Embezzlement. CFO of closely held agricultural concern embezzled $3.5 million during a 7-year period. CFO exchanged company checks, with altered payee line, and legitimate signature of company owner at bank for cashier's checks to a company he set up. During this entire time, there was no supervision of the CFO by the owner of the business. Neither bank statements nor canceled checks were reviewed by company owner, or company's CPA firm. Opined for bank on office procedures for small businesses to discourage misappropriation of assets and basic internal control procedures that owner failed to implement.
Lender Liability. Bank sued by former customer over arrangements for construction financing on new corporate headquarters building. Terms of bank's loan commitment, amount of necessary financing, and financial position of customer were among issues. Performed analysis of customer's financial position (including ability to service debt on new building), reviewed and compared terms of financing at former bank and another institution that eventually provided the construction financing. In addition, calculated total costs of construction of new headquarters building.
Damage Claim Analysis. Bank used by customer for financial damage and loss of business reputation, which resulted when bank returned checks drawn on customer's account. Critique of plaintiff's damage claim, including lost customers, lost profits, and diminution in value of capital stock. Prepared deposition questions for plaintiff's CPA. Prepared trial exhibits.
Fraud Investigation. Bank discovered customer with multi-million dollar mortgage warehouse credit line had developed severe financial problems, partially as a result of fraudulent mortgages that had been funded by the customer through its warehouse line at the bank. Reviewed systems and procedures at bank's customer's offices to determine how fraud was perpetrated and to gain understanding of customer's operations. Assisted with gathering of evidence to determine whether customer was aware fraud, or unwitting victim.
Bank Failure, Accountants' Malpractice. Assistance to certificate of deposit broker in California who advised clients to deposit large, mostly uninsured, sums in out-of-state bank, which subsequently failed. Client sued failed bank and the bank's auditors. Reviewed bank's loan files, particularly loans that were participated to both "upstream" and "downstream" banks. Analyzed audit of bank performed by Big 5 accounting firm. Reviewed audit workpapers for compliance with Generally Accepted Auditing Standards. Reviewed evidence to demonstrate lack of independence of auditors. Prepared deposition questions for all partners in local office of the CPA firm and firm's expert witness on independence. Attended these depositions.
Trust accounting, Breach of Fiduciary Duty. Bank, as co-trustee, sued by beneficiary of trust. Beneficiary claimed bank should have sold certain stock in trust in a more timely manner, because bank should have known stock would decline in value and company would file Chapter 11 bankruptcy. (Co-founder of bankrupt company was beneficiary's father.) Trust agreement specified other co-trustee (beneficiary's uncle) had to provide written authorization before stock could be sold. Bank did not receive authorization. Reviewed all transactions during life of trust; calculated income to beneficiary; compared performance of trust to investment growth indices. Prepared trial exhibits.
Embezzlement, Accountant's Malpractice. Customer sued bank for recovery of funds due to bank's failure to detect fraudulent endorsements on checks negotiated by customer's sole office employee. Bank cross-complained against customer's outside auditor to detect embezzlement during audit and failure to warn customer of dangers of lack of internal control in business operation. Designated customer's books and records for documents production; analyzed CPA's audit workpapers for failure to comply with Generally Accepted Auditing Standards. Prepared questions for deposition of CPA.
Embezzlement. Embezzlement of customers' securities by an employee caused substantial losses to a securities firm and some of its customers. Attempting to recover from the loss, securities firm took a large position in certain securities, which subsequently suffered a significant decline in value. Securities Investors' Protection Corporation (SIPC) intervened and shut down the securities firm. Traced activities in accounts of clients who were victims of the embezzlements; traced trades in risky bonds that caused firm's capital to fall below minimum requirement and calculated losses on trades in these securities. Prepared trial exhibits.
Damage Claim Analysis. Matter involved a private placement offering by plaintiff, which was underwritten by defendant. Offering was not fully subscribed and was withdrawn. Plaintiff sued underwriter, claiming reimbursement of expenses as well as lost profits on the offering. Reviewed plaintiff's itemized records supporting claim, and prepared revised listing, with significantly lower total claim.
Lender Liability, Real Estate Development. Bank loaned over $20 million on a mixed-use development in San Diego County. Developed defaulted on loans, and filed for Chapter 11 bankruptcy protection. On behalf of lender, reviewed all existing accounting records of project. Attempted to trace loan proceeds through development books. Discovered financial statements and tax returns had not been prepared for two years. Reported on status of financial records and project progress to client. Project concluded because developer found another partner to buy out bank's loan.
Fraud, Breach of Contract, Sale/Leaseback Transactions. Bank participated in lease transactions with leasing company that brokered equipment leases for financial institutions. Client bank advanced funds to leasing company. When it was discovered leasing company kept funds and never paid for the equipment, leasing company filed for bankruptcy protection. Client bank sued for enforcement of leases on equipment. Conducted review of financial records of leasing company, including review of lease files. Provided expert opinion, in declaration form, as to certain unwarranted assumptions and unsupported conclusions reached by bankruptcy court. Testified in bankruptcy court.
Lender Liability, Fraud. Chief Financial Officer of building subcontractor embezzled approximately $1 million from employer, using company's Accounts Receivable Line with bank as a source of funds. Financial losses led to company going out of business. Company owner/president sued bank, claiming bank had duty to discover fraud. Company president did not review any of the work done by Chief Financial Officer, or any of the company's books and records. On behalf of bank, reviewed company's records. Prepared deposition questions for company president.