The term Fraud is used frequently and liberally in many contexts. However, fraud is a legal concept and a formal finding of fraud can only be made by a trier-of-fact. In general non-legal terms, fraud is an intentional act or omission that is material, designed to deceive the victim(s), resulting in the victim(s) suffering a loss.
Generally, to prevail on a claim of fraud the accuser must show:
- A material representation was made
- The representation was false
- The person or entity knew the representation was false
- The false representation was made with the intent that the victim would act on it
- The victim relied on the false representation
- The victim suffered damages
While we are often called upon to locate and provide testimony regarding the elements of fraud that may have been present in a particular situation, in some situations our services are more focused on the quantification or impact of the fraud.
Complex Real Estate Limited Partnership Scheme
- Our client invested in real estate projects consisting of multiple layers of limited partnerships with some of the projects involving four or more levels of limited partnerships.
- When some of the limited partners became suspicious of the validity of the representations made by the general partner regarding the proposed and in-process real estate projects, the general partner fled the United States, leaving a web of unfinished and underfunded real estate assets.
- Our client had invested a substantial portion of the overall total cash that had been invested in the various projects.
- Our work consisted of tracing a portion of the cash invested by our client though the books, records and bank accounts of the general partner in an effort to demonstrate to the court and to the other limited partners the extent of the losses our client sustained.
- Our client was awarded in excess of $48 million which was roughly 40% of the total awarded by the trial court.
Investigation of Embezzlement
- An officer of our client’s company was suspected of self-dealing.
- Our work consisted of interviewing key employees, performing analyses of inventory purchases, cash collections and accounts receivables.
- Our analysis determined that the officer had been selling rail car sized lots of the company’s product to various customers of our client. The officer, in collusion with a company bookkeeper, had been voiding the accounts receivable entries for the product that had been sold and placed the money in his personal bank account.
- Our investigation resulted in the preparation of a report (with supporting documentation) that was presented to the Specialized Crime Division of the Dallas County District Attorney, which successfully prosecuted the case.
- Our work was then presented to the client’s insurer, who then reimbursed our client for its losses.
Investigation of Embezzlement
- We were retained by counsel for a quasi-governmental organization to investigate whether the organization’s long time and highly respected president was involved in a scheme to embezzle funds from the organization.
- Our work consisted of interviewing key employees, analyzing relevant documents and accounting records and working with the organization’s bank to obtain 100% of the organizations paid checks spanning multiple bank accounts over a three-year period.
- Through a highly detailed examination, we were able to rule out a variety of possible schemes.
- However, based on our analysis, we determined that the president had been falsifying the signatures of an authorized check signer on various non-routine “emergency” checks. These checks had bypassed the typical automated accounts payable processes. These checks were then cashed by the president.
- Our work was presented to the District Attorney and as a result, the president was terminated, indicted and plead guilty to theft and other charges.