Fraud Investigation and Forensic Accounting
Sequence Inc. provides fraud investigation and forensic accounting services to aid companies in detecting fraud, quantifying the fraud, determining the parties involved, gathering evidence, and presenting the findings to management, owners, executives, boards of directors, shareholders, and courts. Our fraud examination services differ significantly from the services of a “traditional” accounting firm. Our fraud analyses include a critical element: an intuitive ability to investigate fraud. While traditional accounting firms may have expertise in a particular industry, they do not necessarily have the experience to perform a competent investigation.
The services of Sequence Inc. are not industry-specific. We have completed fraud examination engagements in a wide variety of industries including manufacturing, professional services, health care, insurance claims, retailing, investment management, banking, mortgage processing, non-profit, and construction. Sequence Inc. can be retained for either civil or criminal matters, and has been retained by both plaintiffs and defendants.
The firm assists with the following types of cases: (click on a heading below to read the description)
Suspected frauds, particularly those committed by executives and upper management, need to be investigated by an experienced forensic accountant. Sequence Inc. is has examined many cases of fraudulent financial statements, embezzlement or employee theft, purchasing and procurement schemes, kickback and bribery schemes, fictitious vendors or shell company schemes, theft of accounts receivable or accounts payable, pay-and-return schemes, excess charges by subcontractors, personal use of company resources, and expense reporting fraud.
Civil and criminal tax matters pursued by the federal or state taxing authorities are delicate situations. A competent forensic accountant can help to dissect the complex accounting theories used by the government, parse the large quantities of documents requiring complex analysis, and analyze the calculations of the government to eliminate potential unreported taxable income. Sequence Inc. can apply indirect methods of calculating income (including lifestyle analysis, net worth analysis, bank deposit analysis, and source and application analysis), interpret and apply the tax code to specific income and expense items, provide expert witness testimony, and calculate the “tax loss” to assist in sentencing.
Spousal disputes, particularly divorces, frequently involve allegations of hiding money or dissipating assets. The experience of a fraud examiner can be an important asset to your investigation and litigation.
We perform confidential investigations at the request of a spouse, using only legal means to gather information and documentation. Sequence Inc.’s divorce services include analysis of the source and use of funds, searching for unreported income, lifestyle analysis, dissipation claims, analysis and identification of property ownership, examination of business interests, and reconstruction of business books and records.
Please see Tracy’s book on divorce services, Lifestyle Analysis in Divorce Cases.
Sequence Inc. examines and evaluates financial statements, related schedules and notes, and other public company filings for potential red flags of fraud. Specifically, we may identify incomplete disclosures, misleading disclosures, failures to disclose, material misrepresentations, irregularities in financial statement data, relationships between insider trading and financial disclosures, and inappropriate application of Generally Accepted Accounting Principles (GAAP).
We are frequently retained to reconstruct financial statements from source documents. When accounting records are deemed unreliable, the most effective and efficient way to get to the bottom of a company’s finances is by doing a ground-up reconstruction of the financial statements.
We aid individuals and corporations in defending themselves against government investigations, including those started by the Securities and Exchange Commission (SEC), Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), and state and local governments. Financial investigations of this nature are often complex, and it is in the best interest of the target of the investigation to have an expert of their own to examine the complicated financial issues.
Sequence Inc. is experienced in evaluating cases of potential insurance fraud related to disability insurance and workers compensation insurance. Additionally, our fraud experience related to commercial insurance claims includes the examination of claims for losses that did not occur, analysis of overstated claims, and the examination of financial motives for arson. We have assisted with hundreds of insurance claims, recalculating insured losses and examining claims for evidence of fraud.
We conduct independent internal investigations for companies with potential violations of criminal and civil codes, regulatory mandates, and internal compliance and ethics policies. We rarely encounter conflicts of interest in our work, and we can provide companies with an objective, unbiased outside analysis of allegations of fraud.
When an individual misuses her or his authority and power to cause financial losses for another, Sequence Inc. can help calculate the losses. We will conduct a fraud examination to determine the extent of the losses, if any in cases involving management fraud, trustee or power-of-attorney fraud, fraud or deception by family members, and shareholder, director, and officer fraud. As with our other fraud-related services, our firm will conduct an examination to determine what funds are missing, the disposition of the funds, or what business losses were created. The analysis may include reconstruction of the books and records, as well as identification of questionable income and expense items.
Sequence Inc. has extensive experience tracing money moved with high volumes of transactions and through multiple bank accounts. Following fine grain details with a high degree of accuracy is crucial in these investigations. We can manage cases with hundreds of bank accounts and hundreds of thousands of transactions, effectively tracking the flow of funds between people, organizations, and accounts.
A pyramid scheme is a scam in which people pay money to join, and then receive money when they enroll others in the plan. A pyramid scheme is generally not sustainable in the long run, as an ever-increasing number of new associates are required in order for the older associates to continue to receive money. Multi-level marketing companies are similar to pyramid schemes, but they rely on an endless chain of recruiting which hides behind products such as cosmetics, nutritional supplements, or household items to legitimize the schemes as real “business opportunities.” Sequence Inc. has been engaged to examine the financial statements and supplementary information of multi-level marketing companies to determine whether any red flags of fraud are present, and whether there are other undisclosed issues related to income and expenses.
A Ponzi scheme is an investment scam which promises extraordinarily high rates of return and often has questionable business activities.The returns paid to investors come from cash invested by new investors. The scheme must consistently grow in order to continue to fund the “interest payments” to investors, especially since the promoters usually skim substantial sums of money from the schemes for their own use. Eventually, the Ponzi scheme collapses when the promoters cannot generate enough new cash to keep the scam going. Sequence Inc. investigates Ponzi schemes on behalf of defrauded investors, tracing the flow of funds and searching for assets that may be recovered to reimburse investors for their losses.
Sequence Inc. provides forensic accounting services to assist with criminal defense, which may often involve a detailed analysis of complex financial transactions. Our firm has the capability and experience to analyze the documentation and numbers with integrity and objectivity, in order to present the facts accurately to assist with the defense of the client. More importantly, Sequence Inc. can often intervene and assist with an investigation prior to the filing of charges, so as to possibly avert a criminal charge. Assistance can be provided on any case that involves financial transactions and the flow of money.