Several banks filed a lawsuit this week charging that through a series of multi-billion dollar loans over a nine-year period, J.P. Morgan Chase & Co., Citibank and Salomon Smith Barney helped Enron Corp. complete the largest fraud in U.S. corporate history. The plaintiffs are seeking more than $201 million in actual damages and unspecified punitive damages.

The lawsuit, filed by branches of Bayerische Landesbank, Standard Charter Bank, DZBank AG Deutsche Zentral-Ginsengs, Frankfurt am Main, Dresdner Bank AG, Arab Banking Corp. and WestLB AG, claims that Enron and the defendants “dressed up” a series of loans to appear to be prepaid commodities transactions, which are also known as prepays.

The lawsuit, filed in Manhattan, claims that the plaintiffs lent billions to Enron with full knowledge that the energy merchant was not reporting the loans as debt on its balance sheet. It also claims that the defendants played a key role by assisting Enron in structuring transactions. At the same time, it alleges, the defendants were syndicating $3.5 billion in credit facilities for Enron to the plaintiff banks and others.

In other news, the special grand jury, which was convened in Houston more than two years ago to investigate Enron officials, will not be disbanded until prosecutors complete investigating all of the remaining suspects, lawyers said. The grand jury was impaneled in March 2002, about three months after Enron declared bankruptcy. Since the grand jury began its work, 29 former Enron executives have been charged, and nine of those people have been convicted.

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