High Damage Lawsuit Defeated
Bank v. CPA Firm, 2010 MT 291 – A CPA firm was sued when several years of audits did not uncover a massive lapping scheme involving a revolving line of credit from a bank. The accounting firm faced claims for the thefts and massive consequential damages from the shareholders of the audit client, the audit client, the lender, and the holding company that acquired the lender. We quickly negotiated a resolution with the audit client’s shareholders in return for the audit client's dropping its claim. We then won a jury verdict against the bank and sustained a dismissal of the holding company’s claim in a ruling by the state supreme court.
Bottom line: The CPA firm incurred costs and settlements that were a small fraction of the total exposure.