NY Jury Finds Ex-Longtop CFO Liable in Class Action Trial

By on November 24, 2014

In a rare, eight-member New York federal jury ruled that Derek Palaschuk, the former Chief Financial Officer (CFO) of Longtop Financial Technologies Ltd., was liable for recklessly misstating the Chinese software company’s financial condition.

Longtop’s CEO Wai Chau Lin admitted to pervasive accounting fraud and the company’s auditor, Deloitte, resigned, however Palaschuk denied wrongdoing or knowledge of the fraud and claimed to have acted in good faith.

Investors alleged that Longtop overstated its revenues, understated bank loan balances and improperly transferred employee expenses to an off-balance sheet entity.  After Longtop and Lin failed to respond to the allegations in November 2013, a judge slapped those defendants with an $882 million default judgment.

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