Lawsuit Contends Heilig-Meyers Shareholders Duped. Enron-Like Lawsuit Questions Accounting Accuracies: Excerpted from www.VALawyersWeekly.com

Furniture World Magazine

A federal judge has given the green light to a fraud lawsuit questioning the accuracy of a recent annual report put out by a major retail furniture chain that has since filed for bankruptcy. The accounting firm that did the report tried to get the suit thrown out of court. Heilig-Meyers was a Richmond-based institution that sold millions of dollars worth of furniture every year before abruptly filing for bankruptcy in 2000. Now, a lawsuit by a stock-holder questions accounting firm Deloitte & Touche's conclusions. Details of the case can be found in this week's edition of Virginia Lawyers Weekly and through the paper's web site at www.VaLawyersWeekly.com. According to the weekly legal newspaper, the suit is raising some of the same issues highlighted in the high-profile bankruptcy of energy giant Enron and the subsequent investigation of Arthur Andersen, Enron's then-accounting firm. Shareholder John C. Cullather (of Richmond?) contends that the 2000 annual report prepared by Deloitte & Touche, L.L.P. for the furniture retailer Heilig-Meyers contained important misrepresentations and omissions. They also claim that shareholders sustained "significant" losses after relying on the report to purchase shares in Heilig-Meyers, which filed for bankruptcy in 2000. According to Deloitte's report, Heilig-Meyers was a solvent company with $535 million in shareholder equity and had a share price of $8.81. In court papers, Deloitte contended that the statements fairly presented fairly the financial position of Heilig-Meyers. According to Virginia Lawyers Weekly, the legal action contended that Heilig-Meyers' shareholder equity and share price were significantly lower than reported. Shareholder Cullather claims Deloitte signed off on a fraudulent report because it knew or should have known that Heilig-Meyers was in a perilous financial position. In support, Cullather cited a long list of alleged misrepresentations, including Deloitte's alleged knowledge that the company was unloading assets and had hired an investment banker to position it for bankruptcy. "Cullather's claims are consistent with the types of claims made by Enron investors against Arthur Andersen," said Attorney John Tuerck, Virginia Lawyers Weekly's news editor. "The Andersen indictment alleges that the auditor knew about Enron's loss of equity and income and that Andersen failed to account for a host of problems in its reports." U.S. District Judge Robert E. Payne turned aside Deloitte & Touche's bid to dismiss Cullather's case, saying that Cullather's allegations of wrongdoing were potent enough to continue to trial. A trial date in the case has been set for November. Virginia Lawyers Weekly is the leader for legal news for the Virginia legal community, providing vital news, opinions, verdicts, settlements, legal analysis and more. Founded in 1972, Lawyers Weekly, Inc. publishes statewide newspapers in seven states in addition to Virginia (Massachusetts, Michigan, Missouri, North Carolina, Ohio, Rhode Island and South Carolina) as well as Lawyers Weekly USA, a national newspaper geared to smaller law firms and LawyersWeekly.com, an Internet resource site. Please visit the paper's customized legal website at www.Valawyersweekly.com for continuously updated legal news and information.