The Securities and Exchange Commission has filed an enforcement action charging Grant Thornton and Michigan based Doeren Mayhew with participating in the violation of antifraud and reporting provisions of federal securities law in connection with work done in 1998 for a now-defunct Michigan mortgage banking company.
The SEC charges the accounting firm Grant Thornton and Doeren Mayhew & Co., along with three individuals, with "misconduct in connection with their audit of MCA Financial Corporation's financial statements." MCA is now bankrupt. Reuters reported that a Grant Thornton spokesman could not be reached for comment.
According to the SEC, MCA filed false and misleading statements and then used them as part of a public debentures offering. The statements used "related party transactions to inflate and mischaracterize its income, assets and equity," the SEC said.
The SEC stated that the accounting firms named in the action "knew that MCA failed to disclose several million dollars of material, related party transactions," during the company’s 1998 statements audit. The SEC went on to state that despite knowing this, the two firms jointly gave an unqualified opinion on MCA's 1998 statements and consented to the inclusion of their report in MCA's debenture offering materials, Reuters reported.