Categories: Complex Investigations

On behalf of a major global transportation company, White Collar Forensic performed an internal investigation of the suspected theft of equipment.  The investigation included in-depth background investigations of suspect employees, the acquisition and analysis of over 4 million emails and electronically stored evidence, imaging and analysis of computer hard drives, witness and admission-seeking interviews, forensic accounting and loss quantification analyses, and preparation of a detailed investigative report in support of a fidelity insurance proof of loss. The matter also entailed the making of a criminal referral to the U.S. Attorney's Office and Federal Bureau of Investigation and the joint performance of a root cause analysis together with an ad hoc team assembled by the chief compliance officer to identify internal control gaps for remediation. The investigation documented the theft of nearly $7 million of equipment, led to a successful criminal referral and an insurance claim which was paid at its maximum face value.

The CFO of a major global company based in Korea was alleged to have embezzled the equivalent of $5 million of company funds and then fled to the United States where he was suspected of staying with relatives.   An investigation was conducted in Flushing Queens where there is a large Korean population.  Investigators visited several addresses identifiable with the subject's family, performed neighborhood canvasses and circulate "wanted poster" style flyers in the neighborhood offering a reward for information leading to the subject's voluntary return to Korea.  The investigation resulted in the subject surrendering to a local police precinct and eventually agreeing to return to Korea to face criminal charges.

In response to an action taken by the Federal Reserve Bank of New York and the New York State Department of Financial Services, provided investigation, financial analytical and project management resources to one of the first-ever "transaction lookbacks" performed in connection with a bank regulatory action related to the institution's systemic failures to detect and report suspicious activity.  The project consisted of an exhaustive review of U.S. based transactions spanning multiple years seeking to identify and report previously unreported suspicious activity.  The project enabled the bank to avoid severe penalties and restrictions being imposed on the bank and led to widespread improvements to the bank's transaction monitoring, investigation and suspicious activity reporting processes.

A publicly traded consumer products company was suspected of having inflated its revenues by relaxing its return policy to the point where many of its sales looked more like consignment goods than actual sales where it would be permissible to record them as such.   The investigation included collecting and analyzing millions of internal communications, accounting records, shipping invoices, bills of lading, delivery manifests, returns, rebates and other documentation of sales and the movement of finished goods inventory to its distributors.  The investigation and forensic accounting work performed provided outside counsel with sufficient information to demonstrate that the allegations of channel stuffing were unfounded and the SEC closed its investigation with no action.

Assisted a global manufacturer in connection with an investigation of suspected intellectual property theft of proprietary manufacturing technology and inventory.   The investigation included background investigations of former employees, legal entities identifiable with these employees, examination of outbound telephone calls from the plant to these employees which showed ongoing interaction between current and former employees.  The investigation also involved use of the undercover technique to engage directly with individuals suspected of offering the client's reverse engineered machinery for sale.  The investigation revealed that numerous former employees who possessed the requisite engineering expertise used the company's designs to create manufacturing machinery and offer it for sale at well below its market value.  The investigation also revealed that finished product and raw materials were being systematically stolen by insiders who then provided the stolen goods to a network of former employees who transported them to neighboring Ukraine for sale in the black market.  The results of the investigation enabled the company to identify employees who were involved in the IP and property thefts and take action to shut down the theft ring and strengthen their controls.

A European metals manufacturer received a series of allegations via its confidential reporting hotline and in emails to the audit committee, customers and other key stakeholders in which the reporter alleged that the general manager of their Chinese manufacturing plant was involved in vendor kickbacks, improper dismissals to create opportunities for friends and family members and sexual harassment and assault.  The ensuing investigation included background investigations of the China GM, a review of email communications, human resources employment and dismissal records and employee onboarding and ultimately, an interview with the GM.  None of which served to corroborate the allegations.  The investigation concluded with a report listing out the various investigative steps performed in an effort to corroborate the allegations which served to support the decision to close the investigation with no further action.  It also included an outbound email to the whistleblower dignifying his allegations, explaining the fact that the company took his allegations seriously and investigated them but was not able to prove what he had alleged.   No further allegations were received from this whistleblower.

