A Marathon County jury Thursday awarded Aqua Finance $50 million after the Wausau-based company accused accounting firm Baker Tilly Virchow Krause of costing it tens of millions of dollars in profits.
The jurors, nine women and three men, deliberated during parts of two days after hearing four weeks of testimony. Aqua Finance accused its former accounting and advising firm of negligence and breach of contract. Aqua Finance attorneys asked jurors to award up to $327 million.
Aqua Finance's attorneys argued that Baker Tilly and its partner who managed Aqua Finance's account, Kevin Prather, withheld that the Wausau company's loan losses were improperly calculated and did not meet industry standards, according to court records.
Baker Tilly's attorneys say the company's losses were because of the economy, not accounting errors.
Bob Chadwell, who founded Aqua Finance in 1986, shared hugs with his attorneys, family and staff members after the verdict was read. Aqua Finance provides loans to water treatment dealers across the country.
"This is an opportunity to right a wrong," Chadwell said afterward. "What happened should not have happened if common sense prevailed."
Prather announced in February 2008 that Aqua Finance's loan loss reserves were not conducted in accord with industry standards since Jan. 1, 2005, and the company's loan loss reserves must be increased by $20 million, according to a complaint filed in court. Prather later said that he discovered the problem one year earlier, but had not reported it to Aqua Finance.
Baker Tilly withdrew from its agreement to complete Aqua Finance's 2007 audit until after the company resolved its loan reserve issue.
Aqua Finance downsized from 380 employees in January 2008 to 97 employees in February 2011 as it struggled to obtain credit and lost potential customers, according to court records.
Jurors on Thursday found that Baker Tilly was negligent in waiting one year to disclose information about problems with Aqua Finance's reserves. Jurors also determined that Baker Tilly was negligent in its handling of Aqua Finance's 2007 audit and its decision to not complete it.
However, jurors found Prather was not negligent in his handling of the Aqua Finance account.
Baker Tilly was founded in 1931 and has offices across the country. Virchow Krause & Co. offices, including an office in Wausau, were branded in 2009 under the Baker Tilly name.
Attorneys for Baker Tilly declined to comment after the verdict was announced.
Chadwell said he was not depending financially on jurors to award his company money, but the $50 million will be helpful.
"Hopefully, this will jump-start our business and we can be a leading business in the Wausau community," Chadwell said.
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