HOUSTON, April 8 (UPI) -- Expanded lawsuits were filed Monday in the collapse of the energy giant Enron Corp., accusing nine banks, two law firms and more individuals in an alleged scheme to defraud shareholders and employees.
The University of California, the lead plaintiff in the Enron shareholders' lawsuit, filed a consolidated complaint, and lawyers for Enron employees also filed an expanded lawsuit charging banks, auditors and others violated federal laws.
The filings met a Monday deadline imposed by U.S. District Judge Melinda Harmon who is trying to consolidate scores of lawsuits involving Enron and its auditor, Arthur Andersen LLP. She had tentatively scheduled a trial to begin Dec. 1, 2003.
The shareholders' 485-page amended complaint named J.P. Morgan Chase, Citigroup, Merrill Lynch, Credit Suisse First Boston, Canadian Imperial Bank of Commerce, Bank America, Barclays Bank, Deutsche Bank and Lehman Brothers.
The shareholders' lawsuit alleged the banks were key players in fraudulent transactions that cost shareholders more than $25 billion. At the same time, the complaint charged a number of top bank executives profited personally from the schemes.
Two law firms were also included as defendants -- Enron's Houston-based corporate counsel Vinson & Elkins, as well as Chicago-based Kirkland & Ellis, which Enron used to represent a number of so-called "special purpose entities."
"These prestigious banks and law firms used their skills and their professional reputation to help Enron executives shore up the company's stock price and create a false appearance of financial strength and profitability which fooled the public into investing billions of dollars," said James E. Holst, the university's general counsel. "In return, these firms received multi-million-dollar fees, and some of their top executives exploited the situation to cash in personally."
In a statement, Vinson & Elkins said, "We are reviewing the complaint and are not in a position to comment in detail, however, as we have said from the beginning, we are confident that there is no legitimate basis, either in the facts or in the law, to include Vinson & Elkins in this litigation."
There was no immediate comment from the other new defendants.
The amended shareholders' complaint also alleged there was nearly $1.2 billion in insider trading by 28 Enron directors and officers, about $171 million more than previously disclosed. Two Enron insiders, Kenneth Lay and Robert Belfer, together sold $144 million more than has been reported, according to the new complaint.
The named banks allegedly helped to set up clandestinely controlled Enron partnerships, used offshore companies to disguise loans, and facilitated the phony sale of overvalued Enron assets. The law firms issued false legal opinions, helped structure non-arm's-length transactions, and helped prepare false submissions to the U. S. Securities and Exchange Commission, according to allegations in the complaint.
The new complaint also extends the responsibility of Enron's auditing firm, Arthur Andersen, to cover the role of 24 Andersen executives and several of the firm's international entities, including Andersen Worldwide, SC, and affiliates in Brazil, the Cayman Islands, India, Puerto Rico, and the United Kingdom.
The amended complaint filed in behalf of Enron employees added four bankers -- Merrill Lynch & Co. Inc., J.P. Morgan Chase & co., Credit Suisse First Boston Corp., and Citigroup. It also added the law firm of Vinson and Elkins, plus Arthur Andersen & Co. Worldwide Societe Cooperative, Arthur Andersen LLP and specific partners, and UK Arthur Andersen.
In the new lawsuit, lawyers for the employees charged the wrongful conduct was not limited to Houston, but occurred with the help of Wall Street investment bankers and lawyers who helped prop up Enron. In the process, the firms allegedly earned millions in fees and much more for lending, derivatives trading and other advice.
Enron filed the largest bankruptcy in the nation's history last December and the collapse of the huge energy trading company is the focus of numerous federal investigations. More than 4,500 Enron employees lost their jobs and their retirement savings.
