Baptist Foundation of Arizona v. Arthur Andersen
Arthur Andersen LLP agreed to pay $217 million to settle all accounting malpractice suits resulting from its audits prior to the Chapter 11 bankruptcy of the Baptist Foundation, whose collapse in 1999 was the largest non-profit bankruptcy in U.S. history. An Analysis Group team led by Senior Advisor Elizabeth Evans assisted counsel for the Liquidating Trust of the Baptist Foundation in finding expert witnesses for both liability and damages issues.
We also worked with our academic affiliate, Professor Roman L. Weil of the University of Chicago's Booth Graduate School of Business, on the calculation of damages for the Liquidating Trustee. Professor Weil's report showed that, because Baptist Foundation continued to operate after the time that Arthur Andersen's audits should have revealed the insolvency of the Baptist Foundation and acts of wrongdoing on the part of management, the Baptist Foundation lost assets in excess of $150 million that it could have used to pay the claims of its account holders.