Accounting giant Arthur Andersen has completed its $217 million payment in a May 6 settlement with 13,000 former investors of the Baptist Foundation of Arizona (BFA), the Associated Press reported June 5.
The Arizona Republic, meanwhile, reported June 5 that Andersen had technically missed a June 4 deadline for the payment, but Arizona Attorney General Janet Napolitano’s office nevertheless affirmed “there is a transfer of funds in progress.”
Investors lost $570 million in BFA’s 1999 collapse.
After attorney’s fees, former BFA investors are expected to recoup about $175 million in losses from the Andersen settlement. According to The Arizona Republic, investors possibly could recoup 72 cents on the dollar from the Andersen settlement as well as sales of BFA assets and a $21 million settlement with the BFA’s former law firm May 14.
The BFA case involves the largest Chapter 11 bankruptcy filing by a nonprofit organization in U.S. history, and the $217 million settlement is approximately twice the largest malpractice court settlement previously agreed to by Chicago-based Arthur Andersen. The settlement also is the second largest ever paid by a “Big Five” accounting firm to settle litigation not associated with the savings and loan crisis.
Andersen, in a May 6 statement, said it agreed to the settlement “without admitting or denying any fault, in a way consistent without firm’s plan to resolve this matter for the benefit of all parties.
“It is important to underscore that investors were the victims of a massive fraud perpetrated by Baptist Foundation of Arizona leadership,” Andersen stated.
Already pleaded guilty
“In addition to the controller, Donald Deardoff and two associated of BFA who had already pleaded guilty to criminal offenses, five members of BFA’s senior management, including William Crotts, the president and chief executive officer, and the General Counsel, Thomas Grabinski have been indicted on multiple counts of criminal fraud. “There is evidence that all members of BFA’s senior management and majority of the board of director’s engaged in a conspiracy of silence to deny information about BFA’s financial condition to the Andersen auditors.
(BP)
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