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TH Lee files fourth Refco suit, seeks $245m from auditor

The flurry of Refco litigation continues, as TH Lee has now filed suit against Grant Thornton, the independent auditor hired to perform due diligence on Refco before the 2004 merger agreement. The private equity firm alleges the auditor failed to notify it of suspicious transactions on Refco’s balance sheet.

Thomas H Lee Partners has filed another lawsuit related to the 2005 Refco scandal, this time suing Grant Thornton, the independent auditor it had hired to do due diligence on Refco.

TH Lee is seeking at least $245 million (€182 million) in damages from Grant Thornton, on grounds that the auditor was allegedly aware of a series of suspicious transactions on Refco’s balance sheet, yet did not report them. TH Lee said in the suit that it believes Grant Thornton hid the fact that it knew Refco was a “high risk” client.

Less than a month ago, TH Lee filed a $245 million lawsuit against Mayer, Brown, Rowe & Maw, the legal firm that represented Refco during TH Lee’s acquisition, and earlier the private equity firm sued Refco’s former management team for $245 million. TH Lee also successfully sued Bawag, the Austrian bank that helped Refco to manipulate its balance sheet, for at least $84 million.

TH Lee is itself the target of two lawsuits pertaining to Refco. French businessman Gerard Sillam, who claims Refco owes him $800 million for services rendered in 1999, is suing TH Lee and 39 others for that sum and an additional $600 million in punitive damages. Refco Litigation Trusts, an entity created to represent Refco’s creditors in legal proceedings, filed a lawsuit earlier this month against TH Lee, its founder and several executives who served as officers and directors of Refco. The suit, which is seeking $1 billion, alleges that TH Lee knew about and covered up Refco’s problems before it acquired Refco.