Robyn Fenty is not the first businesswoman to encounter major losses and headaches as a result of shoddy work by accountants. She is, however, perhaps one of the most famous.
Also known as Rihannna, the Barbadian pop star is suing her former accountants, alleging she lost tens of millions of dollars as a result of poor bookkeeping, an ongoing Internal Revenue Service audit and a failure to recommend she curb expenses during her most recent tour.
Our New York City business litigation lawyers understand that many entrepreneurs have a keen sense of the business world, but we rely on those professionals whom we hire to keep the books to do an accurate, thorough and overall competent job.
When that does not happen, and the company or enterprise loses money or assets as a result, the company may have cause to seek legal compensation. Having an attorney with experience in business litigation is crucial because these cases can become quite legally technical, and you need someone who is familiar with state law and regulatory guidelines governing accounting practices and standards.
In the State of New York, certified public accountants (or CPAs) must be licensed by the state, and the updated legislation governing their responsibilities is located in Article 149 of New York State's Education Law. There is a state board that oversees public accountancy, and determines whether an applicant is of good moral character and has met all the other requirements in order to practice, including mandatory continued education.
In this case, the accountants' licenses are not in question, but rather their competency. Fenty's lawyers claim that the accountants drained her accounts of tens of millions of dollars in potential revenue over a five-year period, as she continued to work both national and international tours.
For example, her 2009 "Last Girl on Earth" tour reportedly incurred major net losses, despite the fact that these were sold out shows. It was later revealed that the accountants had paid themselves more than 20 percent of total revenues, while paying Fenty about 6 percent.
Her lawsuit contends that the accounting company's uncommon practice of paying itself commissions on the tour as part of it's income left the agency with no incentive to inform Fenty and her team that they needed to reign in expenses - namely, a $7 million home in L.A. It later turned out that the home had a number of structural defects that reportedly made it unlivable, and she has also taken the real estate company to court on that issue.
Additionally, the ongoing audit, Fenty's lawyers indicate, has consumed her valuable time and resources in efforts to correct numerous errors.
At its core, the main issue in this lawsuit is a breach of contract. Fenty paid well for the competent accounting services for which she was promised. She'll now have to prove she has a strong case that she did not get what she was paying for.
The Law Offices of Ira S. Newman provides litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.