Andersen Settles Foundation Claims – Again

May 7, 2002 (PLANSPONSOR.com) - Arthur Andersen has reached another settlement deal regarding its role in the collapse of the Baptist Foundation of Arizona, the largest non-profit bankruptcy in the nation's history.

The settlement, which is subject to court approval, comes one week into a trial in a lawsuit against the struggling accounting firm by the nonprofit investment manager’s bankruptcy trust.

The settlement mirrors a deal that had been announced on March 1, but which fell apart when Andersen’s insurance company  – which is owned by Andersen and its international affiliates – said it was unable to pay the promised settlement because of financial difficulties created when Andersen failed to make a $100 million premium payment. 

Begin Again?

Andersen had reached the initial settlement just days prior to going to trial.  That was the second-largest litigation settlement ever by an accounting firm over its work for an audit client and the largest-ever by Andersen. 

Investors in the foundation claimed Andersen had been negligent as its auditor and ignored warnings that executives were running what amounted to a giant Ponzi scheme under the guise of raising funds for southern Baptist causes.

Andersen said under the terms of the renewed settlement, which resolved suits brought by investors and state regulators, it neither admitted nor denied any fault in the matter.

In addition to settling the case brought by the foundation’s bankruptcy trust, the latest agreement would resolve a civil lawsuit brought by the Arizona attorney general’s office, a separate class action by aggrieved foundation investors, as well as a state administrative proceeding by Arizona accountancy regulators, according to Dow Jones.

Despite the size of the settlement, the 11,000 Baptist Foundation investors reportedly lost an estimated $570 million. 

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