who had one. And that's how she found out. Obviously jody was not at the airport when this happened it all went down and he was eleven so how was it when he found out that jeff was killed by his father and diddy watch the footage of the shooting at that time. They told me not to watch it. They're like whatever you do. Don't watch it. I i think i did watch it. I was very sad. I was fat. Childlike i mean i remember going out the day after behind the back fans and i got i got away from all the commotion that was going on at the house and i just sat down behind it back. I just cry for about an hour. He's a confusion in this eleven year olds mind. It was just surreal. I mean here. I am with a dude that you know i mean i. I like jeff. I didn't tell on him to see this person that you've been hanging out with for the last year you has really good times with You know we go to the asteroid. Hell he took the disneyland while all this kid that so it wasn't all bad this guy being murdered by your father on frigging tv. Yeah it was kind of surreal. Goaty was hurting the whole shape. Family was hurting and on top of that. This case was one of the most high profile baton rouge had ever seen. So the best thing jody's mom could think to do was get her son out of town immediately. After the shooting. My mother took us to go stay with my godfather in biloxi mississippi and so we stayed there for a week because we had people from the london times come and wanting to interview us and we were talking to the press so we just got out of dodd. Meanwhile gary was charged with second degree murder and his bill is set to one hundred thousand dollars after the weekend in jail. His friend posted a property. Bond setting gary free but he still had to answer to his crime. His lawyer foxy sanders immediately. Sent gary to a psychiatric ward. Because sanders felt gary needed to talk about his feelings about his son being sexually abused. He was taken to jill and shorts with tintri second-degree murder because jest. Technically didn't die until the next day because they put him on life support. My dad's shot him on a friday night so he went to paris krizan for the weekend. He couldn't get out because the bills blondin off on the weekend first thing monday morning and one of his friends put up a property bond and he was out he was taken to a middle facility. He was evaluated for about a month and then he came home so on the heels of the shootings. Something interesting was happening in the community. There is pretty much resounding support for gerry and the community didn't want him to face prosecution. It's shocking and we'll tell you all about it after the break. 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K. a. r. a. dot com slash first degree to get twenty percent off your first order. Sakari dot com slash. I agree in march. Nineteen eighty-five at gary placide. Shot the man who admitted to kidnapping and raping a son. Jody as the man arrived at the baton rouge airport after being extradited from california to face charges for abducting then eleven year old jodie. The community responded by rallying in support by gerry. Phone calls are pouring in from all over the country offering both money and moral support support for. Gary didn't end there. Push defence fund was soon opened at a local bank and the porsche family held jump. Elias upper to raise donations for carey's defense and sold tickets for twenty five dollars. Each carries lawyer said his client would not do a day in jail when all the details came out calling the case a justifiable homicide. So what would the outcome ultimately be. So what eventually happened is due to the publicity. Due to the fact that there wasn't a jury in baton rouge louisiana. That was going to convict my father of second-degree murder sending him to jail for the rest of his life. That wasn't going to happen. So the da realized that and decided to offer a plea deal without jailtime. Well my dad's. I wouldn't take the deal in november of nineteen eighty-four eight months after jeff skilling gary was indicted by grand jury for second degree murder. Jeff's mother was in the courtroom pleading for gary to get the electric chair but according to louisiana state law. If it was to be convicted he would be given a mandatory sentence of life in prison without parole and that sentencing guidelines still stands today rights but his lawyers had something up their sleeve. They could claim a gary was legally and seen during the murder because he was distraught over. How jeff had betrayed him and defiled his son so the lawyers were trying to bring the charge down to either manslaughter or justifiable homicide. Everyone was struggling with the situation at hand. So the big question was should gary go to jail as a murderer or should he be given a pass for ridding the world of a dangerous criminal at the time a manslaughter conviction in louisiana could grant someone a maximum sentence of twenty one years in prison today. The same charge carries a maximum sentence of forty years. In the end. Gary was offered a plea deal for manslaughter to which he pleaded no contest they offered a plea deal to manslaughter and after the psychiatric evaluation of the judge recommended are suspended sentence and he recommended three hundred hours community service and probation and the judge said you know in in louisiana. We don't have temporary insanity. We have specific intent. He goes most people in their right. Mind don't go around shooting people ten from television camera so i mean that just goes to show you his state. I mean he did that. Ten fifteen feet in front of a television camera. There's little like hey it wasn't me. I didn't do it. The cop turned around and gay. Wow gary actually. He shielded the other officer from shooting him. 