Insull and Enron: Is There a Parallel? Part 3: Samuel lnsull - Prisoner in the Dock (Part 3 of a 3-Part Series)

Infrastructure 43:1 (2003)

3 Pages Posted: 31 Oct 2012

See all articles by Hon. Richard D. Cudahy

Hon. Richard D. Cudahy

U.S. Court of Appeals for the 7th Circuit

Date Written: 2003

Abstract

This article is the final part of a three-part series on Samuel Insull, infamously known for presiding over a pyramid of electric utility holding companies which at its collapse left hundreds of thousands of investors in varying degrees of destitution. At its peak, Insull's empire extended to 32 states and its total assets were valued at $3 billion. Insull was appointed chairman of the Illinois State Council of Defense and contributed significantly to the senatorial campaign of Frank Smith, but allegations of corruption brought negative publicity and a Federal Trade Commission investigation into the electric utility industry. When a capitalist from Cleveland began acquiring stock in Insull's companies, Insull had to rely on pyramiding, leverage, and the creation of an investment company to to keep all his utility holdings in order to assure his control of the empire. Then the Great Depression hit. Insull remained confident and spent hundreds of millions in capital investment, but because he borrowed extensively against his company's stock prices in addition to other controversial and questionable business practices, the market values of his securities went into a sickening plunge. Insull was forced to resign from the management of all his companies and fled to Europe. He was brought back to America and indicted for embezzlement, larceny, mail fraud and bankruptcy violations but was acquitted of all charges, however this outcome did not exculpate him in the eyes of the multitude that had gone down with the ship.

Suggested Citation

Cudahy, Richard D., Insull and Enron: Is There a Parallel? Part 3: Samuel lnsull - Prisoner in the Dock (Part 3 of a 3-Part Series) (2003). Infrastructure 43:1 (2003), Available at SSRN: https://ssrn.com/abstract=2018604

Richard D. Cudahy (Contact Author)

U.S. Court of Appeals for the 7th Circuit ( email )

219 S. Dearborn Street
Chicago, IL 60604
United States

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