Las Vegas Sun

August 20, 2014

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Two businessmen who say they lost $100 million over defamation lose appeal

The Nevada Supreme Court Thursday rejected the appeal of two men who claim in their Las Vegas suit they lost more than $100 million because of defamatory statements made by a national accounting firm.

The court said Deloitte & Touche had an “absolute privilege” in disclosing information that the two men — Robert Cucinotta and Karim Maskatiya — were involved in criminal activity.

It said the accounting firm was required by federal law to reveal the allegations against Cucinotta and Maskatiya who founded Global Cash Access Holdings Inc., a publicly traded company that provided cash access services to the Nevada gaming industry.

Deloitte & Touche performed audits on the cash access company. The auditing firm had information from an FBI bulletin that the two men were suspected of being involved in such things as extortion, tax fraud and was defrauding the gaming industry by miscoding certain financial transactions.

The accounting firm disclosed the information to the audit committee of the cash access firm. The two men said an independent investigation showed there was no evidence they did anything wrong.

They say when the allegations surfaced, the cash access firm lost $400 million in market capitalization and they “personally lost over $100 million.”

The two men filed a defamation suit against the accounting firm and its Nevada manager Larry Krause. District Judge Elizabeth Goff Gonzales granted a pre-trial summary judgment in favor of Deloitte.

The Supreme Court, in a decision written by Justice Michael Cherry, said, "We agree with our sister jurisdictions that those who are required by law to publish defamatory statements should be privileged in making such statements.”

But the court placed some conditions, saying it was concerned “that unfiltered speech to unintended persons could instigate malicious conduct that would go unpunished."

Cherry said the communications must be made following the law and must be made to a qualified person. He said the court’s decision means privileged communications remains narrow.

In this case the court said Deloitte’s communication to the audit committee of the cash access company was required by the federal securities law.

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