- The Washington Times - Tuesday, January 29, 2002

SAN FRANCISCO (AP) Devastated Enron Corp., after bedeviling California with huge power bills in its heyday, is causing the state more anguish.
Six of California's largest public pension funds lost a combined $250 million when Enron's once-soaring stock crashed and burned late last year. After peaking at $90.75 at the outset of California's energy crisis in 2000, Enron's shares have plunged below 25 cents amid accusations of accounting fraud and insider dealing.
The University of California's pension and endowment funds lost $145 million on its Enron stock holdings the most in the state and the second-largest setback reported so far by public investment funds across the country.
Only Florida's state retirement system, with $325 million in losses on Enron stock, has been hurt more.
The losses of other major California public pension funds surveyed by the Associated Press ranged from $1.6 million to $49 million.
As big as they are, the Enron losses represent just a sliver of the pension funds' total assets, and aren't expected to affect their ability to pay retirement benefits.
The California public funds burned by Enron's collapse are joining lawsuits accusing the company's executives of covering up accounting shenanigans that devastated the stock.
The University of California is fighting with Florida's state retirement system for the right to control a class-action shareholder suit accusing 29 Enron executives and its auditor, Arthur Andersen LLP, of fraud.
Although the class-action suit will seek damages for thousands of investors, the lead shareholder will have the greatest influence on legal strategy. U.S. District Judge Melinda Harmon is expected to pick the lead representative in the shareholder suit within the next two weeks, said University of California attorney Christopher Patti.
Some investments in the Houston-based company paid off for California pension funds.
In 1997, the California Public Employees Retirement System, or Calpers, realized a $132.5 million profit on a $250 million investment in an Enron-led investment called Joint Energy Development Investments, or JEDI.
That investment's success encouraged Calpers to pour an additional $175.5 million into another Enron partnership, called JEDI II. Calpers has received $171.7 million of that money back so far and eventually expects to break even on the deal, said fund spokeswoman Pat Macht.
The San Diego City Employees' Retirement system pocketed a $328,000 profit during the past two years by shorting Enron's stock, said Doug McCalla, the chief investment officer for the fund. Investors that short stocks are essentially betting that the share price will drop a gamble that paid off when Enron imploded.

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