Case Studies

Criminal Cases

In criminal cases which usually involve fraud, money laundering or Proceeds Of Crime Act the evidence is often accumulated by accredited financial investigators using analytical software.

Although the detail is thorough it often lacks accounting integrity if the investigators are not qualified accountants.

As a result the analyses can often contain flaws of principle or errors such as double counting or omissions which a forensic accountant will identify and either refute the allegations or reduce the quantum and the associated sentence.

Case 1

The Defendant had been given a suspended prison sentence for drugs possession. The Prosecution sought a confiscation order under the Proceeds of Crime Act alleging that deposits into the Defendant’s bank accounts totalling £114,000 over a two year period were of an illegitimate nature and regarded this as a criminal benefit eligible for confiscation action.

I was instructed to consider the supporting financial information and opine on whether the Prosecution’s figures were accurate.

I was able to demonstrate that the Prosecution’s assumptions regarding the Defendant’s self employed income were flawed and that the deposits were related to legitimate activity which included turnover from employments, transfers of funds for house purchase and sale of sundry personal effects.

Case 2

The Defendant was charged with a single count of conspiracy to blackmail. A key element of the Prosecution’s case was that the Defendant was cash rich, had purchased a house for in excess of £300,000 for cash and invested in a private company from funds alleged to be of an illegitimate nature.

I was instructed to examine the Defendant’s bank accounts and was able to demonstrate that the house purchase and investment had been funded by transfers of money from his parents using the proceeds of a legitimate life insurance policy.

Case 3

The Defendant was charged with numerous charges of fraud in relation to a “Ponzi” type investment scheme and a single charge of trading without the required registration under the Financial Services and Markets Act 2000. The Prosecution case rested on a report from an employee of the Financial Conduct Authority which set out the view that the Defendant breached the Act by not complying with the provisions of Section 22 of the FSMA and of the Regulated Activities Order.

I was instructed solely in relation to the count under the FSMA to consider the facts and the provisions of the legislation and to advise whether the Defendant was engaged in regulated activities and should have been registered.

This is a complex area and in my report I set out in detail why I did not consider the Defendant needed to be registered and gave testimony under oath at the trial. The Defendant was acquitted on this count.

Case 4

The Defendant had been convicted of offences relating to exploitation of labour and given a custodial sentence. The Prosecution sought a confiscation order under POCA and assessed a value of £741,000 for criminal benefit based on the report of an Accredited Financial Investigator.

I was instructed to examine the Prosecution’s figures and opine on the reasonableness of the figures and the validity of the underlying assumptions. I identified a number of inaccuracies, misunderstandings and errors of principle including the failure to take account of VAT which reduced the assessment to £186,000.

Case 5

The Defendant had pleaded guilty to a charge of fraud by abuse of position and received a custodial sentence. The Prosecution sought a confiscation order under POCA and assessed the available at £342,000. This included personal pension rights.

I was instructed to consider the Prosecution’s figures and opine on whether the figures were accurate and reasonable. I was able to identify that the personal tax implications of the pension rights had not been taken into account and that the assumptions underlying the value of a tainted gift were invalid.

Case 6

The Defendant had pleaded guilty to a drugs offence and received a suspended sentence and the Prosecution sought a confiscation order under POCA alleging an available amount of £110,000 in hidden assets. These were represented as the value of purchases of cryptocurrency made by the Defendant. The Defendant claimed the purchases had been made on behalf of others and the cryptocurrency had been disposed of to accounts outside his control and I was instructed to analyse the transactions and establish whether they supported the Defendant’s claims.

In my report I explained for the benefit of the court the operation of the cryptocurrency market and demonstrated that the funs used to purchase the currency had been transferred to the Defendant from external sources and that the currency was disposed of on the same day and tracked the disposals to the destination cryptocurrency wallets.

Civil Cases

Civil cases usually involve litigation relating to business valuations (shareholder disputes); loss of earnings (personal injury); loss of profits or consequential losses (contractual disputes and business insurance) and are more subjective than criminal cases.

Often opposing forensic accountants are instructed and joint discussions held to narrow the issues and points of difference.

Cases are often highly contentious and volumes of selected competing information provided by each party.

Case 1

The case was a contractual dispute between limited companies in which the Claimant alleged that commissions due under a supply agreement had not been paid in full and their own accountant calculated a loss of £539,000 based on a very limited sample.

I was instructed by the Claimant to consider the reasonableness of the claim and in the absence of key data from the Respondent I calculated a loss of £380,000 on a larger sample. This prompted the Respondent to instruct a forensic accountant who calculated a quantum of £130,000.

By agreeing through joint discussions a methodology using common data we were able to agree a joint statement which set a range of loss between £215,000 and £242,000 for the arbitration process.

Case 2

This is a complex shareholder dispute involving a Section 994 claim for unfair prejudice and a counterclaim for damages as a result of breach of duties. The case required valuations of two limited companies and assessment of losses from alleged diversion of business.

It was highly contentious and I was instructed on behalf of the S994 petitioner. It was clear that myself and my opposing expert were operating to different instructions and records and I worked cooperatively with the Respondent’s instructed expert to produce a joint statement which identified the key issues and areas of difference.

Case 3

A company was engaged in injunction proceedings against a number of individuals. There was an issue regarding the likelihood of a costs order and I was instructed on behalf of the individuals to examine and report on the ownership structure, financial position and viability of the company and its ability to meet potential liabilities in respect of cost orders.

My investigations highlighted that the company’s ultimate ownership was an American private company upon which it was dependent for financial support.

Case 4

I was instructed by the Claimant who was claiming for the loss of profits incurred as a result of a public body landlord failing to carry out its obligations under a lease and operating agreement to run a café and restaurant on its premises.

I prepared a report which projected the profits the business could reasonably have been expected to make over the Agreement period and compared this with the actual results and assessed the loss to be in excess of £400,000.

Case 5

I was instructed by a Claimant who was claiming losses against the landlord of his gym business in relation to a delay in reinstating the premises after a flood.

I prepared a report which assessed losses based on previous trading experience and loss of Covid support and assessed a loss of profits of in excess of £300,000.

Family Cases

Family cases most usually involve financial remedy proceedings associated with family breakdown.

They are almost always highly contentious and where shareholdings in businesses are involved large differences in perceived values are apparent.

It is common for a forensic accountant to be appointed as a single joint expert agreed by both parties to provide a business or shareholding valuation and advise on the tax implications and availability of lump sum payments and the impact of these on the business.

Case 1

In this case of divorce the husband was a 100% shareholder in three companies and I was appointed as joint expert to report on the value of the husband’s shareholdings; the tax implications of selling the shares and the availability of cash within the business. I was also instructed to report on the sums the husband had drawn from the businesses in the preceding year.

Case 2

In this divorce case the husband had traded as a sole trader and sold his business to his new wife. The value attributed to the business by the husband was disputed by his ex wife and I was instructed as a joint expert to value the business at the time of transfer.

Case 3

A divorced mother was appealing the maintenance awarded by the Child Maintenance Service on the basis that the father misrepresented his income from his companies and I acted as the mother’s appointed Client Representative in first tier tribunal hearings and successfully appealed the award having identified diverted income which should have been taken into account in the maintenance calculations.

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