Late Friday, HCAP filed a statement as to why their 10-Q will not be filed on time. I think that this company is virtually gone. I also think that the accountants are ripe to be sued. While Coopers & Lybrand arguably may have been surprised by the Fannie Mae termination (although I think that any knowledgeable party could have suspect it), the charges on the I/O strips of approx. $12 million will seal Coopers fate. How did Coopers test the company's numbers at 12/31/97 for impairment. This to me is the real shocker. I suspect that a class action suit will be filed shortly. Certainly, there are some hungry attorneys out there?
Here is an excerpt.
Specific charges to operations related to the period ended March 31, 1998, are estimated as follows:
1. Write-off of Interest-only strip receivables,
classified as available for sale securities $11,981,819
2. Reversal of allowance for available for sale
securities, previously classified in
Stockholders' Equity 1,875,488
3. Unrealized loss on Interest-only strip
receivables - Trading Securities 3,707,095
Total Charges $17,564,402
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