Enron was at one point one of the most powerful companies financially, or so it appeared. Enron used Mark-To-Market accounting, which is used in trading securities. Enron would create an asset and immediately report a profit even though they hadn't made a dime. If the asset ended up in loss, they would transfer it to an off the books corporation and not take any loss in the books. One main reason that they were able to pull off this trickery for so long is because Jeffery Skillings was able to lure top business school graduates with benefits and luxuries. One of the brightest grads that Skillings got was Andrew Fastow, who used Special Purpose Entities to hide any asset losses or assets that go under. This method kept the losses off the companies books. Enron issued that the SPE investors would compensate them for their losses.


http://www.investopedia.com/articles/stocks/09/enron-collapse.asp