Telos accounting firm helped company breach fiduciary duty, jury finds

By Lisa Kerner

Charlotte, N.C., Dec. 11 - A jury found in favor of Costa Brava Partnership, III, LP's claim that Goodman & Co., an accounting firm, "aided and abetted a breach of fiduciary duty" by its client, Telos Corp. No damages were awarded.

The lawsuit was filed in the Circuit Court for Fairfax County, Virginia, according to a Costa Brava news release.

Costa Brava, a Telos investor, alleged that Goodman's audit opinion was "the centerpiece of a carefully calculated campaign by Goodman and Telos to deprive Costa Brava and others of payments due under the public preferred stock, while enriching the insiders of Telos," the release stated.

The investor also argued that Goodman "misled the U.S. Securities and Exchange Commission and Telos' former auditors, presold its opinion on going concern, and approved of a false 10-K."

"Costa Brava is pleased that there now has been a public finding by an impartial jury that Goodman aided and abetted a breach of fiduciary duty by Telos and its directors," Costa Brava managing partner Seth Hamot said in the release.

Providing testimony during the two-week trial were Telos chairman and chief executive officer John Wood, former Telos board member and former chairman of the audit committee Norman Byers and Goodman's lead auditor, J. Mitchell Bean.

Costa Brava is a Boston-based investment fund.

Telos is an Ashburn, Va., IT solutions and services provider.

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