CHARLESTON – Mountain State Justice is suing the firm who did its yearly audits for never catching that an employee was embezzling money from them for nearly 12 years.
Beginning in 2003, MSJ retained the services of Suttle & Stalnaker to perform its yearly audit and for 12 years, S&S performed each yearly audit for the law firm, according to a complaint filed in Kanawha Circuit Court.
MSJ claims each year, S&S issued an audit opinion that concluded that the financial statements presented “fairly, in all material respects, the financial position of Mountain State Justice.”
S&S issued this opinion despite persistent and material underreporting of revenue year after year on account of continuing employee fraud and embezzlement, according to the suit.
MSJ claims beginning on June 30, 2004, and continuing through March 24, 2016, Kim Cooper devised and engaged in a scheme to defraud and embezzle money from the law firm and was confronted by the Federal Bureau of Investigation on March 24, 2016. She later pled guilty to wire fraud and tax evasion.
This was a type of impropriety that the defendant should have found in its review and audits of MSJ’s books and records, according to the suit.
MSJ claims Cooper was found to have embezzled at least $1,462,023.83 over nearly 12 years.
The plaintiff first became aware of the material misstatement of their financial statements sometime after learning of the FBI’s investigation into Cooper, according to the suit.
MSJ claims it was not made aware of any financial irregularities by virtue of the audits negligently performed by S&S, which negligently failed to discover any of the transgressions.
The defendant was negligent and breached its contract with MSJ, according to the suit.
MSJ is seeking compensatory damages with pre- and post-judgment interest. It is represented by James G. Bordas and Jason E. Causey of Bordas & Bordas.
Kanawha Circuit Court case number: 18-C-207