Settlement Made in Baptist Case

The Arthur Andersen accounting company has agreed to pay $217-million to settle lawsuits arising from its role as auditor of the Baptist Foundation of Arizona, which collapsed in 1999 owing $570-million to more than 11,000 people who had bought securities from the nonprofit group.

The settlement resolves a case brought by a bankruptcy trust representing investors in the failed nonprofit organization. It also resolves a class-action lawsuit by investors and a civil suit and disciplinary proceedings by state regulators.

Arthur Andersen did not admit any wrongdoing by agreeing to the settlement.

The lawsuits alleged that Arthur Andersen certified false and misleading financial statements for the Baptist Foundation, and ignored evidence of the organization’s financial improprieties, thus helping the foundation cover up the fraud that led to its collapse.

The foundation, which was formed in 1948 as the fund-raising and endowment arm of the Arizona Southern Baptist Convention, sold investments to church members, who were told that the foundation’s profits would benefit Christian causes. The group filed for protection from creditors under federal bankruptcy laws following allegations that foundation officials had turned what were legitimate investments into a Ponzi scheme, in which money from new investors was used to pay old ones.

Arthur Andersen’s expected payment, combined with the sale of foundation assets, which is under way, and settlements with other parties, means that foundation investors may recover more than 70 percent of their money.