Lehman Brothers ("Repo 105") 2008

http://www.wealthdaily.com/articles/lehman-brothers-enron-accounting-gimmicks/2375

When Enron caused stockholder's to lose $70 million, Enron employees lost $2 billion, and 90,000 employees lost their jobs because of Arthur Anderson and his deceptive ways, that should be an indication to other accounting firms to learn from falsifying losses and revenues. However, Lehman Brothers thought that they could fool the system again with the intention of filing for the largest bankruptcy in U.S. history. Now is this negligence or fraud? Here are the facts.

Negligence is defined as not paying attention or a lack of concern for another person or situation. Fraud, on the other hand, is an intentional act caused by an individual willfully to commit a crime.  Did the Lehman Brothers commit fraud or negligence? This is one question that has been ask. In other words, no one wants to claim facts as they really are.

For 18 months, the examiner of the Lehman Brother's case, looked through 10 million e-mails, 20 million documents, and typed a report of 2,200 pages. This scheme is named "Repo 105"  and this is how it works. Lehman would contact banks in the Cayman Islands and agree on terms for a repurchase agreement. In the meantime, Lehman would "sell" toxic assets to another bank claiming to buy the assets back. Instead they kept the money and recorded the money as a sale instead of a loan. This helped their asset figures and cancel out their debt figures. Eventually, their scheme caught up with them and the "books" or balance sheet recorded $50 billion more than actual cash on hand. They had nothing.

With this blog is a video on the webpage.