Think BIGGER
https://www.orlandosentinel.com/news/os-xpm-2002-07-27-0207270217-story,amp.html
EVERGREEN ARTHUR ANDERSEN
AUDITOR SUED BY EVERGREEN TRUSTEE
Barry Flynn, Sentinel Staff Writer
THE ORLANDO SENTINEL
Awell-known Orlando accounting firm was sued Friday for work it did last year for Evergreen Security Ltd., a purported investment fund that turned out to be a huge scam.
The firm, Averett Warmus Durkee Bauder & Thompson, compiled a balance sheet for Evergreen that showed the company was solvent as of May 2000, only months before it went bankrupt with $190 million more in liabilities than assets, according to the lawsuit.
The suit was brought in U.S. Bankruptcy Court in Orlando by the court-appointed bankruptcy trustee for Evergreen, Bill Cuthill Jr. He said Averett Warmus "knew or should have known that Evergreen was woefully insolvent during the entire time period reflected in the balance sheet."
A partner in the accounting firm, James Warmus, said Friday: "We believe the filing by Mr. Cuthill is baseless."
"We did a compilation. It's the lowest level of service an accountant can provide," Warmus said. "We did not give an opinion or any other form of assurance on the financial statement."
The suit provides a stark, local focus for what has emerged as a major national issue: the role of accounting firms in ensuring that the companies for which they work report fully and honestly.
The collapse of Enron Corp. and with it the Arthur Andersen accounting firm was the major impetus for the national discussion.
But the issue has continued to come up as a steady stream of national, publicly traded companies have been forced in recent months to restate financial results because of questionable accounting practices.
Evergreen, however, was in a different class. It defrauded about 2,000 investors around the world of an estimated $214 million in the biggest fraud against individual investors in Florida history.
The company held itself out as an offshore investment fund that put money into U.S. government-guaranteed securities held in offshore accounts.
Evergreen is in no way connected to a family of Boston-based mutual funds with a similar name.
Cuthill's suit accuses Averett Warmus of professional negligence and negligent misrepresentation and asks for both actual and punitive damages.
Although the suit does not specify the amount of damages sought, Cuthill said the actual loss was more than $8 million. That's because the fund's insolvency increased by that much after Averett Warmus' work was relied on to prove it was in good financial condition.
Cuthill said Averett Warmus had a $2 million malpractice insurance policy from which some damages could be recovered.
James Warmus, one of two members on the accounting firm's executive committee, said the compilation of the balance sheet for May 30, 2000, was based on data provided by Evergreen's outside management company and was the only work his firm had done for Evergreen.
Evergreen, though it was incorporated in the Virgin Islands, operated for a decade out of a high-rise building at 201 E. Pine St. in downtown Orlando.
Asked if that was not the same building in which Averett Warmus and its approximately 25 certified public accountants had its offices, Warmus said: "Unfortunately, that is true. But I don't think proximity equals a lawsuit."
Cuthill has already sued principals of Evergreen, salespeople and corporations to recover as much as possible of the enormous losses. Also, five individuals have been convicted of felony charges in the case.
The New York City trial of a lawyer, James P. Conroy, who was attorney for one of the Evergreen owners, ended this week in a mistrial.
A spokeswoman for the New York district attorney said a new trial would be held.
I never watched much of the Blacklist, but I am now. The 1st 4 episodes play out like one of these breads on any gicen day.