Accounting firm Spear Safer has agreed to pay $3.5 million to settle allegations of improperly auditing a financial company, Mutual Benefits, accused of defrauding 30,000 investors out of $830 million.
Mutual Benefits bought 8,900 insurance policies from senior citizens and terminally ill patients, expecting the policies to yield death benefits of $1.8 billion. The company sold $1.2 billion in shares to investors until the SEC closed down Mutual Benefits in 2004, charging it with operating a Ponzi scheme.
The company’s former president received a 20-year prison sentence.
According to the plaintiffs, Spear Safer overlooked a series of red flags in Mutual Benefits’ accounting statements when auditing the company between 1994 and 2003. Spear Safer did not admit wrongdoing in the settlement.
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