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The WorldCom settlement "sends a message to folks who are serving as members of boards that they really need to perform an oversight role in a careful and prudent way," says San Francisco-based attorney Richard Heimann, who is suing former Peregrine directors on behalf of shareholders of a company that Peregrine purchased. "The whole case in Peregrine revolves around egregious accounting and financial practices by the company -- some of the most outrageous that I have ever seen, and I have been practicing 25 years."

Like other civil suit attorneys, he does not view Moores as an outside director. "His ownership of stock, connection with senior management and other members of the board, and his physical location -- it's very difficult to understand how he could not be aware of the situation," says Heimann. "We have documents that tend to establish even more knowledge on his part; those documents were produced in discovery, and I can't talk about them in specific detail."

The civil lawsuits help to make the case. For example, Noell and other close Moores associates were on the audit committee. Although the company's by-laws required that minutes be kept of each meeting, investigators could find no minutes, "no resolutions reflecting its decisions, and no agendas," says the Peregrine Litigation Trust lawsuit. "Other than illegible scribblings" and a few special presentations by the outside auditor, "there is scant evidence the committee even existed."

The Cera suit agrees that the audit committee's failures "permitted the pervasive accounting fraud to go forward." However, at one of the special outside auditor meetings, the auditing firm (the now-defunct Arthur Andersen) stressed that Peregrine was improperly recognizing revenue and "not truthfully" disclosing this in filings to the Securities and Exchange Commission. But no change was made. In October of 2001, Andersen told the audit committee that "Peregrine was intentionally and repeatedly violating generally accepted accounting principles." The suit says Noell told Moores about the meeting right afterward.

This information is all available to government investigators. "The U.S. attorney's office brought criminal charges against a number of people," says Heimann. "As is typical, they first go after folks lower down and then move up the organization as far as the evidence takes them. I would not be surprised if others are indicted."

Moores has proclaimed all along that he did not know of the shenanigans. So have other board members. His attorney did not return calls asking about what the WorldCom settlement means to the Peregrine cases.

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