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Accounting Firms Sued Over McDonald's Game

April 04, 2002|From Bloomberg News

Simon Worldwide Inc. sued Ernst & Young, PricewaterhouseCoopers and KPMG International, claiming the accountants should have stopped a rogue employee who rigged a McDonald's Corp. promotional game.

Simon said the accounting firms failed to oversee the distribution of game pieces, including cash awards of $1 million, to the fast-food outlets, according to the suit filed in Los Angeles Superior Court. The company's Simon Marketing unit, which ran the McDonald's game, is based in Los Angeles.

Simon, which lost 75% of its business and 36% of its share value after the scandal broke, has traded suits with the fast-food chain over the loss of $20 million in prizes.

The new suit seeks unspecified actual and punitive damages.

"Defendants did not perform what was required of them under the contracts and did not perform what was required of them as professional accountants," Simon said in the breach of contract and negligence lawsuit.

KPMG said it hasn't seen the suit and declined to comment specifically on it. Ernst & Young spokesman Les Zuke said he hasn't seen the suit but "based on what we know, the suit has no merit." Pricewaterhouse didn't immediately return a call for comment.

A federal grand jury in September indicted 21 people for conspiring to defraud McDonald's games such as "Who Wants to be a Millionaire" and "The Deluxe Monopoly Game." Jerome Jacobson, the former security director for Simon, was accused of stealing winning game pieces and distributing them to conspirators.

Shares of Wakefield, Mass.-based Simon were unchanged Wednesday at 10 cents on Nasdaq.

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