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

professionals continued to warn Andersen for two years that they highly suspected fraudulent
accounting at the Foundation, yet Andersen completely ignored them. An accountant for the
Foundation testified that more than two years before the bankruptcy she met with Andersen and
openly explained the nature of the Foundation and ALO relationship. Subsequently, a Texas Baptist
group became suspicious, called Andersen, spoke with partners, including Corgel and Donald
Dreyfuss, and told them about the suspected fraudulent accounting at the Foundation. Additionally,
Dee Griebel, a sole practitioner CPA figured the fraud out in an afternoon by conducting a simple
search of ALO's public records, revealing that ALO had a negative net worth of approximately $106
million and couldn't possibly make good on the debt to the Foundation. Griebel then called
Andersen's Chicago headquarters and the Phoenix office twice, stating, "'You must withdraw your
unqualified opinion immediately. The company's effectively broke. Call me.'" Neither the Chicago
or Phoenix Andersen office ever called her back. From the first warning until the Foundation's
failure, Andersen issued two more unqualified opinions, allowing the Foundation to take in another
$200 million of investor savings.
(d) Colonial Realty Company. In the mid 90s, the State of Connecticut revoked
Andersen's license to practice after investigating Andersen's conduct in its audits surrounding the
collapse of Colonial Realty Company, a national real estate syndication firm. Central to the Colonial
Realty fraud was a Ponzi scheme that involved deliberate and grossly exaggerated valuation of
Colonial Realty properties. Andersen furnished unqualified opinions supporting Colonial Realty's
extravagant valuations and claims, and assisted in preparing private placement memoranda in
connection with the public offerings that resulted in investors sustaining substantial losses. As with
Enron, after conducting an extensive investigation, Connecticut's Attorney General concluded that
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