TORRANCE : Jury Holds City Responsible in Fraud Case Losses

A jury rejected the city of Torrance’s claim that its auditors could have prevented the city’s loss of $6.2 million to investment adviser Steven D. Wymer, making it much less likely that the city will ever fully recover its losses.

A Torrance Superior Court jury voted last week that Deloitte & Touche should not have to repay the city’s losses plus interest, even though the accounting firm served as the city’s auditors from 1989 to 1991, when Wymer was a Torrance investment adviser.

Wymer, now bankrupt and serving a 14 1/2-year sentence for securities fraud, admitted that after he lost money through bad investments, he disguised the losses to clients and regulators by forging documents and promising high returns. Torrance and dozens of other cities in California and Iowa lost about $100 million in the scheme.

The jury “said this is the client’s responsibility and not the auditors’,” said Aulana Peters, Deloitte’s attorney in the trial.

City officials have not decided if they will appeal the decision. The jury ordered the city to pay Deloitte & Touche $11,900 for the final year of the audit.