Forensic and Investigative Accounting Overview
V&L and its principals specialize in forensic and fraud investigation, bankruptcy, insolvency and litigation support in the areas of operations, taxation, financial advisory services, post-confirmation fiduciary services, D&O and other litigation particularly related to performance by professionals, secured creditors, contract breach, etc., preference and insolvency analyses and avoidance litigation support, claims reconciliation, business and investment valuations, business or asset liquidation, wind-down services, dispute resolution and expert witness services. In providing such services, Verdolino & Lowey and its principals have been appointed as: Examiners, Receivers, Chapter 11 Trustees, Liquidating Supervisors, Liquidating Trustees, Assignees, Liquidating Agents and sole officers. In addition, the Firm has been appointed as Accountants to numerous types of fiduciaries. We have been involved in over 5,000 cases, including approximately 500 Chapter 11 or operating cases over the years working as or for the Fiduciary.
Sampling of notable cases
Federal Trade Commission and the State of Connecticut vs. LeanSpa LLC, NutraSlim LLC, NutraSlim UK LTD and Boris Mizhen
Employed by the court-appointed Connecticut Receiver to assist with investigation of a $34 million internet business with world-wide connections and affiliations, and to assist the Federal Court Receiver with locating assets, reviewing extensive intercompany activity and performing a preliminary accounting and review of the financial condition of multiple Receivership Defendants, including identifying possible third parties for additional investigation or litigation.
U.S. and Cendant Corp. v. Walter A. Forbes
The Firm was employed to act as forensic and financial investigator and expert in connection with the efforts of Cendant Corporation and the United States Attorney’s Office, to investigate, identify, collect and enforce the $3.275 billion dollar Restitution Order entered against Walter A. Forbes. V&L completed a forensic investigation of activity from over 130 bank accounts and over forty corporations, trusts and limited liability companies spanning a 12-year period, to identify undisclosed assets, fraudulent transfers and isolate defendants for further legal enforcement and collection. V&L also assisted with preparing document request lists, background information for interrogatory requests and depositions as well as assisting with trial preparation and e-discovery.
Lee D. Weiss and Weiss Capital Real Estate Group, LLC vs. Private Capital , LLC and Scott Fischer, State of Minnesota, District Court, Fourth Judicial District, Civil Action No. 27-CV-10 20197
The Firm was retained by the Plaintiff as an expert to review financial records and to provide expert testimony services in connection with the co-mingling of funds, inter-company loans and under-capitalization amongst several Real Estate Capital Investment Entities. The Plaintiff was awarded a favorable judgment by the Minnesota Court.
Inofin, Inc.
The Firm was retained to act as the financial advisor and accountant for the Bankruptcy Trustee in a matter involving an automobile financing and dealership operation in Massachusetts and Rhode Island. The engagement included a forensic investigation and analysis of a $60 million operating company, its affiliated corporations and their officers, directors, shareholders and investors. Forensic analysis included working with attorneys to identify potential defendants as well as prepare deposition questions and analysis, exhibits for trial and act as expert witness. Responsibilities also included working with the US Securities and Exchange Commission to assist with their investigation of the insiders.
Investment Realty Funding
Employed as Accountant to the Chapter 7 Trustee in a case involving real estate and mortgage fraud. The engagement included a forensic investigation and analysis of the transactional history of the debtor involving approximately $16 million in investments and 30 parcels of real property. The Firm tracked all receipts and disbursements, investigated loans to insiders and quantified the extent of alleged fraud.
Financial Resources Mortgage, Inc.
Employed as Accountant to the New Hampshire Chapter 7 Trustee in a large-scale mortgage fraud investigation and bankruptcy. Investigated multiple loans collateralized by the same properties. Performed residential and construction loan reconciliation work, tracked use of investor funds, and determined whether investor funds were misappropriated to finance unauthorized real estate development. The case resulted in guilty pleas by two insiders and additional litigation against numerous parties.
Original Rangoon Company
Employed as Trustee in a corporate wind-down and closing. The engagement included a forensic investigation and analysis of financial improprieties by a former employee and assistance with preparation and review of a civil action against the directors and officer’s insurance policy, insurance agent and carrier.
Tenens Corporation v. Vitale Caturano & Company and Price Waterhouse LLP.
The Firm was retained to quantify the damages incurred by the plaintiff as a direct result of the defendants’ failure to discover fraud schemes in excess of $60,000,000. An extensive analysis was performed for the relevant period of 15 years. Initial and rebuttal expert reports were prepared. The case settled after the report was issued.
