$100M Columbia Sussex verdict still in limbo

The $100 million ruling was the largest verdict in Kenton County's history – but international accounting giant Grant Thornton won't be dropping a check in the mail anytime soon.

The Chicago-based firm filed an appeal with the Kentucky Court of Appeals a year after a Kenton County judge ruled the company played "a game of audit roulette" in its tax advice to Crestview Hills-based hotel and casino giant Columbia Sussex Corp.

"We believe we have strong grounds for appeal and look forward to presenting our case," said Kristen Bugaris, a spokeswoman for Grant Thornton.

The appeal was expected. And if history is any guide, it's likely to be a long and protracted battle.

Columbia Sussex initially sued Grant Thornton in 2007, and the case became so complicated that Kenton Circuit Judge Patricia Summe made an unusual comment in her November 2013 ruling:

"This case is fraught with underlying business and personality tensions," she wrote. "It is the proverbial onion with many layers."

In that scathing, 210-page document, Summe ruled that Grant Thornton committed "gross professional negligence" in the early 2000's by pitching its client, Columbia Sussex, a way to bring overseas profits into the U.S. that it knew wouldn't pass muster with the IRS.

The plan was to invest the overseas profits in U.S. Treasury bonds, borrow money against the bonds and then repay the debt with other cash and securities – even as Grant Thornton knew the IRS was beginning to crack down on tax shelters.

"Grant Thornton believed that there was a 90 percent chance that the IRS would disallow the tax benefits ... on audit," Summe wrote.

The firm didn't inform its client of that risk, and the fallout from the bad advice led to an IRS audit. It also cost Columbia Sussex a casino license in Missouri, $20 million in a lawsuit connected to that license and caused significant damage to the company's professional reputation, Summe found.

The $100 million judgment included $80 million in damages to company president William J. Yung III, his wife and their family's trust.

Yung founded Columbia Sussex in 1972 with one hotel, and today it is one of the region's largest privately-held companies and employs 4,700 people worldwide.

"These guys did bad and they are paying for it," he told The Enquirer in November 2013.

Yung has also filed a cross-appeal of Summe's order that both sides reimburse each other for expenses incurred during the discovery phase of the lawsuit. His attorney in both appeals is Sheryl Snyder of Frost Brown Todd in Louisville, who declined to comment.