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Accountancy giant denies allegations that it missed US mortgage fraud

Member: Nifa

A leading international accountancy firm is facing allegations that it did not use sufficient forensic skills to detect fraud while auditing an American mortgage company that went under in the US housing crash.

Complaints have been filed in a Florida Court against Deloitte Touche Tohmatsu.(DTT) alleging that the fraud went undetected over a seven year period.

The action is being brought by the trust overseeing the affairs of the failed company, Taylor Bean & Whitaker (TBW) and one of its subsidiaries, in a claim for losses valued at a combined total of around seven and a half billion dollars.

Lawyers for the trust allege that DTT certification of TBW’s books gave legitimacy to a business that was, they argue, selling false or highly overvalued mortgages, mis-stating its liabilities and hiding overdrawn bank accounts.

Attorney Steven Thomas says that they will show that DTT "certainly did not do their job".

TBW was closed down by the FBI afte a raid on its headquarters in August 2009. Seven TBW executives were later convicted on a range of federal criminal charges, with the former chairman Lee B Farkas sentenced to thirty years in prison.

Deloitte spokesman Jonathan Gandal said DTT rejected the court claims, dismissing the action and the claims as "utterly without merit".


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