Anton Noll, Inc.
The Firm served as the Rhode Island Chapter 7 Trustee’s Accountant and conducted an extensive forensic investigation which included re-creating cash and other activity for a two-year period for five bank accounts held in several states. Discovered numerous transfers to insiders (and their relatives) and affiliated entities amongst the plethora of activity and identified $4,000,000 in misappropriated funds. Qualified as an expert, the Firm testified as to the nature and appropriateness of many transactions and provided an opinion as to the Debtor’s insolvency at two different dates.
Bruce Thunberg
Appointed by the Bankruptcy Court as an Expert reporting to the Court. Investigated financial activities and virtually all transactions of a company for approximately 15 years of activity to assist the Court in determining the ownership of the entity and its assets and liabilities as of a certain date. Issued a report of our findings after a comprehensive forensic investigation.
Gitto Global Corporation
V&L initially served as forensic accountants to the Bankruptcy Court-appointed Examiner in this Chapter 11 bankruptcy case involving alleged pre-petition fraud in excess of $30 million. Through its painstaking review of the Debtor’s electronic and paper records, the Firm was able to assist with identifying thousands of documents indicative of a myriad of financial fraud schemes perpetrated by the Debtor’s principals, and a number of former employees, banks, attorneys, vendors, etc. Subsequently, V&L was retained by both the Chapter 7 Trustee and the secured creditor to perform significant additional forensic work.
Hub Technologies, Inc.
VLPC Principal was appointed Examiner in this Chapter 11 proceeding by the U.S. Bankruptcy Court to investigate allegations of financial misconduct in the context of the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor’s business and the feasibility of the continuance of the business. The Firm issued a report of findings concerning material misrepresentations in the cash flow projections submitted to the Court by the Debtor, which resulted in the appointment of a Chapter 11 Trustee.
Mediation Expert
The Firm was employed by a three-person mediation panel consisting of a retired Massachusetts judge and a lawyer from each of Brown Rudnick LLP and Nixon Peabody, LLP. The Firm’s role was to investigate financial activities involving a fortune 200 company and a complex lease contract involving thousands of transactions of over $160,000,000, which took place from 1994 through 2007. The case was settled based upon V&L’s analysis and recommendation.
Commonwealth of Massachusetts’ Attorney General and Just Energy, Inc.
Verdolino & Lowey was retained by the Commonwealth of Massachusetts’ Attorney General and Just Energy, Inc. to serve as an independent trustee, and to compute damages and administer disbursements to over 50,000 beneficiaries, in connection with the Trust fund and restitution program established for the purpose of making restitution to certain customers. The Firm oversees the Trust pursuant to the settlement agreement between the two parties, which was structured to resolve the Commonwealth’s alleged claims against the company.
Charm, Youngman and Kohn
The Firm was appointed as Receiver by the Commonwealth of Massachusetts Superior Court, to conduct a final forensic accounting of a dissolved partnership and its financial history of investing and operating of numerous businesses, dating back 25 years. The trial Judge accepted every recommendation (over 20 separate issues) in the report in her finding of facts and rulings of law.
Greensill Capital Inc.- United States Bankruptcy Court, Southern District of New York, Chapter 11, Case No. 21-10561-mew
The Debtor filed for relief under Chapter 11 in the United States Bankruptcy Court on March 25, 2021. Subsequently on October 29, 2021, the Court confirmed the Debtor’s Modified Second Amended Chapter 11 Plan of Liquidation. In accordance with the Plan, the Greensill US Liquidation Trust (the “Trust”) was formed, and Craig R. Jalbert (the “Liquidation Trustee”) of Verdolino & Lowey, PC was appointed as Trustee. Jalbert and the Firm are currently performing forensic and other accounting services, budgeting, claims analysis, forensic review of financials, insolvency analysis, and litigation support involving numerous causes of action. The engagement is ongoing.
Melrose Associate Limited Partnership
The Firm was appointed as the Receiver to conclude the accounting and liquidation of the partnership, as ordered by the trial judge, in accordance with a Partnership Agreement. The Receiver performed a forensic accounting of all transactions dating back 15 years and established an accounting of assets and liabilities of the Partnership. Other duties included the leasing, management, appraisal and sale of a 72-acre site, containing industrial buildings occupied by a manufacturing tenant.
