StarTribune: Madoff and Petters Losers Suing their Auditors McGladrey & Pullen of Bloomington Minnesota

Naturally, you want to recover your the money you lost in the Madoff and other ponzi scandals. So you sue everyone involved. Conventional thinking tells us that the auditors eventually will have to pony up some dough.
Bloomington accounting firm faces double whammy over Petters, Madoff. Investors are suing McGladrey & Pullen of Bloomington, blaming it for their losses.
By DAVID PHELPS, Star Tribune

What are the odds?

The Bloomington accounting firm of McGladrey & Pullen has now been sued in relation to both of the top two alleged Ponzi schemes in U.S. history: the $50 billion securities fraud case against Wall Street broker Bernard L. Madoff and the $3.5 billion investment fraud scheme allegedly run by Wayzata businessman Tom Petters.

An investment fund that placed $280 million with Madoff filed suit last week in a state court in Bridgeport, Conn., saying its auditors -- Goldstein Golub Kessler, in 2006, and McGladrey & Pullen LLP, in 2007 -- failed to detect the fraud.

In October, the Ellerbrock Family Trust filed a similar suit in a Minnesota federal court saying that McGladrey & Pullen failed to conduct thorough audits or take other actions that would have uncovered alleged fraud by the Petters companies....more...

1 comment:

Anonymous said...

Being owned by Block, McGladrey has to answer to Wall Street. They are pushed to continually increase the top line, which leads to taking on risky clients. The "partners" have a minimal capital investment, so there is limited deterent to cutting corners. I do not understand how a C corporation can have the adequate amount of professional skepticism that a true partnership does. Yes, McGladrey & Pullen is owned by individual partners, but the revenue sharing agreement with Block gets rid of all the cash. I don't think it is a model that can continue in today's business environment. Letting investment banks go public turned out to not be such a good idea either.