In a recent verdict of a nine year legal battle between BDO Seidman and the estate of George Batchelor and the Batchelor Foundation, the jury ordered BDO to pay $91.7 million in damages for fraud and negligence over the firm’s auditing of Grand Court Lifestyles Inc, a company in which Batchelor had made substantial investments. Grand Court went bankrupt leading to huge losses for the investor.
The lawsuit accuses BDO of careless auditing practices of Grand Court, a company engaged in servicing, acquisition, development, and management of senior living communities. An interesting factoid is that prior to hiring BDO Grand Court had fired their auditor Deloitte & Touche because the auditing firm did not agree with Grand Court about accounting procedures and insisted on appraising the value of all of Grand Court’s multi-family homes, rather than just a sampling of properties. Allegedly BDO agreed to use the less costly method of sampling and so they were brought in to replace Deloitte.