Settlement Approved in Security Firm Case
Jul. 08, 1986
FT. LAUDERDALE, Fla. (AP) _ Seventeen governments nationwide will share a $50 million settlement to recover about 70 percent of the investments they lost with the collapsed ESM Government Securities Inc.
U.S. District Judge Jose Gonzalez on Monday approved the out-of-court settlement between ESM's auditor, Grant Thornton, formerly called Alexander Grant & Co., and the investors.
After ESM failed in March 1985, owing some $300 million to dozens of creditors, investors sued Grant because its audited financial statements had shown ESM was a healthy company.
Jose L. Gomez, once a managing partner of Grant's South Florida offices, has pleaded guilty to accepting payments from ESM officials for approving false financial statements.
Testimony in the trial of two former high-ranking executives in the past several weeks disclosed massive fraud had kept the company afloat since the late 1970s.
The local governments could get their money this week, said David Levine, attorney for ESM court-appointed trustee Thomas Tew. Already, the cities and counties have received 20 cents on the dollar with funds salvaged by Tew from the assets of ESM and its officers.
They are Pompano Beach and Tamarac, Fla.; Beaumont, Texas; Toledo, Ohio; Harrisburg, Allentown and Daupin County, Pa.; Clark County, Nev.; Birmingham and Garden City, Mich.; Hayward, Calif.; the board of education of Memphis, Tenn.; and Jefferson County, Chelan County and Clallam County, Wash.
Meanwhile, Tew said he would reduce his claims against Grant to the extent that they duplicate the settled claims.
''The settlement of this set of claims, which we believe to be the most significant ones asserted against us arising out of the ESM matter, insures that Grant's 450 partners will continue to serve tens of thousands of clients in 80 cities with confidence and dedication,'' said Burt Fischer, executive partner of Grant Thornton.