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WASHINGTON -- Janice Farmer watched helplessly as her life savings disappeared.
Farmer, a single mother from Orange County, had worked hard and denied herself extras so she could build a nest egg. And she'd saved $700,000 for retirement with something left over for her children and grandchildren.
Out of loyalty to her company, she invested her retirement money in Enron stock. Then one day in October, her dream of a secure and carefree retirement evaporated.
Enron stock was falling and she needed to sell. But when she called, she found out her 401(k) plan was under new management and her stocks were frozen for a month during the changeover. With no recourse, she watched her stock drop, and drop, and drop.
When she finally got the chance to sell, her life savings was worth only $20,408.
"We were a loyal and hardworking set of employees. We lived, ate and breathed Enron. They betrayed that trust. My life savings is gone," Farmer said Tuesday at a hearing of the Senate Commerce Committee. Farmer worked 16 years for Florida Natural Gas Transmission in Winter Park, one of several pipelines that merged to form Enron.
Farmer's loss is a case study for the millions who saw at least part of their retirement savings vanish as Enron went from the country's seventh-largest company to almost total collapse.
The stock plunged from more than $90 a share last year to pennies. And pension plans and 401(k)s throughout the country took a huge hit. Florida's pension fund for government workers held 7 million shares that are now virtually worthless.
Enron employees such as Farmer collectively lost billions.
"I can't help but feel I and thousands of employees like me have been lied to and we have been cheated," said Farmer, 61, whose daughter, Julie, placed a comforting arm around her as she testified.
Farmer and others said they concentrated their investments in Enron to support the company they had helped build. Executives had told them that their investments would help the company avoid a hostile takeover. The workers also kept their money in Enron because the same executives advised them the stock was headed up even further. And Wall Street echoed the optimism.
You just don't sell when you see those sorts of predictions, said Charles Prestwood, another Enron retiree, who lost $1.3 million.
Robert Vigil, a foreman, said many workers didn't have a choice. Company officials barred workers younger than 50 from selling Enron shares that were part of the company contribution to the 401(k).
Those same executives, meanwhile, were selling their own shares at the top of the market. Chief Executive Officer Kenneth Lay, for instance, cashed out $101 million worth of stock. That was before the company conceded it had misstated its assets by $1.2 billion -- and before the public knew Enron had set up a series of complicated transactions with secret entities that helped enrich company executives.
Lay, who once ran Florida Gas Co. in Winter Park before it became part of Enron, was invited to testify Tuesday but declined. He is expected to testify Feb. 4 instead.
Sen. Byron Dorgan, D-N.D., said the Senate will investigate what laws need to be changed. The Securities and Exchange Commission also is looking into Enron's collapse, which likely will set a record as the country's biggest bankruptcy.
The company used side business entities to hide massive amounts of debt.
"This is about an energy company that morphed into a trading company," Dorgan said. "It took on substantial risk, created secret off-the-books partnerships and, in effect, cooked the books under the nose of their accountants and investors."
Arthur Andersen, Enron's independent auditor, missed warning signs. C.E. Andrews, head of Arthur Andersen's auditing division, said his firm is investigating what went wrong.
Arthur Andersen also has been criticized for compromising its objectivity by taking millions in consulting fees from Enron even while it was serving in the watchdog role of auditor.
Andrews said that sort of dual role is legal, although some people see an appearance of a conflict of interest. He conceded the auditing firm made an error on one major transaction. But one of Enron's largest problems was caused when company officials failed to give auditors crucial information.
Lawmakers said they'll look into the secret deals that gave executives millions in management fees from partnerships.
"It's a no-brainer. It's an unbelievable conflict of interest," said Scott Cleland, head of The Precursor Group, an independent stock analysis company.
Congress also will investigate the monthlong "lockout" when workers couldn't get access to their retirement savings just as the stock was dropping.
Sen. Barbara Boxer, D-Calif., a former stockbroker, said she has asked the Internal Revenue Service to investigate whether the lockout violated a federal law that prohibits companies from requiring workers to buy company stock with their own 401(k) contributions.
Perhaps, she said, some of the workers' money could be recouped by revoking Enron's tax breaks for the retirement plans.
Independent stock analysts said Enron's collapse is part of a larger ethical lapse on Wall Street. Shareholders think they're getting independent advice from Wall Street analysts but too often those analysts have conflicts of interest. Auditors don't dig as deeply as they should because they don't want to alienate companies that pay them consulting fees. And accounting rules haven't kept up with the types of complicated transactions Enron used.
The retirees said they were pouring their hearts out with the hope Congress will crack down.
"It may be too late for you to help me," Farmer said. "But it is not too late for you to take action to make certain this does not happen to someone else."
Farmer had helped Enron with real estate transactions and taught safe handling of natural gas before she retired last year. Now she's left with that check for $20,408 and $63 a month from a previous employer's pension. She's not even eligible for Social Security until next year. She might have to go back to work.
What hurts most of all is the lost pride. "I'm a simple person," she said. "I could never have spent that much money. That was for my children and grandchildren, and now I have nothing to leave them."
