Telos is a public company and government contractor providing defense oriented IT services. Among other things, Costa Brava, an investor in Telos, alleged that Goodman’s audit opinion was the centerpiece of a carefully calculated campaign by Goodman and Telos to deprive Costa Brava and others of payments due under the public preferred stock, while enriching the insiders of Telos.

Costa Brava argued at trial, among other things, that Goodman & Company misled the U.S. Securities and Exchange Commission and Telos’ former auditors, presold its opinion on going concern, and approved of a false 10-K.

Seth Hamot, the managing partner of Costa Brava, said that "Costa Brava is pleased that there now has been a public finding by an impartial jury that Goodman aided and abetted a breach of fiduciary duty by Telos and its directors.”

During the nearly two-week trial, the jury heard testimony of, among others, John Wood, the Chairman of the Board and Chief Executive Officer of Telos, Norman Byers, a former member of the Telos board and former chairman of the Audit Committee, Ambassador Langhorne Motley, also a former member of both the Telos board and audit committee, and J. Mitchell Bean, Goodman’s lead auditor for the Telos engagement, among others.

After reviewing the evidence presented to it and deliberating for more than ten hours, the jury concluded that Goodman aided and abetted a breach of fiduciary duty by Telos although it awarded no damages. The jury did not find for Costa Brava on other claims.

Daniel Fetterman of Kasowitz, Benson, Torres & Friedman, LLP, counsel for Costa Brava, said that “Costa Brava is gratified by verdict because it confirms that auditors play a critical watchdog role in protecting the public by ensuring the integrity of publicly-filed financial statements."

About Costa Brava Partnership, III, L.P.

Costa Brava is a Boston-based investment fund with investment partners located in Virginia, throughout the U.S. and internationally.