A New York City dealer group victimized by multiple embezzlement schemes is suing the firm it retained to conduct a forensic accounting investigation of financial wrongdoing.
Star Auto Sales, of Bayside, accused Rosenfield and Co. of Orlando, Fla., of breach of contract and fraudulent misrepresentation. Star Auto operates Hyundai, Toyota, Subaru, Chrysler-Jeep-Dodge, Mitsubishi, Nissan and Fiat stores in the Queens borough of New York.
The suit, filed last month in Queens County Supreme Court, alleges in part that the accounting firm failed to identify some thefts by ex-employees and "identified several embezzlement schemes that were not, in fact, embezzlement schemes."
Star Auto Sales claims it relied in good faith on Rosenfield's professed expertise as forensic accountants. Rosenfield's website says the firm has worked with dealers since 1996 and its "first and largest niche practice" is dealer services.
However, the suit said the firm's work was so poor it couldn't be used in civil litigation against the ex-employees and in the criminal prosecution involved. Star Auto Sales ultimately hired other forensic accountants to do the work.
Ken Rosenfield, the firm's managing partner, told Automotive News he could not discuss ongoing litigation. Star Auto Sales and its lawyers did not respond to questions and requests for comment.
In 2016, a principal of the dealer group discovered Vivian Karouzakis, the controller-office manager of several of its stores, was allegedly embezzling. In 2017, the dealer group discovered another controller-office manager, Karouzakis's sister Despina Theocharis, also was allegedly stealing from the company. The complaint names other ex-employees allegedly involved in fraudulent conduct.
It alleges Rosenstein failed to perform its responsibilities under 2017 and 2019 contracts, for which Star Auto Sales paid about $500,000 in fees. The firm refused to refund unearned retainers, failed to determine the amount of the dealer group's losses, submitted reports with "numerous errors and issues" and didn't provide details on questionable sales of vehicles to employees, according to the suit.
In addition, Rosenfield failed to test the accuracy of balance sheet accounts, conduct an internal control study of Star Auto's computer and accounting systems and examine its primary dealership accounting and banking files, the suit alleges. It listed other problems, such as not providing the "four highly qualified staff" for the project as required by contract, "excessively and unreasonably billing" the dealer group and charging for unauthorized work.
In a separate fraud, unjust enrichment and breach of fiduciary duty suit filed earlier, Star Auto Sales accused former sales manager Douglas Filardo of conspiring with Karouzakis and Theocharis to misuse annual advance payments from Subaru of America "to cover up the theft of approximately $455,000.00 in cash deposits from customers." That suit also asserted a separate business owned by Filardo "created fake invoices with marked-up prices" for advertising services to the tune of about $1.4 million.
Another separate civil suit by Star Auto Sales accused Filardo's wife, Francine Filardo, of wrongfully benefiting from her husband's "deceptive and bad faith conduct" and using embezzled funds to buy a house, vehicles, clothes, vacations and to pay her personal taxes and for other improper purposes.
