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Judge Rules Successor Accounting Firm Liable for Damages in Decades Old Liquidation

A federal judge has ruled that the accounting firm PricewaterhouseCoopers is fully responsible for paying a $182.9 million judgment stemming from a jury's finding that...
October 4, 2005

A federal judge has ruled that the accounting firm PricewaterhouseCoopers is fully responsible for paying a $182.9 million judgment stemming from a jury's finding that a predecessor company was negligent in auditing Ambassador Insurance Co., which collapsed more than 20 years ago. The money is to go toward paying the claims of thousands of Ambassador policyholders.

In a verdict rendered July 29 of this year, a jury awarded $119.9 million to Ambassador policyholders and other creditors. The jury assigned 40 percent of the liability to New York-based PricewaterhouseCoopers, successor company to Coopers & Lybrand, which the state of Vermont accused of negligent audits of Ambassador; and 60 percent liability to the late Arnold Chait, the Ambassador president accused by Vermont of mismanagement. Vermont charged that Ambassador's financial statements concealed the company's weakness from regulators. The company was liquidated in the late 1980s after Vermont courts upheld the receivership. The judge also awarded creditors $63 million in interest.

A spokesman for PricewaterhouseCoopers, David L. Nestor, said the company believes "the verdict and judgment are incorrect, and we will seek appeal if the trial court does not set them aside." Richard Whitney, a lawyer for Vermont's insurance department, said "If this holds up, it should make them [policyholders] all whole."

Judge: Accountant Responsible for $183 Million (Insurance Journal 10/2/05)