A New Jersey jury has awarded nearly $32 million in damages to a company that based its purchase of a business on faulty financial records.
After a 24-day trial, the jury in Middlesex County found the national accounting firm KPMG negligent for having signed off on the financial records of a New Jersey-based collectibles manufacturer.
The faulty audits were then used by Cast Art Industries of Corona, Calif., to buy Papel Entities of Monroe Township for $34.4 million in the year 2000.
The jury found KPMG never uncovered accounting records showing that Papel overstated its revenues.
A judge in New Brunswick threw out accounting fraud charges against KPMG in July, but allowed the negligence portion of the case to proceed.
A KPMG spokesman said the firm believes there was no factual basis for the verdict and was confident it would be overturned on appeal.
Information from: The Star-Ledger
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