What You Need to Know About Accounting Malpractice Lawsuits

General Business Trial Group August 9, 2017

Accountants are expected to follow standards of professional care and conduct in the course of providing professional services to their clients, such as tax preparation, business consulting, and asset management.

Accountants are expected to follow professional standards.

When accountants do not uphold their professional responsibilities and their client suffers financial losses as a result, the client may be able to recover their losses by filing an accountant malpractice lawsuit.

The Business Trial Group’s Florida accounting malpractice attorneys represent individuals and businesses on a contingency-fee basis. We charge no hourly fees or retainers, and no fees at all unless we make a recovery in your case.

If your accountant did not do their job properly and you lost money as a result, contact the Business Trial Group and receive a free case review.

Accountant Standards of Professional Conduct

Accountants are expected to abide by rules of professional conduct. These rules are published by the American Institute of Certified Public Accountants (AICPA) and are known as “Generally Accepted Accounting Principles” (GAAP). Florida also has laws concerning public accountancy, based in part on the standards set forth in GAAP.

Under GAAP and state law, Florida accountants—whether they are engaged in audit, tax, consulting, or asset management services—are expected to follow professional standards that include:

Remaining free of conflicts of interest
Not knowingly misrepresenting facts
Only performing those services that can be completed with competence
Exercising due professional care
Obtaining sufficient data to afford a reasonable basis for conclusions or recommendations
Following the rules set forth by the Florida Board of Accountancy
Meeting licensing requirements (including continuing education)
Maintaining accountant-client communications confidentiality

Because many of these standards are very broad and could cover a wide variety of misconduct, you should discuss your particular circumstances with an experienced accounting malpractice attorney.

Examples of Accountant Malpractice

Deviation from professional standards can lead to an accounting malpractice lawsuit. To have a case, however, you must have suffered financial losses from the alleged misconduct.

Common examples of accountant misconduct that can lead to a lawsuit include:

Making tax return errors or giving incorrect tax advice
Failure to recommend an audit
Failure to detect embezzlement or fraud during an audit
Preparing inaccurate business reports or manipulating financial statements
Inaccurately evaluating a financial transaction or statement
Keeping poor financial records
Committing inventory, accounts payable, or accounts receivable errors
Giving bad advice about an estate planning matter or an investment
Fraud, such as overbilling, embezzlement, license fraud, or conflicts of interest

BTG Files Florida Accounting Negligence Lawsuit

The Business Trial Group is currently representing an individual in an accounting malpractice lawsuit in Palm Beach County, Florida. Our client alleges that the accountant he hired to prepare his annual tax returns made errors that resulted in him suffering more than $100,000 in losses.

The alleged errors resulted in our client paying too much in taxes.

The alleged errors involve adjustments to the plaintiff’s annual income for a loss resulting from his sale of a property that had greatly diminished in value. The plaintiff alleges that his accountant incorrectly advised him that his income was too high to deduct the loss of the property sale. The accountant’s purported errors resulted in our client overpaying the IRS and failing to receive an income tax refund.

Several years later—when our client hired a different accountant to prepare his taxes—he was advised that he could have taken the deduction.

The Business Trial Group’s lawsuit alleges that the accountant and the accounting firm had a duty to accurately prepare the plaintiff’s tax returns, but breached this duty by failing to deduct his realized loss from the sale of the property, resulting in the loss of his income tax refund.

Other examples of lawsuits for accounting errors we are currently handling include two cases where our clients relied on accountants’ allegedly negligent advice or incorrect financials statements.

Contingency-Fee Florida Accounting Malpractice Attorneys

Florida law provides only four years from the date of the alleged accountant negligence to file a claim, making it important to discuss your legal options with a Florida accounting malpractice lawyer as soon as possible.

An accountant who deviated from professional standards could be liable for your financial or investment losses, even if you did not hire the accountant directly.

Because Business Trial Group attorneys work on a contingency-fee basis, you will pay no up-front fees, and no fees at all if we do not successfully resolve your case.

Learn more during a no-cost, no-obligation case review

Accountants’ Liability for Financial or Investment Losses

General Business Trial Group August 2, 2017

You probably understand that when your own accountant performs negligent work that causes you financial losses—such as making tax preparation errors or offering bad business advice—you have legal recourse.

But it is less commonly known that an accountant could be liable for your financial or investment losses even when you did not hire them directly.

You can file a lawsuit against an accountant you did not directly hire.

The latter scenario often arises in the context of investment losses. The Business Trial Group is currently representing two clients that filed lawsuits against accountants they did not hire directly, but whose accounting advice and statements they nonetheless relied upon. In both cases, our clients allege that their reliance on a third-party accountant caused them to suffer millions of dollars in losses.

If you think that an accountant may have contributed to your financial or investment losses, the Business Trial Group can help you determine if you have a case.

