and so it begins...

fair use for educational and discussion purposes

Link

Tulsa-Based Company Sues Arthur Andersen

Company Claims Fraud, Negligence

TULSA, Okla. -- A Tulsa-based petroleum company is suing an accounting firm for fraud and negligence in the wake of the collapse of Enron Corp.

Attorneys for Samson Investment Co. filed the civil lawsuit Tuesday in Tulsa County District Court against Chicago-based Arthur Andersen. The lawsuit alleged that Arthur Andersen "recklessly disregarded evidence of questionable financial transactions between Enron and its insiders, and otherwise failed to exercise the degree of care, skill and competence that should be exercised by competent members of the accounting profession when confronted with highly questionable insider transactions."

According to the filing, Samson and other "similarly situated entities justifiably relied on the financial audits of Enron" in "entering into contracts with Enron relating to the purchase and sale of hydrocarbons, such as natural gas."

The lawsuit requests class-action status on behalf of those entities that were detrimentally affected by Andersen "in connection with auditing services provided to Enron Corp., thereby damaging Samson."

The lawsuit seeks an unspecified amount of actual and punitive damages.

The audits and financial materials prepared by Andersen for public dissemination by Enron in various Securities and Exchange Commission filings were "grossly misleading," and Andersen did not exercise "reasonable care or competence in obtaining and or communicating the financial data," the lawsuit alleges.

If Andersen properly performed its duties, "Samson and class members would not have entered into contracts with Enron."

The SEC has been looking into Andersen's role in Enron's complex accounting, including questionable partnerships that kept about $500 million in debt off the energy company's books and allowed Enron executives to profit from the arrangements.

According to the lawsuit, Arthur Andersen knew that Enron's "financial statements from at least 1997 forward were intentionally falsified, resulting in a restatement of earnings reducing earnings by over $500 million" for that period.

Arthur Anderson on Tuesday fired its lead auditor, David B. Duncan, who ordered the destruction of documents during an Oct. 23 meeting. Two weeks later, in a desperate e-mail, his assistant said to "stop the shredding." A day before that, Andersen had received a federal subpoena for the documents.

Andersen said it is replacing the management of its office in Houston, where Enron is based.

The Justice Department is pursuing a criminal investigation of Enron, which became the biggest corporate bankruptcy case in U.S. history on Dec. 2.

-- Anonymous, January 16, 2002

Answers

What? You mean someone missed filing a class action against ENRON?

-- Anonymous, January 16, 2002