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The Moss Adams-Frederick Berg connection, part two: CPAs to fight suit

Office Hours posted yesterday reports that a trustee was suing accounting firm Moss Adams for about $150 million related to a fraud and bankruptcy of Seattle-based Meridian Mortage.

Today the news is Moss Adams officials assert they'll fight the suit and insist they performed auditing for Meridian according to all industry standards.
 
Moss Adams is based in Seattle, and has a large office in downtown Spokane.
 
The suit follows a massive bankruptcy filed by Frederick Darren Berg, who managed Meridian and is accused of creating a massive Ponzi scheme that defrauded investors of hundreds of millions of dollars.
 
As reported in Thursday's Seattle Times, Moss Adams said in a statement it will “vigorously defend against any allegations of wrongdoing.”
 
The lawsuit, filed in King County Superior Court, alleges the large CPA firm wrongly issued “clean” audit reports for six of the Meridian funds at various times between 2001 and 2007.
 
The other Spokane connection to F.D. Berg is the recent announcement that his former luxury bus company, MTR Western, has expanded to Spokane and North Idaho. Last week we noted the company is adding coaches for sports teams and tours.
 
A Seattle company bought MTR Western earlier this year for about $5 million after Berg filed for bankruptcy, and after he pleaded guilty to fraud charges in August, acknowledging that he diverted approximately $100 million for his own purposes.
 
He's scheduled to be sentenced next month.

Moss Adams hit with $150 million lawsuit related to Meridian Mortgage funds

The Seattle Times reports that Seattle accounting firm, Moss Adams, has been hit with a lawsuit related to the “biggest Ponzi scheme in Pacific Northwest history,” the collapse of  Meridian Mortgage funds.

Meridian Mortgage filed bankruptcy in 2010.

The story in Wednesday's editions say the suit was filed on behalf of bankrupty trustee Mark Calvert and alleges the accounting firm should pay $150 million for its failure to detect an alleged fraud scheme.

The suit said Moss Adams, the 11th-biggest CPA firm in the country, issued clean audits for six of the Meridian funds  between 2001 and 2007.  The company has a large office in downtown Spokane.

A dozen Meridian funds collapsed in summer 2010, and last August Meridian founder Frederick Darren Berg pleaded guilty to fraud and admitted diverting “approximately $100 million” to personal uses and to perpetuate the Ponzi scheme.
 
The Times said a Moss Adams spokeswoman did not respond to requests for comment. At least 750 individuals and others lost more than $150 million in Meridian's real-estate funds, according to the lawsuit. (Berg's plea agreement put the total raised at $280 million.)