Accountants to Fight DeLorean Creditor Ruling

Arthur Andersen said Friday it will try to overturn a jury verdict ordering it to pay DeLorean Motor Co. creditors as much as $112 million for failing to reveal illegal accounting practices at the defunct auto maker.

A New York Supreme Court jury said Thursday the accounting firm was negligent in issuing clean financial reports for DeLorean in 1978 and 1979. DeLorean entered bankruptcy protection in 1982 and its chairman, John DeLorean, was indicted on fraud charges in Detroit and later acquitted.

The verdict brings to a close more than a decade of legal fights over DeLorean, which was launched in 1975 to build a futuristic, 12-cylinder, gull-winged sports car.

The New York jury awarded $46.2 million in damages, plus interest. The DeLorean trustee, David Allard, is seeking interest of 9% for 16 years, or $66.5 million. Andersen attorneys hope to overturn the verdict on appeal or limit the interest to one year because the suit was filed only last year.

“Our work for DeLorean Motor Co. was of the highest professional quality,” said Robert Hubbell, a spokesman for Arthur Andersen. Officials at DeLorean “should have foreseen the commercial disaster, and in addition, the fraud perpetrated at the highest level of the company.”

Allard claimed the accounting firm knew, or should have known, that John DeLorean was diverting money from the company.

Arthur Andersen’s attorneys said the firm checked the transfers and they appeared legal.

John DeLorean, now 73 and living in New Jersey, said in an interview that he was disturbed by the trial.

“It’s outrageous what they’re saying I did. The whole thing is totally fabricated and the transactions were found to be legitimate,” he said.