Schein v. Ernst & Young

Description

3-week accounting fraud jury trial in Broward County Circuit Court's complex litigation division.

Plaintiffs Alan Schein and Result Technologies, Inc. brought the claim, alleging they were damaged by Ernst & Young's failure to conduct proper audits of Illinois-based Superior Bank F.S.B. The FDIC took control of Superior Bank in 2001 after declaring it insolvent.

The case calls into question consulting fees given by the banks to Ernst & Young.

The jury found that Ernst & Young was negligent and awarded damages of $16M ($6M to Result Technologies and $10M to Alan Schein).

From BNET News: "Feb. 8--Ernst & Young LLP, the auditing firm accused of inadequately overseeing the books of now-failed Superior Bank FSB, also received consulting fees from the bank which totaled at least twice as much as the fees it received for its accounting services, a federal regulator said.

"It was a direct conflict," said Gaston Gianni, inspector general for the Federal Deposit insurance Corp., in testimony to the Senate banking committee Thursday. "