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Deloitte & Touche Backs Away From 2TheMart

Internet: Shares of the Irvine auctioneer drop by 21% as the accounting firm makes an unexplained departure.

July 16, 1999|DAVID EVANS | BLOOMBERG NEWS

The accounting firm Deloitte & Touche LLP said Thursday it has severed its relationship with 2TheMart.com in the latest of several setbacks for the Internet auction company.

Shares of Irvine-based 2TheMart plummeted 21% after Deloitte's departure was disclosed. The stock fell $3.63 to $14 in heavy trading over-the-counter.

Still, 2TheMart's 25 million shares have a value of $350 million even though the company has yet to set up an auction site and has not filed basic financial information with regulators.

2TheMart said on June 4 that Deloitte was completing an audit of its financial statements in preparation for an initial filing of documents with the Securities and Exchange Commission by June 9. 2TheMart, which went public by merging with a shell company in January, has yet to make that filing.

"They are not a client of the firm," said a spokesman for Deloitte, the nation's fifth-biggest accounting firm, about 2TheMart. He declined to provide further details.

In a prepared statement, 2TheMart said it is "in the final stages of selecting another accounting firm. We plan to make an announcement in the near future."

The company declined to comment further.

On June 10, 2TheMart said its auction site, originally scheduled to debut by June 30, won't be running until the fourth quarter. The site is being developed by International Business Machines Corp.'s Global Services unit at a cost of $9.5 million.

The company's shares soared from $2 on Jan. 13 to a high of $50 on Jan. 20, the day after 2TheMart said its site would be running by the second quarter and would compete with established auction sites such as eBay Inc. and uBid Inc.

The Internet auctioneer went public in January under the direction of Chief Executive Dominic J. Magliarditi, 35, and Chairman Steven Rebeil, 36.

Two years ago, their attempt to become officers of Ameristar Casinos Inc. failed when the Nevada Gaming Commission denied them licenses to run a casino after finding they were "not of good character, honesty and integrity," according to commission documents.

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