(BSNS WIRE) Special Master Appointed in Carnegie's $2.1 Billion Suit vs. Gr Special Master Appointed in Carnegie's $2.1 Billion Suit vs. Grant Thornton
Business Editors
BALTIMORE--(BUSINESS WIRE)--Jan. 14, 2002--
Investigation of Violation by Defendant, Resulting Costs Covered by Grant Thornton Carnegie President Cites `Similarities to Arthur Andersen Evidence Destruction Debacle'
Carnegie International Corporation (OTC BB: CGYC) said today it has been notified by the Circuit Court for Baltimore City that a Special Master has been appointed to conduct a court-ordered investigation of a discovery violation by Grant Thornton, LLP, Carnegie's former auditor and the defendant in a $2.1 billion action being tried in Baltimore Circuit Court (see "Judge `Temporarily Suspends' Trial in Carnegie's $2.1 Billion Suit vs. Grant Thornton, Orders Investigation of Alleged Discovery Violation by Defendant," Business Wire, Nov. 15, 2001). Carnegie President Lowell Farkas said his company and its team of lawyers were notified late last week that Juliet A. Eurich, Esq., a former federal prosecutor, has been appointed by Judge Kaye A. Allison. In her Order (full text at www.carenegitint.com), Judge Allison appointed Ms. Eurich pursuant to Rule 2-541, Maryland Rules of Procedure, allowing up to 90 days for a report on the results of the investigation. Judge Allison also ordered Grant Thornton to pay all costs for the Special Master, including legal and other costs incurred by Carnegie in connection with the selection of, investigation of, and the preparation of the Special Master's report. Carnegie also filed a motion in Baltimore City Circuit Court on July 25, 2001 seeking a default judgment in the $2.1 billion suit, alleging that J.W. Mike Starr, a senior partner and former director of risk management at Grant Thornton, "willfully, knowingly and intentionally destroyed Carnegie documents with the full understanding that litigation was imminent." In a pre-trial ruling in October, Judge Allison said that Mr. Starr "had knowledge that a lawsuit against Grant was imminent when he deleted his computer files," finding him "in violation" of court rules. (see "Carnegie International Receives Favorable Rulings in $2.1 Billion Suit vs. Grant Thornton; ," Business Wire, Oct. 3, 2001). The trial began November 5, but was temporarily suspended by Judge Kaye on November 9 when Grant Thornton's counsel announced in open court that a second set of "original work papers had been discovered," and admitted not producing these files during the discovery process. Judge Allison then suspended the proceedings, saying she would appoint a "third party neutral" to investigate and report back.
There is similarity to Arthur Andersen Destruction of Evidence Debacle
Farkas said there were "many similarities to the Arthur Andersen & Company evidence destruction debacle," in which the accounting firm admitted destroying significant documents and records relating to its client Enron (NYSE: ENE) and Grant Thornton, LLP. "The irony and timing of the Arthur Andersen situation, which remains Page 1 and editorial page news, was not lost on our shareholders or media," Farkas said. "Our phones have been ringing off the wall." Farkas said that Grant Thornton had been engaged by Carnegie to audit years 1997 and 1998; those audit reports included in the company's SEC filings. In May 2000, Carnegie brought suit against Grant Thornton in Baltimore Circuit Court, alleging Grant failed to perform its obligations relating to the audits of 1997 and 1998 as well as fraud. Upon receipt of that report, Farkas said the court will determine the course of further proceedings, including acting on Carnegie's motion for default judgment on all counts. Law firms representing Carnegie International in its action against Grant Thornton are Gary, Williams, Parenti, Finney, Lewis of Stuart, Florida, Florida, and William H. Murphy Jr. & Associates, P.A., and Blank Rome Comisky & McCauley, LLP, both of Baltimore.
About Carnegie International Corporation
Carnegie International Corporation is an Internet support and computer telephony holding company with specialization in telecommunications products, services and distribution, and in E-Commerce and EDI.
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this Press Release (as well as information in oral statements or other written statements made or to be made by Carnegie International Corporation) contain statements that are forward-looking, such as statements relating to the future anticipated direction of the telecommunications industry, plans for future expansion, various business development activities, planned capital expenditures, future funding sources, anticipated sales growth, and potential contracts. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of Carnegie International Corporation. These risks and uncertainties included, but are not limited to, those relating to development and expansion activities, dependence on existing management, financing activities, domestic and global economic conditions, change in Federal or state laws, and market competition factors.
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CONTACT: Carnegie International Corporation Lowell Farkas, +(410) 785-7400 lfarkas@carnegieint.com or The Kaminer Group David A. Kaminer, +(914) 684-1934 dkaminer@kamgrp.com
KEYWORD: MARYLAND INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS E-COMMERCE INTERNET LEGAL/LAW TELECOMMUNICATIONS SOURCE: Carnegie International Corporation
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