'cause he doesn't block doesn't get in the way that other officer shooting 'cause that other officer didn't know him jodie's father garry would serve no jail time for killing jesse. Set my dad. He was one of the most popular people in baton rouge. He never met a stranger. He was friends with everybody. Knew everybody. I tell. My dad do so many people in baton rouge. She could get away with murder and he did. Okay well what do we all think. It's easy okay. In this case to say he deserved it one less criminal whatever but we see the problems with all of this right. Yeah well we. We have this crime on video. There's no denying it. He's not denying that he did it. So it's all there. The facts are all there then it gets into nuance and with the and i think the prosecutors believe this as well. It's like is a jury really going to take the side of the state which really is almost taking the side of the victim in this case and the victim is a complete piece of shit right. And i've literally seen law and order. Svu episodes that sort of borrow from certain cases. And i think. I saw when like this but in the svu version it was a false confession. And then distraught. Father killed this guy and it wasn't him you know and there are other examples of what could have gone wrong here. I mean he could have missed jeff in ricocheted and hit a kid walking through the airport. So there's a lot of problems in a lot of know reckless implications involved with this beyond eradicating the world of one criminal. We can't we can't go shooting people without due process Even with you process as slippery blake. He whether it's justified or not. Then it's like okay so now we're taking it into our own hands. Anybody like do the same thing. And then i mean the world turns into a fucking shit show. Yeah and you also have to know something. Louisiana's laws are so different than any other states laws. I remember taking a law class in high school and every other paragraph is like this law is is in every state except louisiana. It's it's it's almost. It's almost like a different country in a sense so we have to ask ourselves. Did gary get away with murder and were his actions justified. Some newspaper headlines actually referred to gary as a hero. Why did so many people commend gary's actions and is that okay and obviously we don't condone what gary dead and lake alexis said. There's so many ways that this could have gone wrong. Gary could have shot missed and struck an innocent person. A cop who didn't know gary was could have killed him because as soon as shot goes off you can see. The deputies immediately grabbed their guns and he could have justifiably been given a much tougher charge and sentence because he was deliberate in his murder. Regardless of how you spin it. And gary may have had this reason to kill jeff but it doesn't mean. His reason was sensible by any means and jodi acknowledges us an advocate for digital justice. Look at the nestle situation ellie nessler. Her son was abused by can't tell southern christian camp and she was in court. Rinse the courtroom and shot him and killing. Ellie ended up getting convicted going to jail. She's dot cancer but her son willie. He's in jail right now. Think for life for murdering a guy who stole his work tools besides the example jodi just provided there. Many others were. The law did not side with the person who killed someone who heard a family member. It's a risk and the odds are not in your favor. And as the dust of this super high profile case slowly settled jody focused on healing and resuming life as normal kid. When would go on to excel in sports and his studies high school. I was a my senior year. I was a four sport. Athlete quarterback all district. I was the offense of mvp of the district. I was all district second baseman in baseball. I also ran track. But i just went back to be at a high school kid and it wasn't until years later in nineteen one. The jodi started talking about his experience publicly. Which would turn him onto his advocacy work. It wasn't until shortly after. I graduated high school in nineteen ninety-one. We got a call from producer. The geraldo rivera. Talk show and you know it was a free. New york's how you did sounds like come on. Let's go daddy. And so they had agreed they work with do anything till i turned eighteen and once i turned eighteen. They said it was up to me. If i wanted to be on tv. Show so i was like yeah. Let's tell the story we out of new york. We do show aired june nineteen ninety-one week or two later. I get a phone call from mike. Boorda the same cop that was in the air for my dad's and he called me. Jody i want you to hear this from me. I because this is going to be on the news and the newspaper he goes. We just arrested a pastor who was molesting these two boys. The one boy came forward and he said he saw your story on geraldo. And