Former Andersen partner settles in fraud case
Former Arthur Andersen partner has settled civil charges that he assisted American Tissue in $US300m fraud
Fred Gold, a former Arthur Andersen partner, has settled a civil suit against
him, alleging fraud in relation to an American Tissue audit, by agreeing to a
permanent anti-fraud injunction, $US100,000 civil penalty and practice
suspension from USA’s
Securities
and Exchange Commission (SEC) in settlement of litigation.
Gold consented to the settlement without admitting or denying the
commission’s findings which alleged Gold helped American Tissue commit a $US300m
(?148m) fraud.
The SEC complaint alleged that, in 2000, American Tissue fraudulently
inflated reported assets and earnings by improperly capitalising $US15.6m of
previously expensed supplies and overvaluing its finished goods inventory by at
least $12.5 million; Gold knew or was reckless in not knowing that American
Tissue’s finished goods inventory was overstated and that supplies American
Tissue used in its manufacturing processes had been improperly classified as
inventory instead of expenses.
SEC further alleged Gold directed others to alter audit work papers in an
attempt to conceal audit work failures and destroyed documents and e-mails in a
further attempt to conceal the audit failures.
Earlier this month, two other former Arthur Andersen partners, John Parson
and Brendon McDonald, agreed to settle civil charges against them also in
relation to the American Tissue audit.
Further reading:
US auditor committee releases discussion paper
Protiviti settles governance lawsuit out of court