We briefly mentioned this case on Monday but since everyone seems to have checked out mid-week, we’re sure you won’t mind.
Way back in the dawn of the Clinton Administration, some financial reporting chicanery went down at Papel Giftware, Inc. so that Cast Art Industries of Corona, California would run into the company’s outstretched arms. More specifically, chicanery that consisted of ” ’systemic, organized, improper accounting practices at Papel.’ ” Cast Art failed in 2003 which made everyone sad/mad.
KPMG was on watch as this all went down and a jury found the firm negligent in 2008 under the Accountant Liability Act.
The bitch of it is, the KPMG partner was thisclose to pulling out of the engagement, “[A] July 2000 letter by KPMG partner John Quinn that said Papel Chief Financial Officer Rick Wasserman gave an ‘unfair and misleading characterization of the accounting and auditing issues.’ Quinn said he was ‘very much inclined’ to recommend ending work with Papel after that year’s audit, according to the opinion.”
That ‘very much inclined’ didn’t result in “we withdraw from the engagement.”
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“The lawsuit is a bunch of BS. They’re throwing everything at me. I’m not afraid of the IRS.”
~ William Alexander, on allegations brought against him by the IRS.
But that’s exactly what they got! The pro-Israel nonprofit Z Street filed suit against IRS Commish Doug Shulman because Z Street and other “pro-Israel groups whose policies conflict with that of the [Obama] administration,” are getting the stinkeye from the IRS.
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And this has nothing to do with Lehman Brothers.
Attorneys from Houston’s Ahmad, Zavitsanos & Anaipakos are representing a group of investors in a lawsuit filed against hedge fund auditors Ernst & Young after the group lost more than $17 million following the collapse of a Plano, Texas-based hedge fund that promised low-risk investments.
The lawsuit focuses on two funds sold by Plano’s Parkcentral Global and was filed on behalf of Houston financial consultant Gus H. Comiskey and four Tucson, Ariz.-based entities, including the Thomas R. Brown Family Private Foundation. The now-defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate H. Ross Perot before closing its doors after losing a total of more than $2.6 billion.
“Our clients were told that an investment in Parkcentral was designed to preserve capital. Instead, they lost every penny in record time. E&Y was supposed to be auditing Parkcentral, but the audited financial statements never once warned Parkcentral’s investors of their impending doom,” says attorney Demetrios Anaipakos, who will try the case with Amir H. Alavi.
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Not to be confused with the settlement that KPMG reached with the Trustee of New Century that we reported on back in June. This particular lawsuit was brought by New York State Teachers’ Retirement System and shareholders in New Century.
Law.com reports:
A federal judge on Monday granted preliminary approval to a $125 million cash settlement for shareholders of bankrupt New Century Financial Corp., one of the largest lenders to collapse during the subprime mortgage meltdown.
The settlement involves three stipulations: Auditor KPMG LLP will pay $44.75 million; the underwriter defendants will pay $15 million; and New Century’s former officers and directors collectively will pay more than $65 million.
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That's Weintraub on the left there with Rothstein rockin' the 'fro. Source: SFBJ
Unless you were born blind and deaf, you may have noticed that South Florida has its share of shady characters. We all know that Berns Madoff frequented the area. Plus there’s the obsessively dapper Lew Freeman, who was Miami’s go-to forensic accountant until he thought he’d just keep his client’s money.
Another model citizen/criminal in FLA is Scott Rothstein. His Ponzi Scheme managed to bring in just over $1 billion and he got 50 years for his trouble. But now the fallout from Rothstein’s little stunt is now raining hell on Miami accounting firm Berenfeld Spritzer Schechter & Sheer.
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You know what sucks? Getting sued. Ask Bill Michael, KPMG’s UK head of FS. He’s pretty sick and tired of all the sue-happiness going on in the world today. Sure, the financial crisis nearly destroyed the world as we know it but dammit, blaming auditors is downright ludicrous. Why? Because it’s unfair.
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Not a legitimate business expense?
Remeber Tyco? Dennis Kozlowski. Mark Swartz. Roman orgy parties. It sounded like a hoot. Too bad the law got in the way.
Koz and Swartz may be locked up but that doesn’t mean the good times at Tyco had to end!
An accounting manager at Tyco Electronics claims that he was ‘coercively’ fired for taking issue with “Tyco’s exorbitant bashes for its CEO Thomas Lynch and other top executives ‘were almost identical to parties for which Tyco’s former CEO [Dennis Kozlowski] was criminally charged and convicted.’ ”
What kind of party expenses you ask? Run-of-the-mill stuff like ‘mermaid greeters’ and ‘costumed pirates/wenches.’
It doesn’t hurt to have a little eye candy at a company bash, amiright? And maybe Jeffrey Weist was okay with the scantily clad roaming hotties and really just took exception with the $2,350 for the tattoo artist (tatts included!) and limbo and fire dancers, $2,500 for chair covers and sashes and the $1,000 hotel rooms.
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Francine McKenna reported briefly last week that KPMG settled the $1 billion lawsuit with the New Century Liquidating Trustee. Sure enough, we checked with Steven Thomas and he gave us the same statement:
“The New Century Liquidating Trustee and KPMG LLP have entered into a confidential settlement agreement, pursuant to which the lawsuits and arbitration against KPMG LLP and KPMG International have been resolved.”
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