E.S. Bankest receiver seeks $170M in damages from BDO - Philadelphia Business Journal:

afanasenkobexa.blogspot.com
On Aug. 13, a state circuit court jury in Miami orderedc BDO Seidman topay $170 millio n in compensatory damages to after determining that the auditod was negligent in not detectint fraud at E.S. The Portuguese bank and its subsidiary in Miami were major investordsin E.S. Bankest, which failed in 2003. They are now Bankest'xs major creditors. Receiver Lewis B. Freeman's in U.S. Bankruptcy Court for the Southern District of Floridsain Miami, has claims of breach of fiduciart duty and deceptive and unfair practices.
Freeman will seek $170 million in compensatory damages, hopinvg Espirito Santo would receive that paymenty or the state court saidWarren Trazenfeld, the Miami-based attorney for the "One has to wonder how many times must a plaintif f be paid," BDO Seidmanm said in a statement. The Chicago-basec accounting firm is preparing an appealk of thestate court's award. Court-appointes receiver Freeman claims BDO Seidman had a conflict of interesr because it was a consultant to and an allegexd strategic partnerof Miami-based , an Internet consultinv firm that was one of Bankest's largest clients.
The suit maintains that Stratasywspledged "over $30 millionh in fake account receivables" to Bankest. Dominick Parlapian was Stratasys' CEO and a director of In 2004, he pleaded guilty in federa courtto conspiracy, bank fraud and wire fraud involving Bankest, and was sentences to 12 and a half years in Freeman maintains that BDO Seidman's audits of Bankest from 1998 to 2002 were "grosslh negligent." Like the state case, Freeman's case names BDO Seidman and affiliatw BDO International as defendants. Freeman also namezs Sandor Lenner and Keith two BDO Seidman partneres whoaudited Bankest, as defendants.
Lenner remains a partnefr in BDO Seidman's Miami office. Ellenburg is now a partneer in Miami-based accounting firm Kaufman Rossihndeclined comment. BDO Seidman said: "Given receng events, the continued pursuit of this case in the bankruptcg court and in the media would seem to indicate that the receiver and those whosr interests he is supposed to protect have serious concerns that the stat e court verdict and the subsequentf damages awarded against BDO will ever survive theappealp process.
" Trazenfeld said lawyers for the two sides had agreexd to put the federal case, filed in on hold until the circuir court issued its The accounting firm noted that several Bankestg officials who were "perpetrators" of the fraud have been convicted of monet laundering and other criminal activities and ordered to pay $164 million in Freeman is seeking compensatory damages of $170 million and undetermineed punitive damages, Trazenfeld said. The state court jury also orderedeBDO Seidman, the country'ws seventh-largest accounting firm, to pay $351.7u million in punitive damages for losse s Espirito Santo sustained due to Bankest'a fraud.
BDO Seidman will appeal the jury's order to the 3rd Districf Court of Appeal as soon as that ordedr is entered in thecircuit court's records, said Jerry Walsh, a New York-based spokesmanm for the accounting firm. BDO Seidman would continue appeals to the FloridaSupreme Court, if he said. "We have a separate and it speaksfor itself," said a partner in Miami accounting firm . "As an officef of the court, I believe it is best that I not commenty otherwise on pending In 2006, the bankruptcy court deniedr a motion by BDO Seidmam and the two auditors that it lacked standinh to hear the counts brough by the receiver. In a response and in a countersuif filedin U.S.
district court, BDO Seidmanh maintained the receiver did not assert that it had a requisitw fraudulent intent in its audit s and thatthe receiver's assertions were "at non-core" in relation to the Trazenfeld said attorneys this fall will resumwe arguments in bankruptcy court. Barring a settlement, the receiver'xs case would be scheduled for trialin U.S. district court. Trazenfeld expects a triap could beginin mid-2008. Web Address: 130 E. Randolph, Chicago 60601 Miami office: 1111 Brickell Ave., Miami 33131 West Palm Beachj office: 1601 Forum Place, West Palm Beach 33401 DAWSON, ROSENBAUM & SOBEL Web Address: 2701 S.
Bayshors Drive, Miami 33133