Montana Firm Settles Suit Over Bad Investments

Helena, Mont.-based Anderson ZurMuehlen (FY11 net revenue of $19.7 million) has reached settlements with six farmers and ranchers who had sued the firm for more than $13 million lost in bad investments, interest and attorneys’ fees.

The investors lost the money in complex deals called tenancy-in-common shares, or TICs, the Billings Gazette reported. The investors contend they bought portions of real estate, with the assurance that they would receive steady income with little or no risk. Most sold family operations and hoped to use the income for retirement.

The Montana Supreme Court recently ruled that the TICS should be defined as securities, meaning the accounting firm had specific responsibilities related to the transactions.

DBSI Inc., which orchestrated the deals, declared bankruptcy in 2008 and was ultimately labeled a Ponzi scheme by a bankruptcy trustee. The amounts of the settlements are confidential.

Anderson ZurMuehlen had insurance to cover the cost of some claims against it, but its insurer told the firm that in at least some of the cases, it would not cover the claims. Anderson ZurMuehlen sued the insurer and some of the investors to force coverage. That case is now pending in federal court.