Goldman Sachs Group Inc. portrayed speech recognition pioneer Dragon Systems Inc. as rushing to close a $580 million deal without sufficiently vetting its buyer in a doomed union that triggered a negligence suit and landed the bank in Boston federal court.
A Goldman Sachs Group Inc. lawyer argued to jurors that the founders of speech-recognition pioneer Dragon Systems Inc. are scapegoating the investment bank for their own mistakes in a $580 million all-stock sale rendered worthless when the buyer was exposed as a fraud.
Jim and Janet Baker, pioneers in the field of computer speech recognition, turned to Goldman Sachs Group Inc. in late 1999 when they needed investment bankers to advise them on the sale of Dragon Systems Inc., the company they had spent 17 years building.
The Justice Department appears to have learned a lesson in the 10 years since it indicted Arthur Andersen LLP for alleged improprieties in the firm’s Enron bookkeeping. By 2005, when the U.S. Supreme Court unanimously vacated a conviction in the case, the accounting firm had collapsed, and all but a handful of the 85,000 employees worldwide lost their jobs.
Goldman Sachs Group Inc.’s lawyer said it wasn’t the firm’s job to do financial due diligence for its client, Dragon Systems Inc., in the company’s 2000 sale to a Belgian competitor that collapsed in an accounting scandal.