The University of California will file complaints today at a U.S. District Court in Houston to add three defendants to its federal class action suit to recover funds lost as a result of the Enron scandal.
Royal Bank of Canada, New York-based law firm Millbank, Tweed, Hadley & McCloy and Houston-based law firm Andrews and Kurth will join 29 senior Enron executives, the accounting firm Arthur Andersen LLP and 11 other financial institutions accused of securities fraud in a lawsuit originally filed in February 2002.
The University, the lead plaintiff in the case, alleges the defendants knowingly helped Enron inflate its stock value before the company went bankrupt and seeks a $1.1 billion refund on behalf of the hundreds of shareholders represented in the suit.
UC claims to have lost $145 million as a result of Enron’s collapse.
The University’s complaint against Millbank, Tweed, Hadley & McCloy includes allegations that the firm represented banks already listed as defendants in the suit in more than 50 Enron-related transactions involving $18 billion in off-balance sheet financing.
UC alleges that Andrews and Kurth knowingly recorded certain transactions as sales of assets when they were, in fact, loans, causing a false increase in shareholder equity of $350 million and in cash flow of $1.2 billion, while falsely decreasing reported debt by $1.1 billion.
The University accuses Royal Bank of Canada of structuring and funding transactions with the purpose of concealing Enron’s use of off-balance sheet financing.