Fraud and Embezzlement

Our engagement in fraud and embezzlement matters have identified claims arising from a variety of methodologies. Some of the embezzlement cases we have dealt with have involved fraudulent investments, theft by employees through forged checks, cash, the unauthorized transfer of bank funds, the deposit of accounts receivable receipts to an unauthorized account, unauthorized use of credit cards, and more. We have seen long-term employees run their credit cards through the credit card terminal issuing themselves a credit where they had never incurred a charge.

Whether it is fraud or embezzlement, and regardless of whether you are the plaintiff or the defendant, it is generally considered wise to have the evidence of your matter reviewed by a forensic accountant to illuminate the strengths and weaknesses of your case.  Many people unfortunately believe that the forged signature on a check means a quick and easy recovery from their bank, when in reality it is a difficult process.

Our education, training, and experience allow us to focus in on the facts that are important to your circumstances and goals.  It goes without saying that your primary concern is likely to be the recovery of your assets and possibly the filing of criminal charges.  To realize those goals and others it is imperative that a qualified forensic accountant be involved as quickly as possible

 

Client comments:

“I want to thank you, (legal counsel), for the referral to Jeff Porter, CPA.  He completed our financial examination in a timely manner, the backup material was in an understandable format, and his letter of explanation and recommendations were extremely helpful and greatly appreciated.  Jeff is easy to work with, explains what information he needs and why.  This is very helpful to someone who does not work in the accounting field.  I highly recommend Jeff and his services.” –  K.  R.  President

“From the very first meeting, Mr. Porter had a relaxed, confident and will do work ethic that offered comfort to me, knowing he had his work cut out for him. In a case that involved 330 transactions, Mr. Porter was able to easily understand and comprehend the enormous task at hand. When Mr. Porter took the stand his command of the material over the plaintiff’s attorney was crucial, as the jury was able to easily determine that the plaintiff’s charge was no more than a feeble attempt to overwhelm the jury. I would recommend you include Mr. Porter in your team when forensic accounting is necessary.” – B.C.

 

 

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These recent cases illustrate the diversity of circumstances under which fraud and embezzlement can occur.

 

Case Examples:

Example 1:

My client, the plaintiff, was the victim of a substantial embezzlement by an employee over an approximately one-year period that left their company financially devastated. Early in the investigation, certain facts were revealed supporting the view that the defendant, a bank, contributed to the loss by failing to exercise a reasonable standard of care. Every aspect of each transaction at issue was analyzed.  Working closely with legal counsel, attending depositions and conducting a thorough investigation confirmed that the defendant had failed to exercise reasonable care. Ultimately, the jury agreed that the bank was partially responsible and the client was awarded a judgement in excess of $1 million.

Example 2:

In this case, the plaintiff accused my client of fraud and embezzlement and asked for over $1 million in damages. If the plaintiff had been successful, the client would have been barred from working in his chosen profession. Our thorough examination of the evidence and command of the facts were integral in aiding the client’s legal counsel to prepare for and conduct a devastating cross examination of the opposing expert. It is worthwhile to mention that the facts and data presented were so damaging to the plaintiff’s case that they chose to withdraw their expert’s report. Jeff’s testimony was cited by the jury as the turning point in the trial and the most crucial factor in their decision to find against the plaintiff.

Example 3:

Not all cases need to be fully litigated for one party or both to accept the reality of the facts and reach a reasonable settlement.  We were engaged to analyze the operating results of a S corporation in Georgia which operated/managed a large number of popular franchise restaurants.  At issue was the fact that net income had dramatically dropped over the previous three years without a reasonable explanation.  Analysis of the books and records found three compelling issues:

  1. Legal fees incurred by the management company (owned by the majority shareholder) were being passed through/charged to the S corporation contrary to the operating agreement between the parties,
  2. The majority shareholder paid himself substantial distributions, but did not pay a proportionate distribution to the minority shareholders (in violation of the operating agreement and tax law),
  3. While the majority shareholder was, as a part of the operating agreement, allowed to buy a new car every year, our persistence in obtaining records revealed that he was selling the corporation’s car each year and putting the money in his own pocket.

Needless to say, uncovering these transactions put considerable pressure on the majority shareholder and was a material factor in settling the case.