$1.15-Billion Lawsuit Filed Against ESM’s Auditors

Associated Press

Financier Marvin L. Warner filed a $1.15-billion lawsuit against Alexander Grant & Co., the accounting firm that audited the since-collapsed ESM Government Securities, an attorney for Warner said Monday.

The suit, filed in U.S. District Court, claims that the Chicago-based auditors “participated with ESM Government Securities in a conspiracy and scheme to defraud Warner and corporations in which he had an interest,” said John Averill, a lawyer representing Warner.

ESM was shut down March 4 by the federal Securities and Exchange Commission and was accused of bilking more than $300 million from its investors, including several municipalities around the nation.

Forced Shutdown


The collapse of the Fort Lauderdale, Fla.-based securities dealer forced the shutdown of Home State Savings of Cincinnati, which was owned by Warner and had borrowed $670 million from ESM.

Home State’s closing caused a run on other privately insured Ohio savings and loans and prompted Ohio Gov. Richard F. Celeste to declare a temporary bank holiday.

Peter Skomorowsky, a regional managing partner for Alexander Grant based in New York, said Warner’s suit is “entirely without merit, utterly frivolous and we will resist it.”