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A law firm that represented the failed Baptist Foundation of Arizona has agreed to pay the foundation’s bankruptcy trust $21 million, officials said Tuesday. The payment would settle claims that the law firm failed to notice signs of fraud that led to the foundation’s collapse, the largest nonprofit bankruptcy in U.S. history. More than 10,000 mostly elderly investors lost $570 million related to the 1999 bankruptcy. Earlier this month, the foundation’s accounting firm, Arthur Andersen LLP, agreed to pay $217 million to settle lawsuits by the trust, investors and the state. Officials said the Phoenix-based law firm of Jennings, Strouss & Salmon admitted no liability in agreeing to the payment. But attorneys agreed to testify at criminal trials arising out of the foundation’s collapse. The Arizona Corporation Commission, which regulates securities, signed the agreement Tuesday. Attorneys said a judge is expected to give preliminary approval within a week. Investors will have to approve the agreement before any money is paid out, which could take several months. The foundation was created in 1948 to raise money for Southern Baptist causes. During the 1980s, the nonprofit group and its related companies began aggressively raising money by selling securities and managing individual retirement accounts. But before the bankruptcy, authorities say the foundation used a web of related companies to siphon off hundreds of millions in dollars in investment funds. Three former foundation officials have pleaded guilty to fraud charges. Five others await trial. The May 6 Andersen settlement came one week into a trial in which the trust was seeking $150 million in compensatory damages and more in punitive damages relating to Andersen’s audit work. Andersen didn’t admit any fault. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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