Green Bay accountants sued for malpractice Wisconsin Indian Tribe claims $1.8 million in losses By Jessica La Plante News-Chronicle Accusing a Green Bay accounting firm of malpractice, lawyers for a Northern Wisconsin Indian tribe told a Brown County jury Monday the tribe and its casino lost nearly $1.8 million because the firm failed to uncover an embezzlement scheme. At a trial that kicked off Monday, the Sokaogon Chippewa Community claimed the Green Bay accounting firm Shinners, Hucovski and Co. should compensate the tribe for those losses. In a lawsuit filed in 2001, the tribe said the Green Bay firm - which is now a part of the Appleton-based Schenck - failed to live up its obligations to both the tribe and government regulators. The claim centers around an embezzlement scheme that resulted in a federal conviction against Richard DuWayne Derickson, a former tribal planner who was charged with embezzling $370,000 from the tribe. Between 1995 and 1997, Derickson ordered the casino to pay false invoices for fictitious companies, cashing the checks and pocketing the money. Presenting the tribe's case, Milwaukee Attorney Brian Smigelski said a gaming compact the tribe signed with the State of Wisconsin in 1991 laid out specific guidelines for the casino's financial audits. He said the tribe hired the Green Bay firm in 1993 to perform audits and guarantee compliance with those requirements, which included protecting the tribe from organized crime. "The evidence will show there were misstatements in the audit reports that went to the state," Smigelski said. Smigelski said the accounting firm breached its duty by failing to question and investigate a septic system project that was running significantly over budget. "By the time the scheme was done, $522,000 had been spent for a $150,000 septic system," Smigelski said. As a result of the embezzlement, the tribe was forced to temporarily shut down its casino operations in 1997 and then a second time in 1998, resulting in $1.4 million in losses. Denying the claims of negligence, the firm's attorney, Winston Ostrow, said the firm did everything possible to investigate the suspicious expenditures, but its good faith efforts were blocked by corruption within the tribe. As soon as the audits revealed the discrepancies, they were immediately reported to the general manager of the casino, who - unbeknownst to the firm - was receiving bribes to overlook the embezzlement. "Immediately when (accountant) Bradley Frank saw the bills for the septic system, he started asking questions," Ostrow said. He said the closure of the casinos wasn't the fault of the accounting firm, but instead stemmed from "corruption and mismanagement by tribal leaders." To prove the tribe depended on its hired accountants to keep the casino running smoothly, Smigelski called two former tribal officers to testify Monday. The witnesses included Kevin Potter, a former U.S. Attorney who served as the tribe's chief legal counsel, and former tribal treasurer Wayne LaBine. Potter said the tribal leadership saw something was wrong when it decided to distribute the profits from the casino to its membership, a move the casino's management resisted. He said the day-to-day finances of the casino were handled by the general manager, not the tribal council. LaBine said the casino was originally set up as a separate entity from the tribe to guard against misconduct. "We separated the two so people in the council that make policy and political decisions are not running a business based on politics," LaBine said. Smigelski said the firm failed to advise the tribe that a certain accounting practice used by the casino made its profits vulnerable to embezzlement schemes. The trial is expected to conclude sometime next week. On Thursday, the jury is expected to hear testimony from the state's gaming regulator, Linda Minash.