Mutual fund giant Vanguard Group filed a civil suit against Citibank and Salomon Smith Barney last week alleging the firms fraudulently sold it $70 million of worthless Enron bonds, according to the Associated Press.

Vanguard claims that the two firms collaborated to disguise the defunct energy trader’s mounting debt to Citibank using commodity investment accounts, which were used to back Enron bonds. Those bonds were then sold to investors, including Vanguard, and turned out to be worthless after Enron went bankrupt in 2001, the lawsuit alleges.

Vanguard said its funds were duped into buying the bonds through "false and misleading'" financial statements, in which Citibank failed to disclose Enron’s true financial situation and its own role in the deals. Vanguard said the scheme was discovered as the result of U.S. Senate hearings on Enron over the last year, according the report.

Citigroup, the parent company of Citibank, and Salomon Smith Barney did not comment on the lawsuit but Citigroup testified that it "acted at all times in the good-faith belief that the transactions complied with existing law and standards."

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