Chicago Bar-tender

Collapsed Financial Company's Trustee Claims Accountants Knew About Fraud

The Liquidation Trustee for Sentinel Management Group is suing the firm's accountants, claiming they knew about the fraud committed by Sentinel.

The complaint alleges that, between 2002 and 2007, Defendant G. Victor Johnson of the accounting firm McGladrey & Pullen (previously Altschuler, Melvoin & Glasser) this is not a case of negligence where the auditors of the financial statements failed to detect certain misstatements.  Rather, it is alleged that the defendants "knowingly and substantially assisted and participated in the fraud by [Sentinel], and as a result, committed and are liable for fraud themselves."

Among the ways that Defendants exhibited knowledge of the fraud and assisted Sentinel, according to the complaint, was by ignoring regulatory violations, preparing false footnotes to the financial statements regarding the purpose of Sentinel's bank loan and proposing false accounting entries. 

The complaint states that Sentinel, which collapsed in 2007 resulting in million dollar losses to customers, "would not have been able to continue their fraud against customers in late 2006 and 2007 without Defendants' knowing participation."

To read the full complaint, click here.



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