Accounting firm pays up, Cox says

John O'Brien Jun. 16, 2009, 2:22pm


LANSING, Mich. (Legal Newsline) - Michigan Attorney General Mike Cox announced a $109 million national settlement in a class action lawsuit against accounting firm Ernst & Young Tuesday.

The firm was accused of failing to expose fraud taking place at HealthSouth Corporation when it performed audits of the company. Previously, HealthSouth settled allegations of fraud that led to losses by pensioners and investors for $445 million.

Ernst & Young was alleged to have made several accounting errors during their audits of HealthSouth, which admitted to overstating its income by more than $2.8 billion.

"Retirees and pensioners lost millions of dollars in their hard-earned investments as a result of Ernst & Young's actions," Cox said.

Cox said the State of Michigan Retirement Systems lost an estimated $33 million. In other pension cases, Cox earned a $24.5 million settlement against Tyco and helped negotiate a $1.4 billion agreement with Comerica Bank that required the bank to release frozen investments.

He's also pursuing cases against BearSterns and American International Group.

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