One of Nations Largest SBA Lenders--Community West Bancshares--Files 60 Million Dollar Suit Against Former Auditors Alleging Deficient Services

Source: Business Wire Publication date: 2000-10-10

GOLETA, Calif.--(BUSINESS WIRE)--Oct. 10, 2000--Community West Bancshares (Nasdaq:CWBC) and its wholly owned subsidiary, Goleta National Bank, today jointly announced the filing of a lawsuit in Los Angeles Superior Court against their former auditors and financial consultants, Deloitte & Touche LLP.

The suit alleges deficient audit and financial consulting services that ultimately resulted in the restatement of the company's Dec. 31, 1998, financial statements and regulatory capital ratios.

The suit seeks compensatory damages in excess of $60 million.

"We are pleased to announce the filing of this lawsuit, which demonstrates the board of directors' commitment to protecting the shareholders' interests," said Lew Stone, president and chief executive officer. The company is represented by Hennigan, Bennett & Dorman of Los Angeles under a contingent fee arrangement.

Hennigan, Bennett & Dorman represents clients in complex business litigation, among other areas. Hennigan, Bennett & Dorman represented Orange County in litigation arising from its bankruptcy and investment pool losses, which resulted in the recovery of hundreds of millions of dollars on behalf of the county and pool participants.

Company Overview

Community West Bancshares is a financial-services company with headquarters in Goleta.

The company currently has two subsidiaries. Palomar Community Bank has a full-service branch located in Escondido, Calif. Goleta National Bank has two full-service branches, one in Goleta and one in Ventura, Calif. It is one of the nation's largest Small Business Administration (SBA) lenders, with loan production offices located in Alabama, California, Florida, Georgia, South Carolina, North Carolina, Tennessee, Oregon, Washington and Nevada.

The principal going-forward business areas and profit generators of the company are core banking with net interest margins, mortgage lending with fee income, and SBA lending with fee income.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=14671408&ID=cnniw&scategory=Business+and+Finance%3ABankruptcy

-- Carl Jenkins (Somewherepress@aol.com), October 14, 2000

Answers

I thought auditing firms would be coming under the gun as a result of the new SEC-mandated accounting changes that went into effect July l.

-- Billiver (billiver@aol.com), October 14, 2000.