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Category: Forensic Accounting

We have distilled decades of experience at the intersection of law, business and finance into a suite of articles to help our clients make sense of business valuation, forensic accounting, and litigation support. Please visit our site regularly for our latest content.

The business valuation and forensic accounting disciplines often intersect when valuing a business for divorce or shareholder dispute. Controlling shareholders may try to hide assets or downplay cash flow to minimize buyouts of their spouses or minority shareholders. As valuation experts we know how to approach these situations to unearth and adjust for the common and uncommon financial misstatements.   Look Beyond The Financials Financial statements and tax returns are often the first source of information to analyze when valuing a business. But it’s also important to look for public sources of information, as well as to conduct site visits and management interviews. These steps can be especially important in adversarial situations to ensure that controlling shareholders (1) aren’t hiding assets, (2) underreporting income, or (3) overstating liabilities and expenses. Nowadays, a simple internet and/or social media search can help reveal financial misstatement. In a more traditional sense, a review of the detailed accounting general ledgers can provide valuable information.  In a recent shareholder dispute between two brothers we uncovered a fictitious foreign entity.  In this instance, payments to this entity were used by one brother to divert profits and funds from the other.  But for our analysis and inquiry to explain a sudden decrease in gross profit margins, this diversion many never had been discovered. Aside from the traditional financial review, there are three things you, the litigation attorney, should consider: Get your financial expert involved early on. Pay attention to warning signs. Don’t be hesitant to expand the […]


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Unless you were buried alive during this week’s snowstorm, you probably heard that Donald Trump’s 2005 individual income tax return has been disclosed.  To date, no one has taken responsibility for its discovery, except for the journalist who found it on his doorstep.  Many of the talking heads and late night comedians have discussed and joked about the return, or more accurately its first two pages.  Few, if any, have discussed what the return partially states or even means in regards to President Trump’s reported income and/or assets.   Granted, this information is incomplete and may pose more questions than answers.  However, this exercise is not uncommon for a forensic accountant engaged in analyzing an individual income tax return in a business dispute or matrimonial action.  This discussion is non-partisan.  Truthfully, the subject matter could be about anyone.  But you are reading this blog post because it applies to the current President of the United States. Let this be a primer for those of you that are commercial or family law litigators. Form 1040 is the long form federal individual income tax return filed annually by individuals. You can obtain a full copy of this (blank) form and its instructions here. This particular filing is for the year 2005, which is 12 years prior to Mr. Trump becoming President.  It is fair to say that if President Trump voluntarily submitted his returns for public review, he probably would not have provided a return filed so many years ago. Here is […]


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Fraud in the Workplace

Posted in Forensic Accounting, on Jan 2011, By: Mark S. Gottlieb

The popular media have devoted countless hours to storylines that portray fraud in the workplace as an important plot device. From the early TV series Perry Mason and Arrest and Trial to the ubiquitous “ripped from the headlines” stories of the Law and Order franchise, as well as new series on cable such as White Collar, we’ve never lost our fascination for stories that involve fraud and how the perpetrator is finally caught. What compels the senior level manager, the low level employee or the longtime middle manager to ultimately risk everything, convinced that their crimes will go undetected? The characters in  popular fiction, as in the real world, are frequently motivated by financial need caused by avarice, gambling debts, business reversals, poor investments or trying to maintain a lifestyle well beyond their means. Now it seems that almost every day in the business media there are new reports on workplace fraud in all its forms. The frequency of such reports now seem to be outpacing the tv episodes that draw from the “true stories,” and underscoring that truth is stranger than fiction. In a time of massive Ponzi schemes and burgeoning white-collar crime, one can understand why fraud is not uncommon in the business world. In fact, employee fraud costs businesses billions of dollars each year. Employee fraud is an ongoing, widespread and varied problem, one that comes in all sizes for all kinds of companies. It can significantly impact a company’s productivity and profitability. The reasons for fraud […]


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Until this past summer, the idea that YouTube might turn a substantial profit at long last may have been as improbable as Jon Stewart friending Glenn Beck on Facebook. But a federal judge’s recent ruling in YouTube’s favor in the 3-year-long copyright dispute with Viacom, the owner of such profitable brands as Paramount, Nickelodeon and Comedy Central, is a major victory in what some are calling a landmark copyright case.The much-discussed suit revolved around Viacom’s allegations that YouTube only became the Internet’s most viewed video site by posting copyright-protected clips “stolen” from its shows. But in evoking a law that shields Internet services from claims of copyright infringement as long as the illegal content is removed,the Court noted that YouTube had removed about 100,000 videos the day after Viacom sent a mass takedown notice. If the Court in this case had agreed with Viacom, and ordered Google to pay the more than $ 1 billion in business damages the media conglomerate was seeking, the impact on YouTube’s future profitability could have been considerable.For a media conglomerate such as Viacom, however, copyright infringement on a site that might attract well over a billion visitors a day, could translate into lost revenue from DVD sales and rentals, worldwide TV syndication, and paid online distribution of their content. When copyrighted content is readily available for free on YouTube, for example, the Court may take into account what profits, if any, would have been generated by Viacom if not for the alleged copyright infringement. But is this a case of lost profits or lost business for a media conglomerate–or perhaps both?In […]


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Since the Federal Rule of Civil Procedure 26 was last amended in 1993, it has required parties to submit expert reports for all testifying experts. Those amendments have been interpreted by some courts to allow discovery of all draft expert witness reports and all communications between counsel and testifying expert witnesses. In the view of many litigators, the experience under those changes revealed significant practical problems. Allowing such broad discovery significantly expanded expert discovery; it also irrevocably led attorneys and experts to take counteractive measures. However the steps taken to avoid creating discoverable drafts or communications has predictably resulted in inefficient and costly litigation. According to Charles S. Fax in Litigation News, Rule 26, “has bedeviled lawyers in dealings with expert witnesses. However, proposed amendments promise to resolve the difficulties caused by the present rule.” These proposed amendments, the first major revision in nearly two decades, are to take effect in December of this year. No longer would Rule 26 allow full discovery of draft expert reports and require broad disclosure of any communications between an expert and trial counsel. Instead, those communications would come under the protection of the work-product doctrine. The amendments specifically extend work-product protections to drafts of both expert reports and expert party disclosures under Rule 26, and to attorney-expert communications. With the prohibition of discovery about who said what to whom—a matter of no interest to jurors—depositions would now be allowed to focus on the expert’s analysis of the case. What will still be allowed, […]


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