The Comedy Store filed a lawsuit Tuesday claiming that it lost $8.5 million in COVID relief money because its accountant wasn’t aware of the government’s deadline.
The Comedy Club filed a lawsuit against Moss Adams LLP, alleging that the company failed to warn that the grant application period was about to expire.
In late 2020, Congress approved $16 billion in relief funding for theaters and live performance venues that have been forced to close due to the pandemic. In the lawsuit, The Comedy Store says its business slumped nearly 90% in the latter half of 2020.
The famous club – which helped launch the careers of Richard Pryor, Robin Williams, David Letterman and others – wasn’t allowed to reopen at full capacity until last fall.
The Small Business Administration began accepting applications for indoor operator grants on April 8, 2021. The Small Business Administration said it would continue accepting applications until funds run out and did not initially give a specific deadline.
Harold Breslow, a former partner of Moss Adams who was acting as an acting observer at the comedy club, reached out to Moss Adams in July 2021 to request assistance in applying for a grant. According to the lawsuit, Breslow was related to Aparna Venkateswaran, an accountant at Moss Adams who dealt with the SBA.
They had a phone conversation on July 22 about applying for the grant, while Breslow advised he was about to go on vacation for two weeks. Breslow returned to the office on August 16 and continued to work on the order. At no point did Venkateswaran warn him that the application deadline was approaching.
On August 11, SBA announce The application period will end at 11:59 PM on August 20. Breslow and Venkateswaran spoke about the app on the phone on August 25. When Breslow logged into the SBA portal to work on the application on August 26, he discovered that the site was no longer available. According to the lawsuit, Venkateswaran told him she was “surprised” that she had not heard anything about the deadline from the SBA.
The suit states that “the store engaged Moss Adams and Moss Adams encouraged the store to engage with him to avoid exactly what happened.” And Moss Adams’ response was a metaphorical shrug of the shoulders.
The terms of the Comedy Store agreement with Moss Adams limit the CPA’s liability to the total cost of its services—in this case, $275. The lawsuit alleges that this limit should not have been applied because the company’s conduct was gross negligent, fraudulent, and willful. The club is seeking to recover the full $8.5 million from the accounting firm.
The lawsuit also states that Moss Adams later informed the Comedy Store that he had lost the club’s client file.
Moss Adams did not immediately respond to a request for comment.
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