5 Biggest Financial Scandals in US History

2. Enron

Enron was an energy company based in Texas. Enron declared over $100 billion in annual revenue before its downfall, though of course the figure was incorrect because of widespread accounting manipulations. To represent favorable performance, Enron continued to misrepresent its financials, and because of its complex financial statements, was already confusing to not just shareholders but analysts too. In 2001, Enron earned $138.7 billion in revenue in just the first nine months. Among the numerous frauds perpetrated by the company, loan transactions were misclassified as sales, while mark to market accounting saw Enron record the present value of earnings over the period of a contract at the start. In one such example, Enron not only recorded profits of more than $110 million after a failed deal with Blockbuster, but even when Blockbuster withdrew from the deal, Enron continued to report profits despite the reality being significant losses.