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Former Arthur Andersen partner files lawsuit against old firm

A former managing partner of Arthur Andersen LLP's Indianapolis office has filed a lawsuit that seeks up to $139 million from his old firm and, if successful, would keep the sullied accountancy from seeking arbitration.

Filed Monday in U.S. District Court in Indianapolis, the suit follows a related class action by Zionsville resident Gilbert F. Viets in mid-November in Marion Superior Court.

In that action, Viets accused rival accountants Deloitte & Touche LLP, Ernst & Young LLP, PricewaterhouseCoopers, Grant Thornton LLP and KPMG LLP — plus consultancy BearingPoint (formerly KPMG Consulting) — of raiding Andersen assets to the point it no longer could pay up to $1 billion in benefits for as many as 1,000 retired Andersen partners.

Officials with Deloitte & Touche and KPMG LLP, respectively, dismissed Viets' claims as “frivolous” and “without merit.”

Viets' federal lawsuit comes as Andersen tries to block the class action by forcing the state case into arbitration, according to court documents. Viets claims Andersen's push for arbitration is an abuse of remaining assets and wants a trustee to oversee such funds.

About $39 million of the damages Viets seeks stem from claims of contract breach and other obligations Andersen allegedly reneged on, while punitive damages comprise the rest. A jury trial has been requested.

An accountant who spent 35 years with Andersen, Viets received the first year of a 10-year early-retirement package in 2001, according to court documents.

When Andersen's failure to promptly disclose faulty accounting practices at Enron came to light, Viets twice asked that his remaining early-retirement benefits be paid immediately, court records state.

Andersen declined both requests, court documents say. The first time, Viets was told he would receive full payment in September. The second time he was told that this year's benefits would be reduced but that none of the amount due after this year — $2.2 million — would be forthcoming.

Viets blames a recruiting frenzy by each defendant for draining Andersen's worth. One example cited in the state lawsuit alleges that KPMG paid only $100,000 to Andersen to release each transferred partner from noncompetition agreements and other obligations. Another alludes to two “war rooms” established by Deloitte in its Chicago office — one targeting Andersen employees and the other targeting its clients.

By June 1, Deloitte had hired 950 personnel and 78 partners from Andersen and took over servicing 60 percent of Fortune 1000 clients that left Andersen after the firm was indicted for obstruction of justice in the Enron case, the suit states.

Ernst & Young acquired 80 Andersen employees and six partners in Indianapolis, which accounted for 80 percent of Andersen's local audit and tax business.

Andersen since has become insolvent.

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