Deloitte & Touche wins dismissal of Iowa pension fund suit
By Bloomberg | January 23, 2013 4:39 pm
Deloitte & Touche won dismissal of a lawsuit filed by the $23.9 billion Iowa Public Employees’ Retirement System over the auditing of WG Trading Co., a company that U.S. prosecutors said was used as a Ponzi scheme by two of its former managers.
U.S. District Judge Paul Oetken in Manhattan Wednesday granted a request by Deloitte & Touche, one of the so-called Big Four accounting firms, to throw out the claims by the fund.
Iowa PERS said in a complaint filed last year that it suffered millions of dollars in losses as a result of the scheme.
Mr. Oetken said in his ruling that the pension fund’s claims weren’t adequate that Deloitte & Touche exhibited “conscious indifference” and disregarded “red flags” that would have alerted it to the fraud scheme. Mr. Oetken concluded Deloitte & Touche couldn’t be held accountable for representations in statements of unaudited, non-client entities and dismissed claims that the auditor had aided and abetted the fraud.
“The facts as alleged in the complaint fail to support an inference that D&T was reckless, let alone willfully blind with respect to the fraud afoot at Westridge,” Mr. Oetken said in his order.
Paul Greenwood and Steven Walsh, former managers at WG Trading, were indicted in July 2009 on charges they conspired to defraud investors of $554 million. The U.S. said the scheme stretched from 1996 until the men were arrested in February 2009. Mr. Greenwood pleaded guilty to six charges, including conspiracy and securities fraud. Mr. Walsh has pleaded not guilty.