Miami, FL, United States (AHN) – A trust filed a $7.6 billion lawsuit on Monday against giant American accounting firm Deloitte Touche Tohmatsu for its alleged failure to detect fraud in its audit of defunct mortgage company Taylor, Bean & Whitaker.

Neil Luna, the trustee overseeing the failed firm, claimed that Deloitte, which audited Taylor Bean’s financial statements from 2002 to 2009, ignored red flag warnings on the company’s books and allowed former Taylor Bean chairman Lee Farkas to create a fraud that led to the closure of the firm.

The $7.6 billion claim combines the losses of Taylor Bean and its Ocala Funding unit.

Luna charged the accounting firm was negligent and turned a blind eye to the fraud In particular, Luna pointed to Deloitte’s certification of the Taylor Bean books as having provided the company the appearance of a legitimate mortgage enterprise.

He said the company sold false or highly overvalued mortgages, wrongly stated its liabilities and hid overdrawn bank accounts that were indicators of the audit firm’s failure to do its job.

Taylor Bean, which used to be the 12th largest mortgage lender in the U.S., closed in August 2009 after a federal raid on its offices. Seven company executives were convicted of federal criminal charges; Farkas was given a 30-year jail sentence and the six others got prison terms ranging from three months to eight years.

Deloitte spokesman Jonathan Gandal denied Luna’s allegations and dismissed the charges as without merit.

Gandal described the lawsuit as a bizarre notion that the people behind the downfall of Taylor Bean could complain about injury caused by their own crimes and sue outside auditors. He added the lawsuit defies common sense and law.

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