The South Korean subsidiary of a global aerospace and industrial supplies company requested an investigation of their general manager who was suspected of expense fraud, undisclosed conflicts of interest and bribery of public officials. The investigation revealed that the executive used on of his direct reports as a proxy to misuse the company’s purchasing card to pay for Karaoke, gentlemen’s clubs and other forms of entertainment for himself, other employees and local government officials in violation of the firm’s code of conduct and possibly the U.S. Foreign Corrupt Practices Act (FCPA). In addition, the investigation revealed that the general manager had implemented a mortgage lending program for employees in which the company provided private mortgages for key executives. This alone would have been cause to fire the executive but it was subsequently learned that the borrowers had no knowledge of the mortgage loans attributed to them. Instead, the proceeds of this unsanctioned mortgage loan program went directly to the general manager. The investigation led to the dismissal of the GM and enabled the company to implement a series of improvements to their internal controls.

A non-US development bank retained WCF personnel through outside counsel to perform forensic accounting analyses, compliance reviews, background investigations, image and analyze over 100 devices and email accounts in connection with allegations that develop loans and investments were made improperly because of a corrupt relationship between one or more public officials and bank executives. The investigation provided vital evidence to outside counsel enabling them to successfully argue defend the bank in criminal and civil proceedings.

Subsequent to their acquisition of a European subsidiary, a global operator of a chain of entertainment venues took steps to eliminate the Italian subsidiary of the target and consolidate it under the Spain-based operation. The company’s European CFO was subsequently physically threatened by two individuals outside his Italy residence that if the company continued with its plans to close down the Italy operation, he would spend the rest of his life in a wheelchair. The investigation revealed that prior to the purchase, a local crime boss and member of the Camorra crime family had a great deal of influence over what movies were shown in the company’s Italy-based theaters, which vendors the company used to services and regularly could be found inside the company’s offices where he apparently conducted business from a private office. The culmination of this project were several different potential strategies to distance themselves from the crime boss and sever the relationship without any further threats of violence.

A WCF professional oversaw a private bank’s investigation of the embezzlement of $66 million from a bank customer who had corrupted and conspired with the private bank’s general manager. This customer ultimately was able to open numerous private banking accounts that included substantial lines of credit secured by fraudulent collateral, drew down all of the lines of credit to their maximum and then defaulted. The investigation included an extensive review and analysis of numerous private banking accounts, millions of dollars of foreign transfers to related parties and individuals, including public officials, background investigations of the beneficiaries of those transactions and surveillance of the general manager’s residences once it had been determined that he was attempting to flee the jurisdiction. The culmination of these forensic accounting analyses was a criminal referral to the FBI and a successful insurance claim against the bank’s fidelity policy enabling them to recover most of their losses.

On behalf of a medical equipment manufacturer and their counsel, a WCF executive oversaw a forensic accounting investigation of an elaborate fraudulent scheme in which two company executives based in Europe improperly entered into leasing agreements of medical equipment in which they provided 100% financing of medical facilities that were constructed to house the medical equipment and 2 different versions of the leasing agreement. The English language version submitted to corporate headquarters approval contained the company’s standard terms and conditions whereas the foreign language version of those agreements contained very generous terms that favored the customer leaving the company with little to no recourse or collateral in the event of a default. These fraudulent lease agreements caused the company to incur a huge amount of defaults and a loss of over $50 million. The resulting investigation and forensic analysis revealed that the two employees had entered into side agreements with these customers in which they received kickbacks with the understanding that the customers would receive the medical equipment and facility and then default knowing that the company had no recourse. The investigation included intensive data analytics and forensic accounting, dozens of data visualization charts and graphs showing improper relationship and money flows and enabled the company to recover $56 million of their $60 million loss in an insurance claim.

In connection with a Securities Investor Protection Corporation liquidation matter, a WCF executive oversaw the analysis and disposition of assets belonging to the broker dealer and its executives who were involved in insider trading and a series of pump and dump schemes. The team used data analytics to analyze over 10 million outbound phone calls in an effort to identify assets recoverable to the trustee who could then return assets to victims. The phone records analysis revealed that hundreds of calls were placed to banks, law and accounting firms located in several offshore, money laundering safe haven countries enabling the investigative team to identify financial institutions where some of the proceeds of the fraud had been transferred. This effort enabled the trustee to pursue the repatriation of those assets through Mutual Legal Assistance Treaty requests and letters rogatory procedures.