Chicago (Jan. 22, 2004) -- Regulatory troubles keep mounting for national CPA firm Grant Thornton.
On the heels of a massive audit scandal at global dairy concern Parmalat -- a company audited by GT’s Italy-based affiliate -- the Securities and Exchange Commission has accused the firm of lending its reputation to a fraudulent audit of now-shuttered mortgage company MCA Financial Corp. of Southfield, Mich.
Grant Thornton and one of its partners were charged, along with two directors from Troy, Mich.-based firm Doeren Mayhew & Co. The SEC charged that Grant Thornton and Doeren Mayhew jointly audited MCA and gave it a clean audit opinion, despite the fact the company’s 1998 financial report omitted millions of dollars of related-party payments. The regulator maintained the payments allowed MCA to artificially inflate its results, but those payments were not disclosed.
The SEC said in a statement that GT had "rented out its name and prestige to the audit work of a smaller firm without taking adequate care to ensure that the audit was properly staffed and performed."
Investors subsequently lost millions in one of Michigan’s largest cases of security fraud, while five of MCA's former officers subsequently pleaded guilty to criminal charges.
In a statement, a Grant Thornton spokesman said, “The SEC stated in its complaint filed April 24, 2002, against MCA Financial Corporation that MCA's management had engaged in a carefully concealed fraud that included providing false information and lying to our personnel. In addition, all litigation brought against us involving MCA has been dismissed. For 80 years, we have adhered to the highest standards of professionalism and we will vigorously defend ourselves against these charges.”
Along with the two audit firms, the SEC proceeding charged Peter Behrens, 46, a partner in Grant Thornton's Detroit office, and Doeren Mayhew directors Marvin Morris, 60, and Benedict Rybicki, 40.
-- WebCPA staff
