FORENSIC ACCOUNTING CASE

SEC ACCOUNTING AND AUDITING ENFORCEMENT

GRANT THORNTON (RELEASE NO. 3718/ 2 DECEMBER 2015)

SUMMARY
Improper Professional Conduct by Grant Thornton GT), serving as Auditor:
1. Assisted Living Concept, Inc. (ALC) a publicly traded senior living company
2. Broadwind Energy, Inc. (Broadwind) a publicly traded alternative energy company
. Repeatedly violated professional standards while ignoring repeated red flags and fraud risk allowing ALC and

Broadwind to file reports that were materially false and misleading

. ALC enggagement: >3 years, 2 engagement partners GT failed to identify fraud perpertrated by the CEO and CFO
. Broadwind engagement: fail to exercise due professional care and skepticism so that Boradwind able to omit $58

milion impairment charge from deterioritation of customer relationship from its 2 most important customers.
. GT failure contribute to Broadwinds public offering for its stock which concealed this impairment. Thus filing

multiple financial statements which materially overstated revenues.

. Indicate systemic quality issues and failure to adhere professional standards. GT Wisconsin had received

numerous warnings of quality issues involving managing partner. GT still allowed the managing partner to audit
public companies and failed to take remedial steps.

GRANT THORNTON (GT)

Illinois Limited Liability Partnership

PCAOB registered Accounting Firm, headquartered in Chicago, Illinois
The case occured in audit and reviews of clients of Grant Thorntons Wisconsin practice
Melissa K. Koeppel, age 54, CPA licensed in Wisconsin, partner GT Wisconsic 2008 2011.

Engagement partner for ALC 2006-2010 and Broadwind 2007 2010. Since 2012 became
managing director in GT.
Jeffrey J. Robinson, age 63, CPA licensed in Illinois and Wisconsin. Managing partner GT

Wisconsin April 2011 July 2015 (retired). GT engagement partner for ALC 2011 2013.

OTHER RELEVANT ENTITIES

ALC
ALC was a Nevada corporation with principal place of business in Menomonee Falls Wisconsin.
Nov 2006 July 2013, ALC common stock is traded in NYSE.
February 2013, ALC agreed to be sold to global equity firm. In July the transaction completed and

cease from NYSE stock trading.

Broadwind
Alternative energy company incoporated in Delaware and headquartered in Cicero, Illinois.
October 2007, purchased Brad Foote Gear Works Inc to provide gear system for wind turbine and

other energy industry.

February 2015, SEC filed a settled action in Northern District of Illinois against Broadwind and its

CEO, CFO for failure to disclose $58 million impairment charge prior to public offering in January
2010.

ALC AND VENTAS LEASE

ALC operate 200 senior living residence in US, totaling more than 9000 units.
January 2008, ALC purchased operation of 8 assisted living facilites with total 540 units in

Alabama, Florida, Georgia and South Carolina (Ventas facilities).

Entered lease with Ventas Inc. Public trade real estate investment trust as the owner

facilities to operate facilities.

Lease contained financial covenants requiring ALC to maintain certain quarterly and

trailing 12 months occupancy percentages and coverage ratios (cash flow divided by rental
payment) at each facility and portfolio level.
ALC must present FS quarterly report for each facility in accordance with GAAP, schedule of

compliance to the covenants and officer certificate by ALC executive attesting

completeness and accuracy of the information.
Violation will result in: termination of lease, eviction of ALC from all facilities, and require

ALC to pay accelerated payment (NPV of unpaid rent of remaining lease payment).