Faruqi & Faruqi, LLP Obtains Significant Victories On Behalf Of Defrauded Investors In Longwei Petroleum
On January 27, 2014, United States District Judge Harold Baer, Jr. denied motions to dismiss filed by Longwei’s Chief Financial Officer Michael Toups, directors Douglas Cole and Gerald Deciccio, and Longwei’s auditors Child, Von Wagoner & Bradshaw PLLC and Anderson Bradshaw, PLLC. The Court sustained claims that the defendants violated the federal securities laws by making materially false and misleading statements and omissions regarding Longwei’s reported revenues, business, and operations. Most significantly, Judge Baer held that the claims against Longwei’s auditors surpassed the stringent pleading standards imposed by the Private Securities Litigation Reform Act, explaining, “Plaintiffs successfully allege the scienter of the auditors by pleading a combination of ‘red flags’ that should have raised the auditors’ suspicion, the enormous scale of the fraud, the auditors’ failure to follow generally accepted auditing standards (GAAS), and the fact that they had been rebuked for audit deficiencies in the past by the Public Company Accounting Oversight Board[.]” Judge Baer previously entered default judgments finding defendants Dora Dong and Longwei liable for securities fraud, and Plaintiffs are seeking similar judgments against two additional defendants Cai Yongjun and Xue Yongping.
The Court’s Opinion is attached.