National audit firm Grant Thornton has agreed to forfeit about $1.5 million in audit fees and interest plus pay a $3 million penalty to settle charges that the company and two of its partners ignored red flags and fraud risks while auditing Assisted Living Concepts and another publicly traded company, the Securities and Exchange Commission has announced. Grant Thornton also admitted wrongdoing.

Grant Thornton and partners Melissa Koeppel and Jeffrey Robinson “repeatedly violated professional standards, and their inaction allowed the companies [ALC and alternative energy company Broadwind Energy] to make numerous false and misleading public filings,” according to the SEC.

Without admitting or denying the SEC’s findings, Koeppel agreed to pay a $10,000 penalty and be suspended from practicing before the SEC as an accountant for at least five years, and Robinson agreed to pay a $2,500 penalty and be suspended from practicing before the SEC as an accountant for at least two years.

In December, the SEC announced fraud charges against two former ALC executives, alleging that they directed employees to include phony residents in occupancy rate and coverage ratio calculations to avoid defaulting on the financial covenants in a lease agreement with real estate investment trust Ventas Inc., which owned eight ALC-operated communities at the time. If ALC defaulted on the covenants, it would have been required to pay tens of millions of dollars to cover the remaining rent due for the full term of the lease, according to the SEC.

Former ALC CFO John Buono settled his case with the SEC earlier this year. In October, former ALC CEO Laurie Bebo was ordered to pay a $4.2 million civil penalty. 

Grant Thornton, Koeppel and Robinson knew or should have known that heightened scrutiny was warranted in its audits of the company, the agency maintains.

ALC changed its name to Enlivant last year after moving its headquarters from Menomonee Falls, WI, to Chicago in late 2013. Enlivant is part of the portfolio of TPG Capital.