A jury in Cobb County, Ga., has levied a $10 million judgment against PricewaterhouseCoopers, finding that the firm was guilty of negligent misrepresentation during the 1996 merger of nursing-home companies Convalescent Services and Mariner Health Group.
According to the Atlanta Journal-Constitution, the lawsuit was filed in 2002 by Stiles A. Kellett Jr. and his brother Samuel B. Kellett, who ran Marietta, Ga.-based Convalescent. When the brothers sold their facilities to Boston-based Mariner in the mid-1990s, they were compensated primarily in Mariner stock.
The Kellets have said that they would never have entered into the deal if Mariner's troubled finances hadn’t been buried in the company’s books.
Mariner filed for Chapter 11 protection in 2000, and the Kelletts claimed that they lost more than $120 million on the deal. The brothers had sought damages of more than $124 million, but the jury award will place the $10 million in family trusts for the Kellett children. The jury also awarded the brothers $1 each, as well as $1 each to two individual partnerships, denying a request for payment of attorneys' fees and expenses entirely.
PwC was cleared on civil fraud and racketeering charges. The jury also absolved PwC partner Glenn Williams and three former Mariner executives -- including former PwC partner Douglas Hansen, who became Mariner's chief financial officer -- of racketeering, fraud, breach of fiduciary duty and negligent misrepresentation charges.
Attorneys for PwC said that the Big Four firm will consider an appeal.
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