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States suing Enron for lost retirement funds, weighing Arthur A
With the Enron collapse wiping out at least $1 billion from the retirement funds of teachers, firefighters and other public employees, states are joining a class-action suit to win back some money from the once-giant energy trading company.
Several other states are examining their ties to accounting firm Arthur Andersen, or weighing legal action against it. Florida has already filed subpoenas for a potential civil suit.
"We owe it to these public servants to get back as much of their money as we possibly can," Ohio Attorney General Betty Montgomery said.
The retirement of individual public employees -- and the funds' financial stability -- are not in danger, according to the directors of retirement funds in several states. Losses in each state accounted for just a fraction of a percent of each retirement fund's value.
Attorneys general in Georgia, Ohio and Washington state have asked a federal court in Texas to make them the lead plaintiffs in existing investors' securities fraud litigation. Others seeking to lead the class-action suit include agencies overseeing pension funds in Florida and New York City, and the university pension fund in California.
The U.S. District Court in Houston has yet to decide who will lead the suit; briefs are to be filed next week, according to Russ Willard, a spokesman for Georgia Attorney General Thurbert Baker.
Dozens of attorneys general have been discussing Houston-based Enron Corp. and state retirement funds in conference calls over the last month, according to officials in several attorneys general offices.
An Enron spokesman in Houston did not immediately return a call seeking comment on Friday.
The money lost varies widely -- $300 million in Florida retirement funds, $127 million in Georgia, $35 million in Arizona.
Rhode Island lost only $4.7 million, after wisely -- or luckily -- selling all its Enron stock in early August, said Treasurer Paul J. Tavares, the chairman of the state's retirement system.
The lost money, like the $103 million gone in Washington state, needs to be seen in perspective, said James Parker, director of Washington's investment board, where the fund totals $54 billion.
Like Congress, officials in Texas, Florida and Connecticut are beginning investigations into Andersen's role in the downfall of Enron.
Florida Attorney General Bob Butterworth has already issued civil investigative subpoenas to Andersen and Enron.
The Texas Board of Public Accountancy has initiated an investigation into whether the firm violated state auditing standards.
Connecticut Attorney General Richard Blumenthal is seeking a similar investigation, calling recent allegations against the firm "strikingly and surprisingly similar" to a probe into a 1990 real estate investment scam.
In Connecticut, the accountancy board's investigation could lead to the suspension or revocation of the firm's permit to practice in the state.