A federal judge here denied a motion to dismiss the WorldCom class-action litigation against its auditor - former Big Five firm Andersen - charging that the plaintiffs had "identified a host of audit failures."

Judge Denise Cote of the Southern District Court of New York cited in a 60-page opinion that those failures "would permit a jury to find that there was an egregious refusal to see the obvious, repeated failures to investigate the doubtful, and a pattern of acquiescence in improper accounting practices."

Andersen had served as the long-time auditor for the telecommunications giant and its predecessor companies, and withdrew its opinion in the 2001 report. In 2002, WorldCom, battered by accounting errors and incorrect entries for billions of dollars in overhead, filed for Chapter 11 protection in what has been, at roughly $11 billion, the largest bankruptcy in American history to date.

The company emerged from Chapter 11 last year, doing business as MCI Inc.

The trial against Andersen and some 17 banks in the WorldCom case was scheduled to begin Feb. 28.

At press time, jury selection for the trial of former WorldCom chief executive Bernie Ebbers was underway in New York. Ebbers, who has denied any wrongdoing, is charged with securities fraud, conspiracy and filing false statements. If convicted on all counts, he could face up to 80 years in prison.

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