Baptists’ Suit Against Andersen to Go to Trial

Embattled accounting firm Arthur Andersen, fighting for survival after a federal obstruction of justice charge, goes to an Arizona court this week to face investors who claim it failed to flag fraud that triggered the largest nonprofit bankruptcy in U.S. history.

Jury selection is set to begin today in the case brought by the trust for the Baptist Foundation of Arizona, which alleges Andersen failed to do its job as auditor of the organization, which filed for bankruptcy protection in 1999, causing 11,000 mostly elderly investors to lose $570 million.

Chicago-based Andersen was indicted on charges of criminal obstruction of justice after a federal probe into the destruction of records from audits of Enron Corp., the Houston-based energy trader.

The Phoenix case, which preceded the Enron debacle, was supposed to have been dismissed after Andersen agreed to pay $217 million to settle the class-action suit by former investors in the foundation as well as a civil suit by state regulators and proceedings by the Arizona Board of Accountancy.

But the March 1 settlement deal fell apart just four weeks later when Andersen’s insurance company refused to pay.

Opening statements could begin in Maricopa County Superior Court as early as Tuesday.