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A Miami-Dade jury awarded more than $91 million Monday to the estate of Miami aviation pioneer George Batchelor and his foundation, concluding both suffered significant losses by investing in a doomed company because of negligent accounting by BDO Seidman. Jurors deliberated for two days after a four-week trial to end the first phase of the court battle before returning with a compensatory verdict amount of $36.7 million. The plaintiffs followed by asking for $82.8 million in punitive damages. The jury came back late Monday with a $55 million punitive verdict. The estate and foundation claimed a $78 million loss on their investments in Boca Raton-based senior housing operator Grand Court Lifestyles, which filed for bankruptcy protection in 2000 after a string of losses. The lawsuit claimed BDO auditors hired in 1998 hid signs of declining finances. Attorney Steven Thomas, who represented the estate and foundation, argued Chicago-based BDO’s decision to sample but not review all the Grand Court properties meant it failed in its duty to perform an accurate audit of the publicly traded company. Thomas, who leads Venice, California-based Thomas Alexander Forrester, maintained the troubled company fired its previous auditors at Deloitte & Touche in favor of BDO after its auditors agreed to conduct a narrow review. Coral Gables attorneys Hector Lombana of Gamba & Lombana and solo litigator Gonzalo Dorta served as local counsel for the estate and foundation. Deloitte and the plaintiffs reached a confidential settlement shortly before trial started Jan 3. Thomas issued a statement saying he was pleased with the verdict against BDO. “BDO Seidman’s apparent culture of ignoring its public duty is shameful, and this jury recognized that and acted appropriately,” he said. “Today, yet another jury has reminded the entire accounting profession that auditors are our nation’s financial watchdogs.” The Batchelor groups claimed BDO’s review of 27 of Grand Court’s 118 properties failed to reveal an asset-inflating scheme of “round-tripping” — advancing payments to smaller entities and counting repayments as income. BDO’s attorney, Greenberg Traurig shareholder Adam Cole, denied the round-tripping claim and maintained sampling is a well-recognized auditing approach, not a violation of accounting principles. Cole also argued Batchelor didn’t rely on BDO audits because he was a longtime investor who was personal friends with Grand Court executives. The defense portrayed the estate’s lawsuit as an attempt to point the finger at the last auditors before Grand Court’s demise, noting 82 percent of Batchelor’s Grand Court investments were made before BDO was hired. The Batchelor estate’s attorneys spent much of the trial focusing on the effect of Grand Court’s bankruptcy on the foundation, prompting BDO to accuse them of pulling heart strings when most of the losses were in fact sustained by a single investor – Batchelor. A spokesman for BDO, Jerry Walsh, said the firm will appeal to the 3rd District Court of Appeal. “Grand Court was a very brief client of our firm’s New York office in the late 1990s,” the firm said in statement Monday. “In a sworn deposition prior to his death, Mr. Batchelor never mentioned BDO among a lengthy list of professionals and associates he relied on in making his decision to invest in Grand Court.” Award was reversedA previous Miami-Dade Circuit award involving BDO’s audit work — and the same attorneys on both sides — was reversed last year. In that case, Espirito Santo Bank blamed the firm for missing a $170 million fraud at E.S. Bankest, a Miami factoring company half-owned by the bank. The jury’s $521 million award for the bank was reversed on appeal. Jose Pagliery can be reached at (305) 347-6648.

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