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[marketmaven]

CROOK NEWS: KPMG Eats Crow on Lernout & Hauspie

KMPG Agrees to Pay $115M to Settle Suit
Thursday October 7, 2:49 pm ET
KMPG Agrees to Pay $115 Million to Settle Shareholder Suit That Claims Co. Failed in Audit

BOSTON (AP) -- The accounting firm KPMG has agreed to pay $115 million to settle a shareholder lawsuit claiming the company failed in its audit of Lernout & Hauspie Speech Products, which later collapsed. In the 1990s, Lernout & Hauspie was recognized as a world leader in the software that recognizes human speech and turns it into computer text.

But the company, based in Burlington, Mass., collapsed about four years ago and later admitted fraud, including fabricating 70 percent of the sales in its largest unit. A lawsuit pending in federal court claims company executives used deceptive accounting practice to inflate the company's reported revenues by 64 percent, or $377 million, over a 2 1/2 year period.

"Lernout & Hauspie used almost every accounting trick in the book to scam investors, which led to the company's demise," said Jeffrey Block, one of the plaintiffs' attorneys. "The recovery is a win for investors, particularly considering the company went bankrupt."

The settlement ends litigation against KPMG. Several other defendants remain, including Lernout & Hauspie's top executives, who are facing criminal charges in Belgium.

(SUBS 4th graf to correct lawyer's name)