Kossoff, PLLC
United States Bankruptcy Court, Southern District of New York, Chapter 11, Case No. 21-10699 (DSJ) – an involuntary petition for relief under Chapter 7 was filed by a group of Creditors, and a Chapter 7 Trustee was appointed. The Debtor’s former principal pleaded guilty to stealing millions of dollars from the Debtor and dozens of the Debtor’s clients. Verdolino & Lowey, P.C. was retained as Forensic and Tax Accountants to the Chapter 7 Trustee. The Firm has performed a forensic review and reconstruction of all cash transactions from the inception of the Debtor (2013 through 2021), consisting of over 60,000 transactions in excess of $300 million. The Firm has also provided litigation support involving numerous causes of action. The engagement is ongoing.
Eliyahu Mirlis, Plaintiff vs. Daniel Greer et al., Connecticut Superior Court matter 3:16-cv-00678.
The Firm was engaged by the plaintiff in this action to forensically review 6 non-profit corporations on a reverse veil piercing action regarding a $21mm judgement against the controlling individual who was convicted of a series of criminal acts. Each of the 6 organizations kept separate yearly electronic records and this firm was engaged to, among other things, combine all the separate yearly electronic records to be able to review and analyze them as they pertain to the Connecticut reverse veil piercing case law and statutory law. The engagement is ongoing.
Ramadan v. Mamulashvili, Middlesex Superior Court Civil Action No. 09-2281
The Firm was retained as Forensic Accountant to the court appointed Receiver to evaluate, reconcile and analyze the pre-Receivership financial transactions of the Business and to prepare the 2008 Federal Tax Returns for the Businesses. The Firm conducted a forensic accounting of a multi-office dental practice in financial distress and investigated side dealings between shareholders, including loans made and repaid, their terms, and the purpose. The firm’s work included verification of the source of funds pertaining to the purchase of real estate, the review of all checks and deposits to and from bank accounts, the purchase terms for assets and inter-company transfers made in connection with the opening of other dental offices, examination of payroll irregularities including cross-endorsed payroll checks to shareholders and their family members, and examination of hard drives from all identified computers to determine to what extent any computer files have been deleted or removed. V&L made recommendations and advised the Receiver as to maintaining financial controls and successfully prepared financial statements of the Business, prepared and filed the 2008 Federal Tax Returns for the Businesses, and prepared and circulated drafts of the 2009 Federal Tax Returns for the Businesses.
287 Realty LLC and 234 Realty LLC vs. First Hartford Realty Corporation, State of Rhode Island Providence Superior Court C.A. No. PC-2019-6808 and 2019-6794
Retained as forensic accountant to Court Appointed Special Master to investigate Defendant’s accounting relative to Preferred Developer Programs and to examine Plaintiffs’ accounts and business records to resolve allegations of failing to disclose fees received and withholding other information. The Firm collected detailed accounting information from the Defendant, compared this information to payment records collected from the Plaintiffs, categorized the information by development project location, and compiled the amounts collected by the Defendant and paid to the Plaintiffs. The Firm identified approximately $7 million unpaid on account of certain development projects deriving from office accounting practices designed for speed and efficiency while allowing for unpaid developer fees to go undetected. Our expert testimony and report were introduced at trial.
Webster Bank, N.A. vs. PAW Holdings, Inc. et. al., State of Rhode Island Providence Superior Court C.A. No. PC-2020-03151
V&L served as Accountants to the Court Appointed Examiner to determine the facts and circumstances leading to the substantial decrease in the collateral value expressed in the Borrowing Base Certificates, and the extent to which the company had the ability to satisfy its obligations to the bank going forward. V&L obtained and reviewed a significant volume of relevant records, interviewed Respondent employees, and participated in interviews with the Examiner and others, to obtain the information necessary to support the Examiner in completing his duties. The Firm determined and reported several key errors and incorrect recording of transactions. This case was stayed upon the filing of bankruptcy petitions by the Debtors in the Southern District of New York.
GKS Corporation d/b/a The American Inn vs. Statewood, Inc. d/b/a State Line Oil, United States Bankruptcy Court District of Massachusetts Western Division; Adversary Proceeding Case No. 21-3017
Counsel to Plan Committee retained the Firm as forensic accountants to review the Debtor’s financial records and determine the fair value of an insider transfer arising from the uncollected balance owed on a Revolving Demand Note between the Debtor and an Insider. Following a detailed review of all the various accounting records and supporting documents and emails produced by the Debtor, the loan was amortized to determine the balance at all times, by using the actual advances and repayments found in the Debtor’s general ledger and applying interest at the rate stated in the Note, constituting the fair value of the Insider Transfer at the time of Settlement.
