Board Targets License of Accounting Firm
The state’s accounting board has sought to revoke or suspend the license of Arthur Andersen & Co., the world’s biggest accounting firm, for what it calls negligence in auditing Lincoln Savings and two other companies.
Irvine-based Lincoln was seized in 1989 at an ultimate cost to taxpayers of $3.4 billion, America’s costliest thrift failure. Charles H. Keating, the chairman of its Phoenix-based parent company, American Continental Corp., is serving a 12-year prison sentence for fraud.
Marshall Grossman, a lawyer for Arthur Andersen, said discussions with state officials initially resulted in a deal in December calling for Arthur Andersen to pay $625,000 and perform pro bono work to settle the Lincoln charges.
Grossman accused the board of withholding the Lincoln settlement to pressure Arthur Andersen to pay $2 million to settle the other two cases, which involved allegedly negligent audits of A&B; Loan Co. and Grand Wilshire Chevrolet.
Arthur Andersen paid about $79 million to the U.S. government last year to settle charges of negligence in auditing thrifts, including Lincoln.
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