Receive a free case review from our accountant malpractice attorneys

Lawsuit against McGladrey for Negligent Accounting Advice

We represent IDJB Investments, the majority shareholder and major creditor of Physicians United Plan, Inc. (PUP), a Florida Medicare Advantage Plan, in an accountant and auditor malpractice lawsuit against McGladrey, a major accounting and auditing firm.

The Orlando, Florida malpractice lawsuit alleges that McGladrey’s bad accounting and auditing practices lead to PUP’s failure and resulted in IDJB suffering millions of dollars of financial losses. While PUP hired McGladrey, IDJB alleges damages due to its reliance on McGladrey’s accounting and auditing representations.

PUP was formed in Florida in 2005. IDJB was PUP’s major investor and originally held 100% of PUP’s shares. As PUP grew, the company hired McGladrey as its accounting and auditing firm to monitor PUP so that it could grow, stay compliant with Florida law, and avoid insolvency.

Under Florida law, PUP’s growth necessitated larger capital investments. One way it sought to meet capital requirements was through a series of transactions with the Pacific Western Bank Corporation (PACWEST). The PACWEST transactions were presented to and approved by McGladrey.

While McGladrey assured PUP that the PACWEST transactions complied with Florida’s statutory requirements, they did not comply, leading to a misstatement of PUP’s true financial condition. Following an audit by the state of Florida and adjustments to PUP’s finances, PUP was determined to be insolvent by the state and, ultimately, failed.

IDJB claims that McGladrey knew or should have known that the PACWEST investment scheme did not comply with Florida’s statutory requirements and would have negative financial consequences for PUP—and by extension, IDJB. The lawsuit asserts that if IDJB had been timely made aware of PUP’s true financial condition, rather than relying upon McGladrey’s false and misleading approvals and audits, IDJB would have taken action to protect its interests.

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Lawsuit Against Accountant for Financial Statement Errors

In another case concerning an accountant’s involvement in an investment, our client alleges that it relied on financial statements prepared by a company’s outside accountant, Laura Sims of Sims Munson CPA, to make a $2.4 million investment. The company appears to have been a Ponzi scheme and the investor’s money was lost.

Our client learned that the company had no sales at the time he invested.

According to the lawsuit, the plaintiff was considering investing in a company called Rollaguard Security. As part of his due diligence, our client was provided with financial statements from Rollaguard’s outside accounting firm. Based on the financial statements that Rollaguard’s accountants prepared, which showed significant sales, the plaintiff made a $2.4 million investment in the company.

Two years later, Rollaguard filed for bankruptcy. Since that time, our client learned that the company had no sales at the time he invested. The sales were fabricated and the financial statements the he was provided appear to have been false.

The West Palm Beach, Florida accountant malpractice lawsuit alleges that Rollaguard’s accountants knew—or should have known—that the financial statements they prepared and provided to our client were incorrect, misleading, and contained multiple errors. Because our client relied on the materially false and misleading financial statements to make a decision to invest in Rollaguard, the lawsuit states, Rollaguard’s accountants are liable for our client’s investment losses.

Accountants of Madoff Scam Feeder Funds Pay Investors

The two Business Trial Group lawsuits described above assert similar claims to those that investors have asserted against PricewaterhouseCoopers (PwC) and Ernst & Young for their role in the Bernie Madoff investment scam.

Investment firms Fairfield Greenwich Group and Tremont Group Holdings were the two largest feeder funds of the $3.2 billion Madoff Ponzi scheme. PwC units were responsible for auditing Fairfield’s funds from 2002 to 2007, while Ernst & Young audited Tremont’s funds from 2000 to 2003.

Fairfield investors filed a lawsuit against PwC, and Tremont investors filed suit against Ernst & Young. The cases claimed that PwC/Ernst & Young should have uncovered the fraudulent Madoff assets, and that their failure to conduct proper audits caused the investors’ losses.

PwC paid $55 million to settle the investor lawsuit. Ernst & Young was ordered by a Washington state jury to pay investors $25 million. These lawsuits provide additional examples of the circumstances under which parties can file a lawsuit against an accountant they did not hire.

Contingency-Fee Accounting Malpractice Attorneys in Florida

The preceding cases show that an individual or business need not have directly hired an accountant in order to suffer the consequences of an accountant’s negligence.

Pay for results, not hours.

No matter how complex an accountant’s errors, omissions, or misconduct, our Florida accountant malpractice attorneys work on a contingency-fee basis. You will never pay up-front fees; and you will pay no fees at all until we successfully resolve your case.

If you have suffered financial losses due to an accountant’s negligence, error, or fraud, we can help.

