Schein v. Ernst & Young

VERDICT

Trial
06/29/09 – 07/22/09

Play button overlay 45f08f27c7337d189e8c31e635b5d0a0781b273131135cd77ee8b6f12366e7a2
Play button overlay 45f08f27c7337d189e8c31e635b5d0a0781b273131135cd77ee8b6f12366e7a2

Summary

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. "

Outcome

Fault For Result Technologies: 70%-Ernst & Young 30%- Results Technologies
Fault for Schein: 60%- Ernst & Young 40%- Schein
Damages sustained by Results Technology, caused by Ernst & Young: 6,000,000
Damages sustained by Schein, caused by Ernst & Young: 10,000,000

Total: 16,000,000

Sessions

JUL
10
JUL
16
AM Session
Not in Session
0 Chapters
PM Session
Not in Session
0 Chapters
JUL
17
PM Session
Verdict
1 Chapters
JUL
22

Recording Disclaimer: This proceeding was recorded in full.

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