Associated Press

OLYMPIA — Washington state has been chosen to represent some of the public bondholders in a class-action securities fraud lawsuit against Enron Corp., state Attorney General Christine Gregoire said Monday.

Attorneys filed an amended complaint with the U.S. District Court in Houston on Monday, seeking to recoup $97.5 million the state’s pension systems lost when Enron bonds plummeted in value.

Enron, the world’s largest natural gas trading company and a leading electricity trader, spiraled downward into the biggest corporate bankruptcy in U.S. history on Dec. 2, amid allegations of accounting abuses.

The original lawsuit was filed late last year in Houston on behalf of shareholders and large investors. The suit alleges that 29 current and former Enron executives and board members gained $1.2 billion by selling company stock before Enron filed for bankruptcy protection.

The University of California Board of Regents is the lead plaintiff. Because of the size and complexity of the case, the regents’ lawyers are appointing lead representatives for several categories of investors. Washington was chosen to represent some of the public entities that bought Enron bonds.

The Washington State Investment Board, which oversees a multibillion-dollar portfolio on behalf of public pensioners and state government, bought $60 million worth of Enron bonds in July 1998, and $50 million more in May 1999.

The state already was included in the class-action lawsuit, but designation as a subclass representative will give it more clout, Gregoire said.

"This role will give Washington a voice on litigation tactics, settlements and distribution of proceeds," said Gregoire, who was a central player in a multistate lawsuit against the tobacco industry, which agreed in 1998 to pay a total of $206 billion to the 46 plaintiff states.

"This gives us a chance to more aggressively pursue our contentions that Enron misled investors through improper accounting, disclosure of false information and other questionable tactics to hide its debt," she said.

Enron ran a complex web of partnerships to hide more than $1 billion in debt, which ultimately toppled the company because the partnerships were improperly buttressed by plunging Enron stock, plaintiffs allege in court papers.

Gary Bruebaker, acting director of the state investment board, said the state has a duty to try to recover "all losses that are a result of misleading information presented to the financial marketplace."

At the same time, he reiterated that Washington’s public pensions aren’t threatened by the Enron losses. The state’s holdings are "broadly diversified and losses related to the Enron case are an extremely small proportion — 17 one-hundredths of 1 percent — of the total retirement fund portfolio," he said.

"Retirement benefits of both current and future retirees … are not impacted in any way by the Enron bankruptcy," he said.

Deputy Attorney General David Walsh said it’s not yet known how many public entities the state will represent once the court approves the state’s designation.

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