Learn more during a no-cost, no-obligation case review

Oral Brokerage Contracts, Procuring Cause, and Real Estate Commissions

General Christian Savio July 19, 2017

Pure commission-based professionals working in the highly competitive real estate field can face steep challenges even when everyone plays by the rules. So when a broker or agent works to put together a deal but does not receive a commission for their efforts, it can be demoralizing.

Florida recognizes oral brokerage agreements as valid.

But there is good news for brokers and agents who are circumvented in a deal that they were instrumental in closing. Florida law provides financial relief for realtors cut out of a deal—as long as the broker or sales associate is found to be the procuring cause of the transaction.

If you did not receive a real estate commission that you are contractually entitled to—whether the contract is written or oral—the Business Trial Group can help. We handle all real estate commission disputes on a contingency-fee basis, so you pay no fees until we prevail in your case.

Learn more during a no-cost, no-obligation case review

Oral Real Estate Contracts

Issues regarding procuring cause are often found where there is no written brokerage agreement.

Florida law recognizes oral brokerage agreements as valid and enforceable. While the burden of proof is on the party who asserts an oral contract, and it is certainly more prudent to have a written agreement, a real estate broker or agent can still recover their commission even when there’s no written contract.

Procuring Cause in Florida

As a general rule, to entitle a broker to a commission, the broker must either find or procure a purchaser or effect a sale of such property.

The broker is typically entitled to a commission when he or she produces a purchaser that is “ready, able and willing to perform upon the terms fixed.” This is known as the procuring cause doctrine.

To earn a commission under the procuring cause doctrine, the broker must bring the parties together and a sale must be effectuated as a result of continuous negotiations between the seller and buyer.

The broker/agent has two requirements under the doctrine in order to be entitled to a commission: (1) initiate negotiations by doing some affirmative act to bring buyer and seller together; and (2) remain involved in the continuing negotiations between buyer and seller.

The Continuous Negotiations Test

To satisfy the second prong of the procuring cause test and for the transaction not to be considered abandoned, there must be continuous negotiations between the parties.

While there is no definitive line in the sand and it can vary depending on the type and complexity of the transaction, Florida courts have found that transactions were not abandoned when as long as a year went by without communication between the broker and client.

There is also an exception to the continuous negotiations requirement when the broker is purposefully excluded from the continuous negotiations. In this situation, the broker needs to prove that the parties negotiated directly with each other without the participation of the broker who first brought them together.

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Protect Your Right to a Real Estate Commission

The main takeaway for real estate agents and brokers is that under Florida law, your word counts. With or without a written brokerage agreement you are still entitled to a commission if you were the procuring cause of a real estate transaction.

You are entitled to a commission if you procured a real estate deal.

If you think you are owed a commission on a residential or commercial real estate transaction, you should speak with an experienced attorney as soon as possible. Real estate commission lawsuits tend to be fact intensive, so it is important get legal advice as soon as you think a problem may arise. You may also be able to gain an advantage by getting a broker’s lien before the transaction closes. Acting quickly to secure representation will give you the best opportunity to recover what you are owed.

Contingency-Fee Real Estate Litigation

The Business Trial Group has successfully represented numerous residential and commercial real estate brokers in commission disputes, achieving significant settlements and verdicts.

From our more than 40 offices, we regularly assist clients in Miami, Ft. Lauderdale, West Palm Beach, Naples, and throughout Central and North Florida. And because we work on a contingency basis, you will pay no retainer or hourly fees, and no fees whatsoever until we successfully resolve your case.

Discuss your case for free with our Florida real estate brokerage attorneys

Real Estate Agents’ Liability for Errors and Omissions

General Business Trial Group July 12, 2017

The Florida real estate market has long been attractive to buyers. As the Sunshine State experiences a construction boom and job growth since the great recession, the market continues to gain strength, especially in cities such as Miami, Ft. Lauderdale, Orlando, West Palm Beach, Tampa, and Jacksonville.

Realtors are held to standards of professional conduct.

A strong real estate market means plenty of opportunities for real estate professionals. In their eagerness to close the deal, however, agents and brokers can make errors and omissions that cause financial losses for buyers and sellers.

Florida real estate agents and brokers are held to standards of professional conduct that, if not met, can expose them and the brokerage firms they work for to liability. If you have suffered financials losses due to misrepresentations or other misconduct by a realtor, you may be able to file a lawsuit to recover your damages.

The Business Trial Group handles real estate lawsuits on a contingency-fee basis, so you will pay no hourly fees or expensive retainers. In fact, we charge no fees whatsoever unless and until we make a recovery in your case.

Learn more during a no-cost, no-obligation case review.

Professional Duties of Florida Realtors and Brokerage Firms

Florida law sets forth the responsibilities owed by real estate brokers and sales associates to their clients. This same conduct can also be grounds for a lawsuit.

