Accounting Professionals Face Lawsuits in the Double Jump, Inc. Bankruptcy Case; Trustee’s Complaint Alleges Breach of Fiduciary Duty
March 30, 2022, Nevada – Chapter 7 trustee, Christina Lovato, for the bankruptcy estates of Debtors DC Solar Solutions, Inc., DC Solar Distribution, Inc., DC Solar Freedom, Inc., and Double Jump, Inc., filed an action Scott Wentz, Rana Yee, and Montage Services, Inc., seeking damages and asserting a claim based on alleged “professional malpractice”, “breach of fiduciary duty”, “aiding and abetting breach” and “conspiracy to breach fiduciary duty” and for alleged “fraudulent transfers” in the amount $366,244.
Lovato’s Complaint alleges that the Defendants are each CPAs and were DC Solar’s expert consultants, advisors, and independent outside auditors, and they “breached their professional standards of care and obligations under the Code of Conduct by subordinating their professional judgment and integrity to Jeff Carpoff, a DC Solar insider secretly engaged in a massive Ponzi scheme.”
The Complaint also alleges the following:
- “If the Defendants had complied with their professional standards of care…the Carpoff Ponzi Scheme would have come to an end by no later than July 2015.”
- The Defendants “assisted in prolonging Carpoff’s fraud by issuing unqualified audit opinions that falsely stated that Solutions’ financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”).”
- “Moreover, the Defendants simultaneously aided Carpoff with structuring transactions that they knew Carpoff would use to loot DC Solar.
- “The Defendants’ conduct was a substantial factor in causing harm to DC Solar because, among other things, DC Solar’s investors did, in fact, rely on the Defendants’ Audit Opinions..”
- The Debtors “did not receive reasonably equivalent value in exchange for the Transfers and was insolvent at the time of each of the Transfers.” “The Transfers were payment of professional fees, which were not earned.”
In re DOUBLE JUMP, INC., Case 21-05072-gs, Bankruptcy Court for the District of Nevada