Blumenthal also sent a letter to U.S. Attorney General John Ashcroft urging the Department of Justice to investigate Arthur Andersen's role in the collapse of two Connecticut companies, First Connecticut Life Insurance Company and Capital Benefit Plans, Inc. Blumenthal issued subpoenas to Arthur Andersen seeking documents relating to the two failed companies.

Blumenthal alleges Andersen aided and abetted the looting of the companies by its owners by filing deceptive financial statements and reports with the state Department of Insurance and others.

"While First Connecticut's losses will not rival Enron's, the allegations show a pattern of professional wrongdoing that has significantly diminished and degraded -- if not destroyed -- the public's trust in our financial system," Blumenthal wrote. "I urge you to take these allegations into consideration before you enter into any settlement agreement with Arthur Andersen."

The lawsuit, brought on behalf of state taxpayers, and the Commissioner of the Department of Consumer Protection, charges Andersen with fraud, negligence, negligent misrepresentation, recklessness, and violations of the Connecticut Unfair Trade Practices Act (CUTPA). The lawsuit seeks both punitive and actual damages, costs, and other legal and equitable relief.

Blumenthal said Andersen "directly conspired with Enron insiders and others to fraudulently inflate Enron's earnings and disguise its liabilities. Arthur Andersen failed intentionally to investigate or disclose accounting irregularities, self-enriching schemes by Enron management, insider dealing and off-book partnerships and other entities, and misstatements of earnings by Enron."

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