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August 11, 2009 11:13 AM

Report: Major Problems with Heller Profit Numbers

Posted by Zach Lowe


Heller Ehrman played with its internal accounting numbers to make the firm appear more stable than it was in late 2007 and early 2008, according to a story on the blog of The Recorder, an Am Law Daily sibling publication. 

The Recorder tracked down a filing in the Heller Ehrman bankruptcy that outlines the findings of an investigation into Heller's finances by the creditors committee in the case, the story says. Among those findings:

• Heller distributed $9 million in fictitious profits to shareholders in early 2008, then had its accounting department record the allegedly phony profits as "shareholder loans." Bank of America, Heller's chief lender, believes the firm had no intention of collecting on those loans.

• Heller wrote 118 checks worth $3 million to cover expenses in late 2007, but held those checks so they would not clear until 2008 in an attempt to artificially boost profits in 2007, the investigation found. 

As The Recorder put it: "Some pretty shady stuff was going on at Heller last year."

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