Boston-based Vitale Caturano & Co. is facing a malpractice suit for allegedly failing to properly investigate a number of red flags that could have tipped a prominent New England family off to the looting of some $57 million from its trust funds.The Ayer Family Trusts hold several hundred million dollars for about 100 descendents of industrialist Frederick Ayer. Those trusts had been largely overseen by the corporation's former chief operating officer, and employee of more than 30 years, John Doorly.
According to court documents, Doorly engaged in the "systematic looting" of $57 million from the trust funds, much of it through the use of duplicate accounts.
Doorly was fired from the position in March 2006, but the family's suit against Vitale Caturano claims that the firm should have acted more quickly to investigate Doorly's secrecy regarding a number of trusts, and notes that the funds suffered losses of more than $10 million during Vitale Caturano's time as auditor.
"We met all of our professional obligations in this case, as we do every day for every client," firm president and co-founder Richard Caturano said. "We are sorry it has come to this, but know that we have the facts on our side, which will be clear as this goes through the legal process."
The alleged fraud dates back to the mid-1990s, when the trusts were being audited by Vitale Caturano's predecessor, PricewaterhouseCoopers.
Vitale Caturano was appointed as auditor in 2004, and the lawsuit says that the firm was in the midst of preparing the 2005 year-end audit when the alleged fraud was uncovered.