The professional duties that Florida realtors owe include:

Dealing honestly and fairly
Accounting for all funds
Using skill, care, and diligence in transactions
Disclosing all known material facts of the property to potential buyers
Not making misleading, deceptive, or fraudulent representations to potential buyers

Florida Realtor Lawsuits Causes of Action

Lawsuits against residential or commercial realtors typically allege one or more of the following causes of action against the agent and/or the brokerage:

Fraud by a Real Estate Agent or Broker

Fraud means that the real estate agent intentionally made a false statement concerning a material fact, or intentionally omitted (left out) a material fact about a property. In the context of a real estate transaction, a material fact is a fact that a reasonable person would find relevant to the decision of whether to purchase or sell a property. A party suing their Florida realtor under a fraud cause of action may be entitled to punitive damages.

Negligent Misrepresentations by a Real Estate Agent or Broker

Negligence also relates to omissions and misrepresentations of material facts, but it deals with unintentional (instead of purposeful) omissions and representations. While negligence is a less serious offense than fraud, the harm suffered by buyers and sellers may be indistinguishable, and they can still recover their financial losses when their realtors make unintentional errors.

Breach of Fiduciary Duty by a Real Estate Agent or Broker

In certain cases real estate agents and brokers owe clients a fiduciary duty. A fiduciary duty requires a Florida real estate professional to put the best interests of their clients ahead of their own interests. This high standard of care reflects the fact that agents and brokers, as compared to their clients, usually possess superior knowledge about real estate, which creates the potential to abuse their position of authority.

Breach of a Real Estate Contract

The specific agreement between a real estate agent and a client can impose duties on the agent that go beyond their general duties of honest and fair dealing. When real estate agents breach a contract with a client, they can be liable for the financial losses stemming from that breach.

Vicarious Liability of Florida Real Estate Brokerages

When a real estate agent/broker does not meet their professional duties and a lawsuit arises from their misconduct, the brokerage firm they work for may be held liable under a legal concept known as “vicarious liability.”

Brokerages can be liable for an agent’s misconduct.

Florida courts have ruled that if a real estate firm profits from the actions of an agent—for example, by earning money on a real estate transaction that involved misconduct—then the firm cannot disclaim the misconduct while also accepting the fruits of the agent’s efforts.

Examples of Real Estate Agent Misrepresentations

Misrepresentations by Florida real estate agents and brokers can occur in commercial or residential transactions and take many forms. If you are concerned that you have been deceived or lied to by a real estate professional, the examples below should provide some more context. You can discuss your specific issues with our Florida real estate attorneys, free of charge.

Misrepresentations about Building Regulations

Florida building regulations place limits on how an owner may build on a property. For many clients, building regulations are material to their purchase decision—especially if they plan to renovate the property.

The Business Trial Group recently reached a settlement with a well-known real estate agency over an agent’s misrepresentation about a property’s compliance with building regulations. Our clients purchased a Florida property based on the agent’s representation that the property was in compliance with building regulations, when in fact the property did not comply.

Misrepresentations about Zoning Laws

Another material fact for potential buyers is how property is zoned. Zoning regulations and restrictions specify how property within certain areas can be used (e.g. for residential, commercial, or industrial use).

For the buyer who is looking to establish a new location for a business, whether or not the location allows commercial activity is of crucial importance. If a real estate agent assures the buyer that the property can be used for a business—but zoning laws prohibit this—the agent may be liable for the misrepresentation.

Zoning laws do not allow our client to use the site for its intended purpose.

For instance, Business Trial Group attorney Roger Brown is currently representing a client who purchased property as a site for a private school, only to find out after closing that zoning restrictions prohibited using the property for this purpose. Mr. Brown’s client has brought claims against its real estate broker, real estate attorney, and the seller of the property for, among other things, the additional expenses it has incurred due to their alleged negligence.

Other examples of residential and commercial real estate agent misconduct that can lead to legal action include:

Misrepresenting the value of a property
Not disclosing property damage or flaws
Over-inflating or exaggerating property features
Not disclosing an easement, title problems, or environmental problems
Misrepresenting the property boundary
Misrepresenting property information, such as the age of an addition or feature

Florida Contingency-Fee Real Estate Attorneys

The Business Trial Group represents property buyers in lawsuits against residential and commercial real estate agents and brokerage firms on a contingency-fee basis.

No matter how complex your real estate dispute, we charge no hourly fees. This allows our clients to take on wealthier and larger real estate companies and obtain justice.

With offices in Ft. Lauderdale, West Palm Beach, Ft. Myers, Tampa, Orlando, Jacksonville, and Tallahassee, the Business Trial Group’s experienced real estate attorneys represent clients throughout Florida.

Learn more about our contingency-fee real estate attorneys and find out if you have a case during a free consultation.