New court papers filed on Monday allege some of Wall Street's biggest banks helped bankrupt Enron Corp. create fraudulent deals that made them rich but cost investors at least $25 billion.

The allegations, which lawyers said will be difficult to prove, are contained in an amended class-action lawsuit filed by the University of California board of regents on behalf of thousands of other stockholders of the Houston energy trader whose name has become synonymous with financial chicanery.

"Instead of protecting the public from the Enron fraud, the bankers knowingly chose to become partners in deceit," said William Lerach, the lead lawyer for the plaintiffs. "They were not only willing participants but profiteers."

Shareholders allege in a 500-page lawsuit the lawyers, bankers, accountants and executives helped orchestrate and profit from the financial fraud that led Enron to file the largest-ever U.S. bankruptcy on Dec. 2.

Trying to implicate the banks and lawyers sets a higher bar of proof for the plaintiffs because of a 1994 U.S. Supreme Court decision, lawyers said. In the Central Bank of Denver case, the court ruled that "aiders and abettors" are not liable under the anti-fraud provisions of the securities laws unless they actively participate in it.

"They clearly have a large challenge before them," said Christopher Bebel, a Houston lawyer. "However, they have no alternative. They have to pursue this course of action to have a chance of locating sufficient funds."

A second class-action amended complaint was also filed on Monday on behalf of Enron employees who lost their retirement savings. The new complaint, filed by Seattle law firm Hagens Berman, contains many similar allegations.

"Enron's investment banks and lawyers helped create, structure and sell securities which propped up the Enron pyramid," according to the employee suit, filed in the U.S. District Court in Houston.


The shareholder complaint, also filed in Houston's federal court, names investment banks Merrill Lynch & Co. Inc. (MER), Deutsche Bank AG , J.P. Morgan Chase & Co. Inc. (JPM), Credit Suisse First Boston, Citigroup Inc. (C), Barclays Bank Plc , Canadian Imperial Bank of Commerce, Bank of America Corp. (BAC) and Lehman Bros. Holdings Inc. (LEH).

"We believe there is no basis for this claim, and we intend to vigorously defend against it," a Merrill spokesman said. Citigroup and J.P. Morgan declined to comment. CIBC, Lehman, Bank of America, Deutsche Bank, Barclays and CSFB were not immediately available to comment.

Also named were Enron's chief outside counsel, Houston legal powerhouse Vinson & Elkins, and Chicago-based law firm Kirkland & Ellis, which represented some off-balance sheet partnerships that led to Enron's demise. The two law firms have also said they would fight the allegations.

Already named were 29 top Enron officers and directors and accountant Andersen , itself critically wounded and near break-up because of its work with Enron. Other individuals were added to the suit on Monday as well.

The California university system, which held a press conference to discuss the suit in San Francisco, said its Enron stock lost $144.9 million in value. U.S. District Judge Melinda Harmon selected the university as lead plaintiff because of its size and experience in similar litigation.

Enron officers named in the suit include former Chairman Kenneth Lay, Jeffrey Skilling, the former chief executive who stepped down abruptly in August, and Andrew Fastow, the chief financial officer ousted last fall after the secret partnerships he engineered and managed from both sides of the table became public. All have all denied wrongdoing.

The complaint alleges Lay made about $184 million, nearly twice the money previously thought, from insider stock sales. His trades are the focus of an investigation by the Federal Bureau of Investigation and the U.S. Securities & Exchange Commission, as Reuters first reported last week.

The class-action trial is set to start on Dec. 1.