The Malpractice of A Major Accounting Firm Looks A Lot Like Legal Malpractice
Court Says Accounting Giant Defrauded Business Owner, Graydon Head Wins $100 Million Judgment
Kenton Circuit Court Rules Accounting Giant Committed Fraud, Malpractice
Cincinnati, OH – November 13, 2013 – The Kenton Circuit Court has rendered its verdict, ruling after a month-long trial that accounting giant Grant Thornton sold an abusive tax product to local business owner Bill Yung, president of Northern Kentucky based Columbia Sussex Corporation. Yung and his family were represented in the case by Greater Cincinnati law firm Graydon Head.
Kenton Circuit Judge Patricia Summe ordered Grant Thornton LLP to pay Yung, his wife Martha and the 1994 William J. Yung Family Trust a total of more than $100 million, consisting of $20.22 million in compensatory damages, and $80 million in punitive damages.
Judge Summe concluded that Grant Thornton’s conduct toward the Yungs was “reprehensible,” further finding that the fraud continued from 2000 all the way through trial. She also concluded that Grant Thornton’s actions harmed Bill Yung’s reputation and contributed to his inability to secure licensure from the Missouri Gaming Commission in 2005.
According to the decision, in early 2000 Grant Thornton began developing a tax product to move clients’ offshore money into the United States with minimal tax consequences. This was around the same time that the U.S. Treasury was cracking down on what it perceived as abusive tax shelters.
The Yungs argued they were sold such a product, even though Grant Thornton knew the IRS would characterize it as an abusive tax shelter. According to the lawsuit, Grant Thornton didn’t inform the Yungs of those facts, and the firm’s tax advice cost the family millions in unnecessary taxes, penalties and interest.
The suit stretched on for six years and culminated in a trial that ended last year. The court laid out the basis for Grant Thornton’s liability in 210 pages of findings of fact and conclusions of law, resulting in the $100 million judgment. The judgment is not yet final, as the court intends to conduct a hearing of the remaining issue of sanctions for discovery abuses leading up to trial.
“It took a special client in Bill Yung and his family to pursue this complex claim against an infinitely resourced national accounting firm,” commented Graydon Head lead trial attorney Kevin Murphy. “Our team is proud to have represented them in this David versus Goliath case, and we are just pleased to have delivered a victory.”