Washington State Sues E&Y Over Met Mortgage Woes

Washington's insurance commissioner is seeking millions of dollars from accounting firm Ernst & Young for its alleged neglect in overseeing finances at Metropolitan


Click Here

Mortgage & Securities.

Insurance Commissioner Mike Kreidler, acting as the court-appointed receiver of Western United Life Assurance Co. - a Met Mortgage affiliate - filed the lawsuit in Spokane County Superior Court on Thursday, the Associated Press reported.

Kreidler took control of Western United in March, a month after Metropolitan and its sister company, Summit Securities, filed for bankruptcy. The insurance company lost money because Ernst & Young failed to follow accounting and auditing standards, the lawsuit says. The suit seeks unspecified millions of dollars, court costs and the costs to rehabilitate Western United.

"Ernst & Young failed to do its job, so it's my duty as receiver to pursue legal action to protect Western United and its policyholders," Kreidler said in a statement.

Samuel Maizel, the U.S. Bankruptcy Court-appointed investigator in the collapse of Met Mortgage, issued a report noting that PricewaterhouseCoopers LLP and Ernst & Young were "likely negligent in the performance of their duties."

PricewaterhouseCoopers audited the company's fiscal 2000 books. Ernst & Young produced audits in 2001 and 2002 but resigned, saying it couldn't trust numbers provided by the company.

The examiner has criticized Ernst & Young for failing to stop Metropolitan's practice of using last-minute deals to show end-of-year profits.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.