CORRECTING and REPLACING Sullivan & Cromwell Files Lawsuit on Behalf of Banco Espirito Santo International Against BDO Seidman, Alleging Fraud and Conflicts of Interest.Business Editors/Legal Writers CORRECTION...by Sullivan & Cromwell MIAMI--(BUSINESS WIRE)--May 18, 2004 In BW6091 issued May 18, 2004: Please replace the release with the following corrected version. The corrected release reads: SULLIVAN & CROMWELL FILES LAWSUIT ON BEHALF OF BANCO ESPIRITO SANTO INTERNATIONAL AGAINST BDO SEIDMAN BDO Seidman, LLP is the United States arm of BDO International, one of the largest accounting firms outside of the Big Four. History BDO Seidman, LLP was founded as Seidman and Seidman in New York City in 1910 by Maximillian L. Seidman. , ALLEGING NEGLIGENCE AND CONFLICTS OF INTEREST Sullivan & Cromwell today filed a lawsuit in the Circuit Court of the Eleventh Judicial Circuit (Miami), case number 04-11128, on behalf of Banco Espirito Santo International Ltd and certain affiliates against international accounting firm BDO Seidman, one of the five largest accounting firms in the world. The suit, which seeks in excess of $170 million in damages and comes amidst an ongoing investigation by the United States Attorney United States Attorneys (also known as federal prosecutors) represent the United States federal government in United States district court and United States court of appeals. There are 93 U.S. , charges that BDO Seidman did nothing more than "rubber stamp" year after year of phony financial statements. The lawsuit says that BDO Seidman had conflicting interests and was negligent in auditing E.S. Bankest LC and its predecessor over an eight year period. BDO's "unqualified" audit opinions claimed to present "fairly, in all material respects, the financial position of" Bankest, when in fact Bankest's financial statements falsely showed over $200 million in assets when in reality there were almost none. At the same time that BDO BDO Big Day Out (Australian music festival) BDO Banco de Oro (Philippines) BDO 1,4-Butanediol BDO British Darts Organisation BDO Block Development Officer BDO Big Dumb Object issued its opinions as Bankest's "independent" auditor, BDO was a strategic partner with Stratasys Group LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a Bankest affiliate that was used to carry out the fraud, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the lawsuit. By the time a Federal Grand Jury indicted INDICTED, practice. When a man is accused by a bill of indictment preferred by a grand jury, he is said to be indicted. the managers of Bankest and Stratasys, lenders had been bilked of more than $170 million. BDO cited as "shill shill Slang n. One who poses as a satisfied customer or an enthusiastic gambler to dupe bystanders into participating in a swindle. v. shilled, shill·ing, shills v.intr. " The suit accuses BDO Seidman of "rubber stamping four years worth of obviously false financial statements." "The principals (of this fraud) needed an independent auditor Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. who would either not discover its manipulations of the accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying or else look the other way when it falsified its financial statements. The principals found their shill in BDO," says the lawsuit. The suit names both BDO International, headquartered in Brussels, and BDO Seidman, headquartered in Chicago. BDO's Conflict The lawsuit goes on to say that BDO's ignorance was financially motivated, and that it was a strategic ally with the affiliate company Stratasys, controlled by Dominick Parlapiano, one of the men which the U.S. government indicted and who recently pled guilty to various charges. The lawsuit also says that Parlapiano had a "social relationship" with Sandy Lenner, the BDO audit partner in charge of the account, and that Parlapiano and other principals of the fraud had been long-term clients of BDO. "It's as if the Enron-Arthur Andersen scandal has been forgotten," said Steven Thomas, of Sullivan & Cromwell. He is co-counsel along with Mitchell Berger of the Florida law firm Berger Singerman. Thomas did not rule out the possibility of additional claims being brought in this matter. (Note to Editors: The Complaint is posted on the Berger Singerman Website at http://www.bergersingerman.com) |
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