Kouri

White & Case, Travers D. Wood, Matthew P. Lewis and Mark E. Gustafson for Real Party in Interest.

Wincom was a privately held start-up wireless telecommunications company hoping to develop an interactive television business. Under its business plan, Wincom intended to execute a reverse merger with Struthers Industries, Inc., a publicly traded company. The two companies envisioned Wincom emerging from the merger in control of the new entity, which would be a publicly tradeable company.

BDO Seidman is a national accounting firm. In preparation for the merger, Wincom hired BDO in January 1996 to audit its balance sheet and financial statements for the year ending on December 31, 1995. Three months later in April 1996, BDO delivered an audit report to Wincom certifying its 1995 financial statements and balance sheet complied with generally accepted accounting principles. [1] The report approved Wincom's balance sheet showing $121 million in assets, the lion's share consisting of $79 million in broadcasting licenses and $28 million in real estate. Wincom had vastly inflated its financial worthiness and wealth when judged by generally accepted accounting principles,…