What Is Leslie Fay Accounting Fraud

Fred Pomerantz, a war veteran was a very proud and successful man, founded Leslie Fay. Leslie Fay was a women’s clothing store located in the heart of Manhattan’s business clothing district. In addition, Leslie Fay focused on stylishly conservative dresses for women in the 30 to 55--age bracket. In the late 1980s, Leslie Fay was the largest supplier of women’s dresses to department stores. Fred Pomerantz took Leslie Fay public in 1952. However, in the 1980’s Leslie Fay went private again for several years amid a leveraged buyout arranged by John Pomerantz, Fred’s son.
Fred Pomerantz’s son, John Pomerantz also became a big part of Leslie Fay in 1960 after earning a degree in economics. He soon became Leslie Fay’s president in 1972. In 1969, Fred Pomerantz hired Paul Polishan an accounting degree graduate, to help with the accounting side of Leslie Fay. Even though Leslie Fay operated their accounting office in Wilkes-Barre, Pennsylvania and hiring Donald Kenia as the company controller,

Paul Polishan claimed Donald Kenia committed the large fraud scandal. After the fraud scheme was publicly disclosed, Leslie Fay hired Arthur Andersen & Co. to investigate their financial statements for the previous years. During the investigation, John Pomerantz put Paul Polishan on temporary paid leave.
Prior to Arthur Andersen & Co taking over Leslie Fay’s audits, BDO Seidman was their audit firm since the mid-1970s and issued unqualified opinions each year for Leslie Fay’s financial statements. BDO Seidman shortly withdrew their audit opinions on Leslie Fay’s 1990 and 1991 financial statements after the fraud claims were disclosed. In the fall of 1993, the audit committee completed their eight-month investigation of the accounting fraud that took place. There was a 600-page report issued and was submitted to the SEC for federal