Defunct Colonial Bank Sues The Sh*t Out of Its Former Auditors, Including PwC

A-ha! I hate to say I told you so (no I don't) but, uh, I told you so.

In August of 2009, I caught PwC digging around on my site to find out more about the Colonial Bank failure, a failure which PwC itself oversaw and maybe just participated in (if indirectly, naturally). The year before Colonial's epic failure, PwC auditors gave the bank the all clear.

"In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of The Colonial BancGroup, Inc. and its subsidiaries at December 31, 2008 and 2007 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America," read the opinion.

Anyway, fast-forward two years and here we are:

Colonial Bancgroup Inc (CBCDQ.PK) and its trustee filed a lawsuit against former auditors PricewaterhouseCoopers LLC and Crowe Horwath LLP, charging them with accounting malpractice and professional negligence for not catching a fraud that led to the bank's collapse.

The complaint was filed late on Wednesday in a Circuit Court in Montgomery County, Alabama.

It also accuses the auditors of breach of contract, saying that PwC's independent audits of its financial statements violated generally accepted accounting standards and served to conceal the seven-year fraud that drained it of $1.8 billion and left it with hundreds of millions of dollars in worthless or nonexistent assets on its balance sheet.

Can someone please tell me why the fuck the PCAOB still has a job with this nonsense going on? Why the fuck does PwC make $13 billion a year soaking its clients on audit fees? And why aren't the people of the United States suing the shit out of these auditors too? Colonial was the 6th largest bank failure in U.S. history and cost taxpayers $3.8 billion.

Anyone else find it funny how they call the audit service arm "Assurance?" It has nothing to do with discovering fraud or giving investors actual peace of mind that the statements they are looking at are, in fact, prepared in accordance with GAAP. Rather it is a mafia-style pay-to-play protection ring that offers clean audit opinions in exchange for cash.

Vomit. All over Dennis Nally's impeccably polished shoes.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Bob English said...

If PwC can sign off on the Fed's WTF accounting (your term), Colonial's not such a stretch.

Anonymous said...

the fraud there extended from TBW and the higher ups within Colonial were in on the grift for years Farkass is pumping iron in jail right now and some of his old buds from Colonial are going to be doing the same. The auditors should have been able to spot something (?) Don't know... don't care anymore. You did have it called.

Anonymous said...

Kissick said she helped Farkas and other co-conspirators in November 2003 transfer Taylor Bean’s deficit to Colonial Bank’s mortgage loan purchasing facility. The facility was used to provide mortgage originators such as Taylor Bean with funds for new loans while they worked to sell existing ones to investors.

The conspirators in a scheme called “Plan B” sent mortgage data to Colonial Bank for loans that didn’t exist or that Taylor, Bean had already committed or sold to other third- party investors, according to court records.

For about four years, the conspirators sold fictitious and improperly valued mortgage pools to Colonial Bank.

What a tangled web we weave ....