Bradley B. Rush, former CFO of Sunrise Senior Living, has sued the company for breach of contract and defamation for terminating him in May and claiming he destroyed documents.

The McLean, Va.-based company allegedly fired Rush in retaliation for his discovery and disclosure of Sunrise's "improper, and in some cases fraudulent, accounting practices, and as part of Sunrise's campaign to make Mr. Rush the 'fall guy' for its improper and fraudulent behavior," according to a complaint filed by lead attorney, John M. Dowd, of Akin Gump Strauss Hauer & Feld in Washington, D.C.

The 31-page complaint, filed in the Circuit Court of Fairfax, Va., said Rush discovered nine improper accounting practices employed by Sunrise before he became CFO and brought them to the attention of Sunrise's senior management and board of directors, outside auditors Ernst &Young, and the Securities and Exchange Commission. Among the errors were the use of excess health insurance reserves to make up for earnings shortfalls. The company appointed a new CFO, Julie A. Pangelinan, last week. She was formerly chief accounting officer at Sunrise and helped uncover some of the errors.

Rush's lawyers claim that while he was meeting with the SEC, and preparing a restatement of Sunrise's financials for the years 2003 to 2005, the company's senior managers decided to sell the company to private investors to eliminate SEC supervision and generate profits to themselves and the board directors. The CEO stood to make a profit of more than $350 million, the president would profit by approximately $40 million, and the board directors would make about $3 million to $10 million each.

The complaint alleges that Rush's efforts to uncover the accounting improprieties threatened the plan to sell off the company. After he refused to back down under pressure, he was fired and made a scapegoat.

According to the suit, Sunrise made false allegations that Rush had destroyed documents, although he said the only documents he didn't keep were ones the company's general counsel said he did not need to retain. His complaint alleges that Sunrise breached its contractual obligations when it terminated him without cause, depriving him of stock options, long-term incentive plan benefits, bonuses and his health insurance while damaging his reputation and earning capacity. His lawyers are seeking up to $13 million in damages.

Sunrise denied Rush's charges. "The assertion that Mr. Rush was fired because he was trying to uncover or report financial improprieties is nonsense," said a statement forwarded by the company. "The reasons why Mr. Rush's employment as CFO was terminated for cause, including his actions inconsistent with the company's document preservation directives, as previously disclosed by the company, will be demonstrated in the litigation."

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