Farmer, a single mother from Orange County, had worked hard and denied herself extras so she could build a nest egg. And she'd saved $700,000 for retirement with something left over for her children and grandchildren.
Out of loyalty to her company, she invested her retirement money in Enron stock. Then one day in October, her dream of a secure and carefree retirement evaporated.
Enron stock was falling and she needed to sell. But when she called, she found out her 401(k) plan was under new management and her stocks were frozen for a month during the changeover. With no recourse, she watched her stock drop, and drop, and drop.
When she finally got the chance to sell, her life savings was worth only $20,408.
"We were a loyal and hardworking set of employees. We lived, ate and breathed Enron. They betrayed that trust. My life savings is gone," Farmer said Tuesday at a hearing of the Senate Commerce Committee. Farmer worked 16 years for Florida Natural Gas Transmission in Winter Park, one of several pipelines that merged to form Enron.
Farmer's loss is a case study for the millions who saw at least part of their retirement savings vanish as Enron went from the country's seventh-largest company to almost total collapse.
The stock plunged from more than $90 a share last year to pennies. And pension plans and 401(k)s throughout the country took a huge hit. Florida's pension fund for government workers held 7 million shares that are now virtually worthless.
Enron employees such as Farmer collectively lost billions.
"I can't help but feel I and thousands of employees like me have been lied to and we have been cheated," said Farmer, 61, whose daughter, Julie, placed a comforting arm around her as she testified.
Farmer and others said they concentrated their investments in Enron to support the company they had helped build. Executives had told them that their investments would help the company avoid a hostile takeover. The workers also kept their money in Enron because the same executives advised them the stock was headed up even further. And Wall Street echoed the optimism.
You just don't sell when you see those sorts of predictions, said Charles Prestwood, another Enron retiree, who lost $1.3 million.
Robert Vigil, a foreman, said many workers didn't have a choice. Company officials barred workers younger than 50 from selling Enron shares that were part of the company contribution to the 401(k).
Those same executives, meanwhile, were selling their own shares at the top of the market. Chief Executive Officer Kenneth Lay, for instance, cashed out $101 million worth of stock. That was before the company conceded it had misstated its assets by $1.2 billion -- and before the public knew Enron had set up a series of complicated transactions with secret entities that helped enrich company executives.
Lay, who once ran Florida Gas Co. in Winter Park before it became part of Enron, was invited to testify Tuesday but declined. He is expected to testify Feb. 4 instead.
Sen. Byron Dorgan, D-N.D., said the Senate will investigate what laws need to be changed. The Securities and Exchange Commission also is looking into Enron's collapse, which likely will set a record as the country's biggest bankruptcy.
The company used side business entities to hide massive amounts of debt.
"This is about an energy company that morphed into a trading company," Dorgan said. "It took on substantial risk, created secret off-the-books partnerships and, in effect, cooked the books under the nose of their accountants and investors."
Arthur Andersen, Enron's independent auditor, missed warning signs. C.E. Andrews, head of Arthur Andersen's auditing division, said his firm is investigating what went wrong.
Arthur Andersen also has been criticized for compromising its objectivity by taking millions in consulting fees from Enron even while it was serving in the watchdog role of auditor.
Andrews said that sort of dual role is legal, although some people see an appearance of a conflict of interest. He conceded the auditing firm made an error on one major transaction. But one of Enron's largest problems was caused when company officials failed to give auditors crucial information.
Lawmakers said they'll look into the secret deals that gave executives millions in management fees from partnerships.
"It's a no-brainer. It's an unbelievable conflict of interest," said Scott Cleland, head of The Precursor Group, an independent stock analysis company.
Congress also will investigate the monthlong "lockout" when workers couldn't get access to their retirement savings just as the stock was dropping.
Sen. Barbara Boxer, D-Calif., a former stockbroker, said she has asked the Internal Revenue Service to investigate whether the lockout violated a federal law that prohibits companies from requiring workers to buy company stock with their own 401(k) contributions.
Perhaps, she said, some of the workers' money could be recouped by revoking Enron's tax breaks for the retirement plans.
Independent stock analysts said Enron's collapse is part of a larger ethical lapse on Wall Street. Shareholders think they're getting independent advice from Wall Street analysts but too often those analysts have conflicts of interest. Auditors don't dig as deeply as they should because they don't want to alienate companies that pay them consulting fees. And accounting rules haven't kept up with the types of complicated transactions Enron used.
The retirees said they were pouring their hearts out with the hope Congress will crack down.
"It may be too late for you to help me," Farmer said. "But it is not too late for you to take action to make certain this does not happen to someone else."
Farmer had helped Enron with real estate transactions and taught safe handling of natural gas before she retired last year. Now she's left with that check for $20,408 and $63 a month from a previous employer's pension. She's not even eligible for Social Security until next year. She might have to go back to work.
What hurts most of all is the lost pride. "I'm a simple person," she said. "I could never have spent that much money. That was for my children and grandchildren, and now I have nothing to leave them."
