Deloitte US is being sued for $7.6bn by
investors who claim the firm failed to detect its former client’s,
defunct Florida mortgage company Taylor Bean & Whitaker
(TB&W), massive fraud, according to US media reports.
A TB&W bankruptcy trustee for creditor and
Ocala Funding, a company that
purchased hundreds of millions of dollars’ worth of mortgages
from TB&W, filed two
separate lawsuits at the Miami-Dade Circuit Court this
week.
Deloitte spokesman Jonathan Gandal told the
media that the company rejects the claims and they are “utterly
without merit.”
Gandal said the blame for the fraud and losses
should rest squarely on TB&W, Ocala Funding and Farkas.
TB&W fraud began in 2002 and the company
collapsed in 2009 leading to the failure of Alabama based Colonial
Bank.
The investors
and creditors claim that Deloitte’s certifications of
TB&W’s accounts were critical to maintaining its appearance as
a legitimate, profitable business while the mortgage company was
actually selling fake or grossly overvalued mortgages, misstating
its liabilities and hiding overdrawn bank accounts.
Deloitte quit as TB&W’s auditor in 2009
prior to a federal investigation.
In the Ocala lawsuit it claims there was an
e-mail exchange in which Deloitte auditors raise questions about
various financial transactions. One of which is said to involve
$6bn that was analysed just before the deadline to complete on an
audit and the lawsuit claims that due to time constraints to
certify the information and in the face of possible financial
irregularities, Deloitte was negligent.
