Chicago-based BDO Seidman is being sued by Banco Espirito Santo International Ltd. over an alleged $170 million fraud that the accounting firm allegedly failed to uncover. Banco Espirito claims that BDO signed off on "obviously false financial statements," the Associated Press reported.

BDO Seidman, the auditor for E.S. Bankest, a joint venture between Miami's Espirito Santo Bank of Florida and two Key Biscayne brothers, Eduardo and Hector Orlansky, has not seen the lawsuit and declined comment, a company spokesman told the AP.

BDO Seidman and its Belgium-based global affiliate, BDO International, were named as defendants, the AP reported.

E.S. Bankest was known for its factoring business and bought bills due a company at a discount, then tried to collect them in full, keeping the difference as profit, the AP reported. Associates of the Orlansky brothers, who have pleaded guilty in a separate federal criminal case, claim that Bankest inflated the value of the bills it bought, the AP reported.

Loans from Espirito Santo paid for the purchases made by the joint operation with money it raised by selling debt to its clients, according to the federal indictment. After the scheme blew up, Espirito Santo was left holding $170 million in debt.

Espirito’s lawsuit claims that BDO Seidman should have discovered the fraud when it audited Bankest’s financial statements, the AP reported, adding that there was a conflict of interest since BDO Seidman was a strategic partner of a Bankest affiliate.

The Orlansky brothers and three other defendants are due to stand trial in April, the AP reported.