Enron Corp. - University of California | Office of The President

he was aware of many of the company's accounting improprieties and disclosure failures. In 01,
Andersen paid $110 million to settle shareholder lawsuits in connection with Sunbeam's restatement
of six quarters of financial results. Indeed, the SEC stated that Sunbeam's purported turnaround was
little more than accounting gimmicks, accomplished through the creation of inappropriate "cookie-
jar" reserves. In this case, as in Enron, Andersen's document destruction was a common theme. In
fact, an Andersen partner testified that months after the restatements were announced and after
shareholder lawsuits had been filed, the firm ordered its Fort Lauderdale employees to dispose of any
work papers or correspondence that did not agree with the final documentation of the Sunbeam
restatement.
(c) Baptist Foundation of Arizona. In a suit filed by the Arizona Attorney
General, Andersen had recently agreed to pay investors $217 million to settle a suit in connection
with the 99 failure of The Baptist Foundation of Arizona ("Foundation"), where an ongoing Ponzi
scheme wiped out $590 million of investors' savings, many of them retirees. Three key individuals
associated with the Foundation have pleaded guilty to felony charges, five others have been indicted,
and Arizona authorities are in the process of revoking the licenses of three Andersen auditors. Jay
Steven Ozer, one of the senior partners on Andersen's audits of the Foundation, audited Charles
Keating's Lincoln Savings & Loan, described below. Ozer has recently agreed to give up his Arizona
accounting license. The Foundation used accounting artifices that were strikingly similar to Enron's.
For example, the Foundation used off-balance-sheet entities to hide significant losses in its real estate
investments. Unbeknownst to investors, the Foundation sold the real estate at artificially inflated
prices to a company called ALO, in exchange for a mere IOU instead of cash. In a theme common
to many Enron SPEs, unknown to investors, ALO was a related-party entity created, financed and
controlled by the Foundation. Particularly egregious was the fact that outside CPAs and
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