The Comedy Store Loses $8.5 Million In COVID Funds

The Comedy Store filed a lawsuit on Tuesday claiming that it lost out on $8.5 million in COVID relief funds because its accountant didn’t know about a government deadline.

The comedy club sued Moss Adams LLP, alleging that the firm failed to warn that the application period for the grants was about to close.

In late 2020, Congress approved $16 billion in relief funding to theaters and live performance venues that had been forced to close due to the pandemic. In the suit, the Comedy Store says that its business plummeted by nearly 90% in the latter half of 2020.

The iconic club — which helped launch the careers of Richard Pryor, Robin Williams, David Letterman and many others — was not allowed to reopen at full capacity until last fall.

The Small Business Administration began accepting applications for Shuttered Venue Operator Grants on Apr. 8, 2021. The SBA said it would keep accepting applications until the funds were exhausted and initially did not give a firm deadline.

Harold Breslow, a former partner at Moss Adams who was working as the comedy club’s acting controller, reached out to Moss Adams in July 2021 to seek help applying for a grant. According to the suit, Breslow was connected 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 that he was about to go on a two-week vacation. Breslow returned to the office on Aug. 16 and continued to work on the application. At no point, according to the suit, did Venkateswaran warn him that the deadline to submit the application was approaching.

On Aug. 11, the SBA announced that the application period would close at 11:59 p.m. on Aug. 20. Breslow and Venkateswaran talked about the application on the phone on Aug. 25. When Breslow logged into the SBA portal to work on the application on Aug. 26, he discovered that the site was no longer accessible. According to the suit, Venkateswaran told him she was “surprised” she had not heard anything about the deadline from the SBA.

“The Store engaged Moss Adams and Moss Adams induced the Store to engage it, to avoid exactly what happened,” the suit states. “And Moss Adams’ response was a metaphorical shrug of the shoulders.”

The terms of the Comedy Store’s agreement with Moss Adams limits the CPA firm’s liability to the total cost of its services — in this case, $275. The lawsuit claims that limit should not apply because the firm’s conduct was grossly negligent, fraudulent and willful. The club is seeking to recoup the full $8.5 million from the accounting firm.

The suit also states that Moss Adams later informed the Comedy Store that it had lost the club’s client file.