- The Washington Times - Wednesday, April 1, 2009

NEW YORK (AP) - The trustee for a California mortgage lender that collapsed two years after disclosing accounting errors has sued accounting giant KPMG, blaming it for its demise.

The trustee, Alan Jacobs, filed lawsuits Wednesday in California and New York on behalf of New Century Financial Corp.

He accused KPMG of failing its public watchdog role by helping the subprime mortgage lender make misstatements about its finances and by filing “grossly negligent audits.”

The lawsuit said KPMG acted as a cheerleader for management to keep its client happy rather than exercise professional, ethical judgment.

New Century disclosed accounting errors in early 2007 and its stock plunged 90 percent. Afterward, unable to finance its lending business, it went bankrupt.

(This version CORRECTS SUBS 2nd graf to correct day to Wednesday. APNewsNow; will be led.)

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