Pusch & Nguyen law firm case plaintiffs

Gerard Pusch and Anthony Pusch / Pusch & Nguyen

Pusch & Nguyen law firm case defendants

David and John Nguyen, Nguyen Injury Law Firm, Prosper and related companies

Pusch & Nguyen law firm case issue

Self-dealing, misuse/misappropriation of funds and assets, use of proprietary information/trademarks, and client solicitation/diversion

Pusch & Nguyen law firm case claims

Breach of fiduciary duty, conversion, breach of contract, civil conspiracy, unjust enrichment, accounting, tortious interference, and others

PCAOB Auditing Standard 2110

Auditor performs risk assessment procedures to identify/assess material misstatement risks and design further audit procedures

AICPA General standards rule

Professional must provide: -professional competence -due professional care -planning and supervision -sufficient relevant data

Colonial Bank Scheme #1

CBG hid TBW overdrafts

What happens in Colonial Bank Scheme #1

Used kiting to make TBW's accounts look funded and grew up to $100MM

Colonial Bank Scheme #2

TBW sold worthless mortgages to CBG

What happens in Colonial Bank Scheme #2

Colonial Bank treated worthless mortgages as legitimate assets up to $500MM

Colonial Bank Scheme #3

TBW sold pools of worthless mortgages to CBG

What happens in Colonial Bank Scheme #3

Sold them as valuable mortgage-backed securities

TBW's role

Created/sold the fake or impaired mortgages and securities and helped conceal its financial problems

CBG's role

Certain employees helped TBW hide overdrafts and accepted/recorded the worthless assets as legitimate, causing Colonial's financial statements to overstate asset quality

PwC's role

As Colonial's external auditor, PwC's role is important from an audit failure/red-flag perspective—the case is commonly studied for what the auditors should have detected regarding the fraudulent mortgage assets and related transactions

Results for the Colonial Bank Schemes

The fraud helped cause both companies to collapse in 2009

FTX/FTX US fraud scheme

FTX secretly misappropriated billions of dollars of customer funds and transferred them to Alameda Research. Alameda used the money for trading, investments, real estate, political contributions, and other purposes.

How much money was involved in the FTX fraud?

Double-counting of $8B

Who directed the FTX fraud scheme?

Sam Bankman-Fried directed the fraud scheme

Who is John ray in FTX fraud scheme?

He came in afterward to investigate, clean up the company, and recover assets

Results of FTX fraud scheme

FTX collapsed and filed for bankruptcy in November 2022. The fraud resulted in billions of dollars of customer and creditor losses. SBF was later convicted and sentenced to 25 years in prison

Who were FTX/FTX US auditors?

FTX = Prager Metis FTX US = Armanino

First Brands Fraud Scheme

It was an auto-parts company that used complicated financing methods to get cash and hide how much debt it really had

What were First Brands complex financing arrangements?

Factoring ($2.3B) Supply chain financing ($800MM) Off-balance sheet debt ($2.3B)

Factoring

Sold accounts receivable to get cash immediately

Supply chain financing

Used financing to pay suppliers while delaying its own payments

Off-balance sheet debt

Borrowing money in a way that keeps the debt from appearing obvious on the balance sheet

AICPA Professional Competence

Have the knowledge and skills needed to perform the work properly

AICPA Due Professional Care

Perform your work carefully, thoroughly, and responsibly

AICPA Planning & Supervision

Properly plan the engagement and supervise anyone assisting with the work

AICPA Sufficient Relevant Data

Obtain enough appropriate information to support your conclusions