World’s largest accounting firm sued for $7.6 Billion
The world’s largest accounting and consulting firm Deloitte Touche Tohmatsu Ltd., is being sued for its alleged failure at detecting fraud during audits at Taylor, Bean & Whitaker Mortgage Corp, (TBW), one of the largest private mortgage companies to crumble during the US housing crisis.
The first complaint was filed September 26, 2011 in a Miami Circuit Court by Neil F. Luria, a plan trustee overseeing the bankruptcy of TBW, claiming losses of $6 Billion. A second complaint was filed by Ocala Funding, a wholly owned subsidiary of TBW, claiming losses of $1.6 Billion
One of the complaints states: Deloitte “certified TBW as a solvent, viable company with accurate financial statements every year from 2001 to 2008.” The complaint goes on to say, that the ‘rosy picture’ depicted by Deloitte regarding TBW was ‘completely false’.
Jonathan Gandal, a spokesman for Deloitte says the claims are ‘utterly without merit.’
Deloitte is not alone in their legal troubles regarding the credit crisis, Pricewaterhouse Coopers, KPMG and Ernst & Young are also facing accusations, with their auditing standards being put under the microscope by investors who, as a united group, seek to get back billions of dollars lost in the financial meltdown.
The former chairman of TBW, Lee Farkas, received a 30 year prison sentence in April for his leadership role in what U.S. officials described as one of the biggest bank frauds ever.
Officials from the U.S. Justice Department said Farkas was the mastermind in a $2.9 billion fraud scheme that led to TBW’s demise and the implosion of Colonial Bank, one of the largest U.S. regional banks.
