Lawsuit Alleges Accounting Firm Armanino Failed to Advise Former Owners of Alliance Family of Companies, Costing Millions

DALLAS, Feb. 21, 2019 /PRNewswire/ -- On Tuesday the former owners of Dallas-based Alliance Family of Companies filed a lawsuit in Dallas County against accounting firm Armanino, LLP, alleging negligence, breach of fiduciary duty, negligent misrepresentation, fraud by nondisclosure, unjust enrichment and exemplary damages.

The suit seeks over $14 million in damages in total.

The lawsuit alleges that in 2015, Armanino, then known as Travis Wolff & Co., approached Justin Magnuson and Don Jacobs, then owners of Alliance, to provide "fully-integrated" tax, audit and business advisory services in connection with a possible sale of the company.  According to the lawsuit, in response to the "fully integrated services" sales pitch, Magnuson and Jacobs moved the tax and audit work for each of them personally and for the company to Armanino, and shortly thereafter the issues began.

According to the suit, Armanino identified an accounting discrepancy that could have increased the value of the company during the negotiations, but failed to let the company's owners know. They then allowed the deal to proceed at a lower-negotiated price, costing Alliance's owners $12 million in losses.

"We are disappointed to learn about how Armanino's failure to properly advise us cost millions of dollars, and hope other Dallas companies learn from the accounting firm's mistake," said Magnuson. "We are particularly disappointed because Armanino was not only charging us to do the audits but was also charging us to advise us on the sale of the company."

The lawsuit alleges that not only did Armanino miss certain tax filing deadlines, but also received a "kickback" on the fees from the investment banker they brought to the table. The lawsuit also alleges that Armanino gave Magnuson and Jacobs bad advice on structuring the potential equity ownership of certain key employees.

The key piece of the lawsuit alleges that Armanino discovered an understatement of Alliance's income and failed to tell the clients at a critical time in the negotiations for the sale of the company, costing the former owners to lose over $12 million on the sale of the company.

Alliance provides innovative solutions to the delivery of healthcare services focused on quality, convenience, and affordability. Alliance has been revolutionizing healthcare services for patients, enabling them to receive specialized testing in the comfort and safety of their home.

SOURCE Alliance Family of Companies