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Federal judge finds that Pricewaterhouse withheld evidence in fraud suit

[JURIST] US Magistrate Judge Patricia A. Hemann has recommended that a federal district judge enter a default judgment against PricewaterhouseCoopers [corporate website] for the company's failure to turn over documents and other evidence in an accounting fraud suit brought by former client Telxon and its shareholders. Hemann's nonbinding recommendations come after Telxon and its shareholders filed motions for sanctions against PwC for failing to comply with discovery rules in a lawsuit where PwC is accused of failing to conduct audits in accordance with generally accepted accounting principles. In her report to Judge Kathleen O'Malley, Hemann wrote that "In some cases, it is difficult to avoid the conclusion [that PwC] engaged in deliberate fraud" and that "there is strong evidence that documents have been destroyed, placing plaintiffs and Telxon in a situation which cannot be remedied." Responding to Hemann's report, which was completed in July but unsealed Tuesday, PricewaterhouseCoopers issued a statement noting its objections to the recommendations, but acknowledging "an error in discovering and producing documents in the litigation later than that should have occurred." The New York Times has more.

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