Presumably this new $300 million, 800 room facility in Westlake, Texas will help centralize the destruction caused by Deloittians when they attend various training sessions. If you’ve got any additional details or opinions on this new Mecca in the Deloitte universe, kindly enlighten us.
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The Deloitte Lawsuit Du Jour
Deloitte is doing a damn fine job of keeping attorneys in business these days.
Two founders of casino industry supplier Global Cash Access Holdings Inc. [(“GCA”)] of Las Vegas are suing an accounting firm, charging it harmed them by disclosing information in an FBI bulletin they say wrongly associated the founders with criminal activity.
Attorneys for Robert Cucinotta and Karim Maskatiya filed suit Friday in federal court in Las Vegas against Deloitte & Touche LLP and Larry Krause, managing partner of Deloitte’s Nevada practice.
Asked about the allegations Monday, Deloitte & Touche said in a statement: “We believe the complaint to be without merit and intend to defend against it vigorously.”
The lawsuit alleges that Deloitte told GCA’s audit committee that Cucinotta and Maskatiya were involved in criminal activity including, ‘murder, extortion, tax fraud and financial fraud, and also may be subject to substantial back taxes.’
That didn’t go over well:
Cucinotta and Maskatiya assert Deloitte didn’t contact them or investigate the information in the FBI Bulletin before contacting the GCA Audit Committee; and that Deloitte demanded that GCA investigate the allegations and said it wouldn’t certify the third quarter 2007 financial statements until the probe was completed.
The actions by Deloitte caused GCA to announce on Nov. 14, 2007, it would delay filing its quarterly financial report with the Securities and Exchange Commission pending conclusion of an investigation into “confidential” issues, the lawsuit says.
“Predictably, the market reaction to that shocking press release was brutal and GCA market capitalization declined by $400 million,” the lawsuit charged, adding Cucinotta and Maskatiya together lost almost $100 million in a single day.
GCA hired Skadden Arps Slate Meagher & Flom to perform an internal investigation and the subsequent report found, ‘no evidence that (Cucinotta and Maskatiya) engaged in serious wrongdoing or are under investigation by law enforcement officials.’
Deloitte, still sketched out by Cucinotta and Maskatiya, threatened to resign as the auditors of GCA if they didn’t remove themselves from the company’s board of directors. Eventually the two men agreed and ‘pursuant to seriously oppressive terms’ sold all their shares in GCA back to the company.
So C&M get strong-armed into selling their shares back to company at a huge loss and now they want to Deloitte to settle up. While the plaintiffs’ seem to have a legitimate beef, was Deloitte acting as they should have?
Sure, maybe they jumped the gun with the information. It’s not uncommon. If you assume that Deloitte informed the audit committee that C&M were bad dudes to protect GCA’s investors, then they were probably acting in good faith (insane as that may seem). Auditors just can’t seem to win.
Casino supply company’s founders sue over link to criminal activity [Las Vegas Sun]