that's what made him come forward having the strength invulnerability to share your experiences really does have the ability to inspire hope for those struggling and this is the concept that the first degree was essentially founded upon. And so. that's that's probably the moment. When i realize that in my mind free trip turns into me. Stop a guy molesting kids. And that's when. I realized i could take something that was negative. That happened to me and try to turn it into something positive. That can help other people and show them that. You don't have to be scarred for life you don't have to be some you know damaged goods. I mean like. I said i. I have been playing. Sports now enrolled in college. So i mean. I was pretty much average. Eighteen year old girlfriend. That's the moment when i was like okay. I know what i wanna do. It gave me purpose. It gave me the rations when i was in college. There's an organization an organization that story call michigan's violence and basically it was men as allies to fight sexual assault against women like teammates that led me so victim services center of of montgomery county pennsylvania in norristown pennsylvania and even now when i do a presentation or speech. There's there's this after presentation kind. A little high but full rush. I get to where okay i. I've accomplished something now. What started as a free trip to new york ended up leading jody to his calling after high school. He went on to get his bachelor's degree. In general studies at louisiana state university with a minor in psychology speech communications and philosophy in college. He was on the board for men against violence and he then went on to be an advocate for sexual assault victims especially for students between the ages of pre k. To college he spoke at professional trainings for police departments hospitals and in two thousand and four even attended a conference at the white house on missing exploited and runaway children in two thousand nineteen. Jody published a book. Titled why gary why it chronicles his life. Almost forty years ago and gives advice to parents about how they can protect their children. Jody continues to share his message with people across the country by attending crime conferences. Its effort to help people who might be in a similar situation as he was and possibly give current victims the courage to come forward to prevent future abuse before we wrap things up and talking to jody. You wondered how jody's gary coped with what he had done killing a man even if he thought he deserved. It is traumatizing to say. The least mother was raised catholic. I mean he did community service at the the catholic school in church so he he definitely had strong beliefs. That also not kill. But i think Thou shall not fuck my kid. Trump's vow night -til so did my dad regret killing jeff. No did he regret the fact that he killed us. Human being i believe so i don't know if he ever said it by. I do believe that there were times where you know. He's just wish the whole thing would have never happens. It also goes to show how out of his mind was. I mean i mean my dad's like i said he was prepared to die. And when you're when you're there you're dangerous when jodi looks back on jeff. Now there's no confusion about what or who. He was clearly was a sociopath because he had emphysema empathy for nobody else. He didn't care about no one else's feelings he would lie to anyone for whatever reason to get whatever he wanted. Most importantly jodi has never let these experiences. Define him with the proper support. You can get over this if you think. That's the worst if you think being sexually abused as the worst thing that happened so you you're to feel that way and how do you think is how you feel. You gotta get but you gotta know you can overcome you. Can you can overcome and you can be alright. Ask for gerry. Following the incident he continued living somewhat normal life besides being known as a legend in some people's eyes. Jody is alluded to in two thousand eleven. Gary suffered a stroke prompted. Jody return baton rouge afterwards. He was put in a nursing home on october twentieth. Two thousand fourteen. Gary suffered a second stroke and passed away at sixty eight years old before his death. Gary didn't interview with. Espn were reporter. Asked him a very important question. Do you regret killing jeff. No would you do it again. Oh yes all right. well huge. Jody for being with us for the past two weeks. If you are listening out there and you have a story to tell please email last hello at the first read. Podcast dot com. Follow us on instagram. At the first three out alexis linkletter appalachia johnson. At jack vanik join our facebook group. You're talking true crime all the time by searching the first degree in the search bar and Check back tomorrow because we're gonna have a brand new episode of killing time right in our and remember only you can prevent serial killers. Keep your friends close but not happy. Be hot fruit. Dagon ill shoutout to jared monaco for scoring and creating original music for the first degree producing by caitlyn cleveland producing an additional writing by taylor rogers and producing for gas one by on santiago sources for this episode art. Espn advocate washington. 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