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Miami-The accounting firm BDO Seidman LLP and two of its Florida partners helped perpetuate one of the largest white-collar scams in South Florida, according to a lawsuit filed recently in U.S. Bankruptcy Court in Miami. Lewis B. Freeman, who took over the failed E.S. Bankest at the center of the alleged fraud, filed the suit. The civil suit accuses the defendants-BDO Seidman’s Florida operation, its parent BDO International of Brussels and partners Sandor Lenner and Keith Ellenburg-of professional malpractice, aiding and abetting breach of fiduciary duty and fraud. Lenner was the audit partner for the failed factoring company E.S. Bankest, and Ellenburg was responsible for reviewing Lenner’s audits. BDO International is the target of vicarious liability and deceptive and unfair trade practice claims. E.S. Bankest is alleged to have run a complicated shell game by inflating the value of high-risk assets for sale to investors. The company lost up to $185 million on $1 billion in accounts receivable. Freeman, the former court-appointed receiver for the company and now its manager, is still trying to recover $170 million. Freeman’s suit on behalf of E.S. Bankest seeks compensatory and punitive damages, civil penalties, attorney fees and interest from BDO. Miami solo practitioner Warren R. Trazenfeld filed the suit on behalf of Freeman. ‘Fake’ financials alleged The suit alleges the defendants ignored E.S. Bankest’s “fake” financial results and kept lucrative consulting contracts with related clients. For example, the computer consulting company Stratasys Group borrowed $30 million from E.S. Bankest using “fake” financials to qualify for advances on its accounts receivable, according to the suit. BDO Seidman, in turn, was an “alliance partner” of Stratasys, which paid BDO to use its logo and for nonaccounting services, the suit asserts. “I believe this is an Enron-type situation where the accounting firm saw opportunities to earn additional fees,” Freeman said. “As in Enron, this caused problems and the company to liquidate.” BDO Seidman spokesman Jerry Walsh in New York denied any negligence or improper conflicts of interest with E.S. Bankest and called the comparison to Enron “ridiculous.” He attributed any fraud to Bankest and other officials and said, “BDO Seidman remains confident that it will prevail in a court of law.” Lenner and Ellenburg did not return calls for comment. Lenner is still with BDO. Ellenburg was hired by Kaufman Rossin in Miami as an audit manager.

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