CPA Firm Blind to Evergreen's Financials, Trustee Charges in New Suit

GlobeSt.com couldn't reach the firm's principals or Cuthill at publication deadline to learn why the accountants were brought into the 18-month-old investigation at this time. In a published report, James Warmus, a partner at the 13-year-old firm, says the suit is frivolous and without merit.

The July 26 Orange Circuit Court civil suit alleges the CPAs "knew or should have known that Evergreen was woefully insolvent during the entire time period reflected in the balance sheet."

The suit seeks unspecified compensatory and punitive damages, estimated by two GlobeSt.com real estate lawyer sources following the case independently, to be in the $8 million range.

The accountants have offices in the same Downtown office building, Capital Plaza I at 201 E. Pine St., where Evergreen associates operated unobtrusively from 1991 through 2000, court records show.

Averett Warmus doesn't dispute the suit's allegations that it compiled the balance sheet for the period ended May 30, 2000. But the firm maintains, in a published report, that it was never hired to specifically audit Evergreen's alleged cooked books.

Seven months later, Evergreen voluntarily filed for Chapter 11 protection from creditors under the U.S. Bankruptcy Code. Evergreen listed liabilities of $214 million and assets of $3 million.

Cuthill has recovered $4 million of the missing $214 million to date, according to court records. In May, the trustee sued 76 individuals and corporations to recover $8.1 million in the 18-month-old fraud investigation, the largest of its kind in Florida's history, court filings state.

Evergreen sold unregistered mortgage-backed securities, promising returns of $10%-plus, court filings allege. Cuthill has previously told the court he may be able to recover a total $53.5 million or about 25% of the missing money.

Evergreen Security Ltd. ownership changed hands several times over its 10-year existence, court pleadings show. The latest owner, William J. Zylka, 65, of New Vernon, NJ, has pleaded guilty in New York to fraud charges and is awaiting sentence. He faces prison time of six years to 18 years, court deputies familiar with the case, tell GlobeSt.com.

New York lawyer James P. Conroy, who allegedly counseled Zylka during his Evergreen operations, faces a new trial later this year after a New York jury couldn't reach a decision last week on felony charges brought by the Manhattan district attorney's office, according to published reports.

Orlando lawyers Martin W. Boelens Jr., who managed Evergreen for Zylka, and Robert W. Boyd have been charged with securities, mail and wire fraud. They have agreed to plead guilty in exchange for prison terms of less than 10 years, according to the U.S. Attorney's office in Manhattan.

Two other lawyers being sued by Cuthill are Matthew A. Tavrides of Orlando and David H. Tedder of Longwood, FL.

Other local defendants in the same suit are Jim Kime, First American Life & Health Co., Winter Park, FL; Shari Larson, 37 N. Orange Ave., Orlando; and Paul DeLauro, 201 E. Pine St., Orlando.

Cuthill's suits allege Zylka and his associates operated unobtrusively from 1991 to 2001 from leased class A offices at the Downtown 15-story Capital Plaza I at 201 E. Pine St.

The newest suit, like the previously filed complaints, alleges the Evergreen scheme unraveled when Boelens voluntarily placed Evergreen into Chapter 11 protection in January 2001. Boelens managed the Evergreen fund for the last five years of its existence, court records show.

The Boston-based Evergreen Investments family of mutual funds, owned by Wachovia Corp. of Winston-Salem, is not associated or related to Evergreen Security Ltd.