Deloitte sued for $7.6 billion, accused of missing fraud

Mon Sep 26, 2011 5:56pm EDT
 
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By Kevin Gray

(Reuters) - Deloitte Touche Tohmatsu Ltd DLTE.UL, the world's largest accounting and consulting firm, was accused on Monday of failing to detect fraud during its audits of one of the biggest private mortgage firms to collapse during the U.S. housing crash.

A trust overseeing the bankruptcy of Taylor, Bean & Whitaker Mortgage Corp, or TBW, and one of the company's subsidiaries filed complaints in a Miami Circuit Court claiming a combined $7.6 billion in losses.

Deloitte "certified TBW as a solvent, viable company with accurate financial statements every year from 2001 to 2008," one of the complaints said.

"Despite Deloitte's credentials and expertise as one of the 'Big 4' accounting firms, those statements -- and the rosy picture they depicted of TBW -- were completely false," it said.

Deloitte spokesman Jonathan Gandal said the "claims are utterly without merit."

It was the latest lawsuit to hit one of the major accounting firms over their role in the credit crisis.

Pricewaterhouse Coopers, KPMG and Ernst & Young are also facing accusations about their auditing standards by investors who collectively seek to recoup billions of dollars lost in the financial meltdown.

Lee Farkas, the former chairman of Taylor, Bean and Whitaker, was sentenced to 30 years in prison in April for masterminding what U.S. officials described as one of the biggest bank frauds ever.   Continued...