04 Sep

The Forensic Accountant as Consultant

Forensic accountants are often retained in litigation as expert witnesses, with the intention that they will provide expert opinions and testimony on behalf of the client. Although retention as a consultant is less common, it is an important option to consider. Sometimes, the work of the consultant can be even more important than the work of the testifying expert. The consultant may be able to dig deeper into sensitive issues because there is no fear of testimony or of disclosing the consultant’s work.

Maintaining privilege
One of the biggest benefits to retaining a consultant is the fact that the consultant’s communications and work product enjoy privilege. Because the consultant is essentially an extension of the law firm, the identity of the consultant, the scope of work, the evidence examined, and the results of the work need not be disclosed to opposing counsel. (Note that documents examined by the consultant may very well need to be disclosed as part of the discovery process, but the consultant’s work or impressions of the documents should not be disclosed.) Read More

25 Aug

Expert Witness Looks at a Jury From the Inside

Several years ago, I got called for jury duty. Unlike almost everyone else who complains when called for jury duty, I was thrilled. I wanted to be on a jury.

If I was going to have to do my civic duty, I wanted to get something out of it, rather than just sit in the jury pool room all week. After spending time testifying as an expert witness in front of juries, I would now have a chance to be the jury and get a real-life look at what happens in the jury room.

My wish was granted and I was seated on a jury for a misdemeanor criminal case that lasted about a day, then came the moment of truth. The jurors sat down in the jury room and looked at each other. It was clear that at least 10 of the 12 had no idea what was supposed to happen next.

I appointed myself foreperson and began leading the discussion. The facts of the case were pretty clear. The evidence was somewhat limited, and the case really came down to the testimony of the defendant and one witness. The defendant had almost no credibility. Read More

01 Jun

Expert Witness Testimony: Communicating to the Court

fraud-magazine-acfeThe best financial expert witnesses help win cases by artfully and simply communicating the facts through written reports and oral testimonies. And you can learn how to do it.

While waiting in the hallway outside the courtroom to testify as an expert witness, I thought of all the ways my testimony could go wrong. I had hours to contemplate opposing counsel’s questions for me. It was my first time testifying, and I didn’t want to blow it. But I relaxed as I eased into the witness chair and stole a glance at the jury. They were ordinary people who were just hoping to understand my calculations. I led them simply through the financial matters. From the looks on their faces, I think they understood.

In my testimony, I closely followed the main points of my prepared report. The counsel who had hired me showed large exhibits from my report, which illustrated my points. We easily walked the jury (and the judge) through the numbers. Opposing counsel tried but failed to confuse the jury members. I knew I had hit a home run when I saw the foreman nodding each time I made a point. His new understanding of the issues would prove invaluable during jury deliberations.

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Competent and convincing expert witnesses are a vital part of cases involving economic damages and other financial calculations. Traditional accounting, financial and fraud examination skills just aren’t enough when it comes to litigation. A financial expert witness must be able to qualify as an expert in court and then effectively communicate in a written report and oral testimony to an opposing lawyer, a judge, and a jury who probably aren’t accountants or fraud examiners. Read More

18 Feb

Making the Most of an Expert Witness

gavel-moneyMore than ever, competent and dynamic expert witnesses are critical to winning legal cases. Even if a case doesn’t go to trial, a credible expert can be the key to settling the case for your client.

I believe that an expert witness has the opportunity to make or break a case. We all know that there are few chances to fix a bad opinion when you go to court. There is one chance to express the correct opinion and support it fully. A faulty opinion, or one with little reliable support, can doom a case.

Some attorneys have their preferred experts, while others get referrals from colleagues. Each attorney works with an expert witness in the way that she or he is comfortable. However, it never hurts to hear about it from the other side. This is my perspective on best utilizing your expert witness to her or his full value. Read More

09 Feb

Criminal Defense of Financial Cases

The most interesting cases I work are criminal cases for defendants accused of financial crimes such as money laundering, tax fraud, bribery and corruption, embezzlement, and investment fraud. I do my best work as a forensic accountant and fraud investigator in cases in which a trail of money must be followed through a complex web of people, entities, and bank accounts.

Peers and colleagues often question my desire to do criminal defense work. CPAs often see themselves as financial watchdogs, especially when they are providing traditional accounting or auditing services. The see themselves on the “right side” of the law, and can’t get their heads around the idea of a CPA helping a criminal. Read More

07 Feb

WICPA On Balance: Putting the “Expert” in “Witness”

This article was originally printed in the January/February 2012 issue of the magazine of the Wisconsin Institute of CPAs, On Balance.

Lawyers are constantly on the lookout for financial experts who can help them win cases. Virtually all civil suits involve issues about money, and a certified public accountant is one of the best resources for sorting out the financial details.

As a CPA, you don’t have to focus on litigation work to become an expert witness. As a professional doing income taxes, financial statement audits, benefit plan consulting, or other advisory work, you possess valuable expertise that could help expand your practice. The key is to set yourself up as an expert on a narrow range of issues and market yourself to the right potential clients. Read More

27 Dec

Controlling Legal Fees and Expert Fees

With the challenging economy we’ve had over the last couple of years, people are constantly asking me how business is going. The assumption is that people and companies don’t have money for litigation, and so my business is probably suffering. Fortunately, that is not the case, as my business has been growing tremendously over the last few years.

It is true that businesses and individuals don’t have as much money for litigation, but they still have money and they still have to litigate some things to keep their businesses and lives intact.  However, there is a legitimate concern about the legal fees and expert fees that are going to be incurred, and so consumers are choosing wisely. Read More

02 Apr

Daughter Turns in Mom in Tri Energy Ponzi Scheme

More than two years ago, I mentioned here a news story about a Ponzi scheme called Tri Energy Inc. The Securities and Exchange Commission first took action against the company in 2005:

The Securities and Exchange Commission yesterday obtained a temporary restraining order, an asset freeze, and other emergency relief, in a civil action filed against several individuals and entities alleged to be perpetrating an ongoing affinity fraud and Ponzi scheme. According to the Complaint, defendants have defrauded hundreds of investors of over $12 million by promising returns of 100% or more within 60 days. The Complaint alleges that defendants have been telling investors that these extraordinary profits were to be generated in part by helping an unnamed Saudi Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates. In reality, according to the Complaint, although some money has been paid out to investors, these funds appear to have come from new investor money, and substantial amounts of investor funds have been transferred to bank accounts controlled by the proposed defendants and relief defendants. Read More

27 Jun

Patrick Byrne: Do As I Say, Not As I Do.

Patrick Byrne, CEO of Overstock.com (NASDAQ:OSTK) has been on a crusade against naked short selling for a couple of years (or more?). It is currently his position that naked short selling is bad. He confirms his belief in this statement on Overstock.com:

Patrick Byrne is waging a fight with Wall Street over naked short selling. He believes that, through the practice of naked shorting, Wall Street is cheating Main Street America and destroying small companies for a profit. Byrne feels that the SEC is failing to protect retail investors and small companies because it has been captured by Wall Street, and that the New York financial press is similarly co-opted. Byrne believes that the SEC’s efforts to eliminate this abusive practice are falling short, not simply for Overstock (which has itself been on the Regulation SHO Threshold list for over two years), but in a way that creates the possibility of systemic risk for our financial world.

So naked short selling is an “abusive practice”? (Notice that there are no qualifiers in the statement above. It simply says that naked shorting is bad.) Read More