Investigating Cases With Large Volumes of Financial Data

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Many of the cases I work currently focus on the tracing of funds through multiple bank, brokerage, and credit card accounts. I am typically working with tens of thousands of transactions at a time, so the sheer volume of the data could be overwhelming.

I use a proprietary system that allows me to capture, manage, and analyze large volumes of data. There are quality controls in place that ensure the integrity of the data, and speed an efficiency of the system allows me get down to the business of investigating much quicker than forensic accountants used to.

Getting the Data

The process of discovery can be long and agonizing for everyone. There is often a push and pull between the parties in the discovery process, as opposing counsel rarely wants to voluntarily give up damaging financial data. It often takes several rounds of requests to get the information we seek.

Counsel has to be careful to ask for the right data in the right format. Not properly identifying the information we are seeking can lead to denials that the information exists. One of the goals in discovery is to be specific enough that we get targeted data, but general enough that we still get other important data we didn’t know existed.

The format of the data is important as well. Even with technological advances, some discovery is still produced in paper format. We should try to get financial data in a digital format as much as possible. This means asking for the data in native format (if the other side uses widely available software) or exported to a spreadsheet or xml file. Banks like to produce paper statements, but are moving toward producing pdfs of the bank statements. Sometimes they will agree to digital data dumps, and those are extremely helpful.

Once You Have the Data
One of the most common types of financial data that is sought during discovery is bank documentation. Parties seek bank statements and copies of checks and deposit tickets to see exactly what happened with money. Many times, this third party source documentation is critical because accounting records are deemed unreliable. Often the bank data is the only documentation that will tell us the truth about the money.

Two consistent problems exist with bank documentation: It is voluminous, and it is usually in an unfriendly format. Bank documents almost always come on paper, or as digital images of the paper statements (i.e. PDFs). There are thousands of banks, each with several different formats for their statements, and so there is little uniformity among the statements.

When statements are produced in hard copy or digital images, the forensic accountants have to figure out what to do with them. Believe it or not, many forensic accounting firms still have staff that manually enter the data into spreadsheets or databases. This manual work is time consuming and prone to errors.

Faster, Better Results
I use specialized software that pulls the data off the documents or digital images, automatically reconciles the data to ensure accuracy, and puts it in a database …. allowing me to begin using the data very quickly.

This software can save hundreds of hours of data entry and months of delay in a case. It not only extracts data from the bank statements, it can also match the check copies and deposit tickets to the transactions on the bank statements, saving additional time and effort usually devoted to manual matching of the transactions.

Litigation Advantage
The benefit in litigation is easily seen in a real world example. A divorce case involved a high volume of bank documents, as we attempted to find out how and where the spouse spent a significant amount of money over the last several years of the marriage.

Doing things the old way, staff logged approximately 375 hours over a period of four months entering the transactions into a database and categorizing them for analysis. The opposing expert had a similar burden, since they wanted to do their own analysis of the spending.

Using the technology discussed above, the data could have been extracted from the bank documents, put into a database, and categorized in a matter of a few weeks or less. This increased speed would have offered an obvious advantage in the litigation.

One of the early steps in litigation is getting information and data. But that data is rendered worthless if your forensic accountant is not able to put the data to use. Tools available to financial investigators have made it possible to put the data to work in a fraction of the time it would ordinarily take.

Cases with high volumes of bank data, such as money laundering, securities fraud, Ponzi schemes, tax fraud, and white collar crime, are ideal candidates for such technology. Greater speed and accuracy coupled with better tools to analyze the data gives the attorney faster answers about the trail of money, and that intelligence provides a marked advantage in litigation.

2 thoughts on “Investigating Cases With Large Volumes of Financial Data

  1. Arya

    Wasted 8 minutes of my life going through this where you didn’t even mention names of any kind of software you use for this purpose.

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