Estate of Harry Chang, Surrogate’s Court of The State of New York County of New York File No. 3038/2003
The Firm was retained by the heirs to the real property estate, to contest the executor’s accounting. The team reconstructed rent rolls and security deposit histories pertaining to the operation of a traditional long term residential apartment building and as a short term vacation rental property, traced all transfers between estate accounts, sourced all assets that contributed to the estate and from where, including but not limited to apartment tenants, advances from family members, borrowed funds from mortgage lenders, proceeds of asset sales, and all other sources in all contexts appearing in the detail of the other supporting records, and analyzed all disbursements from estate accounts including but not limited to distributions to family members, payments to professionals and other third parties on behalf of family members, payments to third party service providers and others pertaining to operating the commercial property including ordinary maintenance and repairs, capital improvements, utilities, and taxes, and debt service payments to lenders from years of bank statements and more than a dozen different bank and brokerage accounts, docket records from NY Surrogates Court to determine disposition of all known estate assets, real estate, financial investments, and the results of operating the commercial property and use of estate cash to successfully contest executor’s accounting and presented a claim which ultimately produced a successful settlement.
Estate Investigation
The Firm was retained by counsel to the heir to an estate, to investigate allegations of financial misconduct in connection with various aspects surrounding the estate, including a detailed review of public land records, electronic and paper financial records and tax returns for seven years of operation of residential apartment buildings, and assistance with the preparation of a Probate Account for filing with the Probate Court.
Royalty Investigation
The firm was retained by the Plaintiff to act as forensic expert and to quantify unpaid royalty fees as a direct result of underreported usage of licensed intellectual property by a well-known lab services provider to the pharmaceutical industry over the course of several years. The firm assembled the years of purchase orders, invoices, email, and other records produced by the Defendant in discovery. We compiled the relevant sales data by customer and provided the Plaintiff with a detailed analysis quantifying the Defendant’s use of the proprietary application.
Estate of Connolly Geaney Ablitt & Willard, P.C. v. Durham Commercial Capital Corp. and Maasai Holdings, LLC
Retained by the Chapter 7 Trustee for a Debtor law firm specializing in high-volume legal services to national loan servicers and mortgage holders in connection with defaulted consumer home mortgage loans, to perform forensic analysis regarding issues related to a series of transactions involving the Debtor and Defendants and a fully drawn line of credit secured by substantially all of the Debtor’s assets, including the Debtor’s accounts receivable. The Firm performed an accounting of advances and collections by Durham relating to a Factoring Agreement, and examined checks retrieved from the Debtor’s files representing client payments, to determine what transfers of cash and receivables were made by the Debtor to Durham and what, if anything, the Debtor received in exchange.
ABCD Holdings, LLC, et. al. vs. Patrick J. Hannon and Elizabeth B. Hannon, United States Bankruptcy Court District of Massachusetts Eastern Division, Adversary Proceeding No. 13-01306
The majority shareholder retained V&L to conduct an audit of the books and records of the businesses pursuant to their objection to Patrick J. and Elizabeth B. Hannon’s discharge in a Chapter 7 Bankruptcy (Case No. 12-13862-WCH). V&L collected the computer and various business records from the business premises including, but not limited to, accounts payable files, payroll files, and scale tickets. The firm also reviewed voluminous bank records produced by the Plaintiff, and interviewed defendants. Our investigation and review of a significant number of transactions conducted the Firm noted many cases of disbursing of funds from the ten known bank accounts to pay expenses that were personal in nature. Our findings were used successfully by the Plaintiff to secure Summary Judgement.
Daniel Gibson vs. Scott R. Beamon et. al., Commonwealth of Massachusetts Middlesex SS Superior Court Department Civil Action No. 2011-02702
The Firm was retained as part of the Wind-Down Committee established pursuant to a Confidential Settlement Agreement of a law firm in dissolution for the purposes of supervising the wind-down of the law firm’s affairs and production of a complete accounting and resolution of all accounts receivable, accounts payable, debts, assets and liabilities relating to the operation of the Firm, including an accounting of all amounts owed to the Firm by certain members of the Firm, and to establish the likely nature and breadth of the alleged misconduct. V&L conducted an extensive analysis of the firm’s books and records including ten years of bank statements, cancelled checks and general ledger cash transactions including the Firm’s IOLTA account. V&L confirmed irregular activity dating back many years, which ultimately resulted in an indictment.