Freddie Mac

Lawsuit over audits seeks $5.5B from PricewaterhouseCoopers

Accounting giant PricewaterhouseCoopers squared off Tuesday in court with lawyers for a defunct mortgage company's creditors and investors over a $5.5 billion lawsuit, which claimed the Big Four firm failed through years of audits to uncover massive fraud at a failed Alabama bank.

The estimated $21 billion fraud at Colonial Bank of Montgomery, Alabama, was orchestrated by top executives at the shuttered mortgage firm Taylor, Bean and Whitaker of Ocala, Florida. Six Taylor Bean senior executives and two Colonial employees were convicted of federal fraud crimes and went to prison. Colonial was shut down in 2009.

Steven Thomas, attorney for a trustee representing Taylor Bean...