Accounting for Horses, Cattle and Catfish

The Faegre & Benson law firm developed a significant practice of representing accounting firms that had been sued for accounting malpractice. For example, I represented four of what were known as The Big Five accounting firms: Arthur Anderson, Coopers & Lybrand (Coopers), Deloitte & Touche and KPMG Peat Marwick. Another partner had primary responsibility for the other Big Five firm–Arthur Young & Co.

One of the most interesting of these accountants liability cases was the Australian KPMG Peat Marwick firm’s battle with Sentry Insurance of Stevens Point, Wisconsin.[1]

The other accounting case I remember most vividly was for Coopers. It had been sued in the federal district court in Minnesota[2] for alleged securities law violations and common law fraud. The plaintiff was an Argentine company that had invested and lost $35 million in a Minnesota company (Interfund Corporation). Interfund’s main business was financing the purchase and sale of Arabian horses, but it also helped to finance a company in Missouri that was breeding cattle and operating a catfish farm. The plaintiff alleged that in making its investments it had relied upon Interfund’s audited financial statements that allegedly were materially overstated.

The plaintiff because of its large investment, however, had one of its own people on the Interfund board of directors and thus was privy to all of its financial information far beyond what was in the audited financial statements. As I recall, this was the primary undisputed issue of material fact that was the basis for Coopers’ successful motion for summary judgment that I brought after the conclusion of pre-trial discovery. There was no appeal.

This case required several trips to New York City to consult with Coopers’ in-house general counsel, to inspect the plaintiff’s documents and to depose its personnel. In my spare time, I attended concerts and Broadway shows.

New York Public Library
Rose Main Reading Room, New York Public Library

I also spent time on these trips in the famous New York City Public Library at Fifth Avenue and 42nd Street doing research about an ancestor, W.C. Brown, who was President of the New York Central Railroad in the early 20th century. [3]

Grand Central Terminal
Grand Central Terminal

Two blocks east of the Library on 42nd Street sits Grand Central Terminal that was built while Brown was the Railroad’s President.


[1]  See Post: Battling Australian and Wisconsin Courts (Aug. 12, 2011).

[2]  See Post: Minnesota’s Federal Court (June 28, 2011).

[3] See Post: Adventures of a History Detective (April 5, 2011).

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dwkcommentaries

As a retired lawyer and adjunct law professor, Duane W. Krohnke has developed strong interests in U.S. and international law, politics and history. He also is a Christian and an active member of Minneapolis’ Westminster Presbyterian Church. His blog draws from these and other interests. He delights in the writing freedom of blogging that does not follow a preordained logical structure. The ex post facto logical organization of the posts and comments is set forth in the continually being revised “List of Posts and Comments–Topical” in the Pages section on the right side of the blog.

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