Categories: Investigative Due Diligence

Retained in connection with an investment in a proposed roll-up of nursing homes and assistive living facilities.  The proposed investment target was requesting  $100 million to acquire and combine multiple nursing home and assistive living facilities to bring them under a common ownership structure and brand. Comprehensive open source and public record background investigations were performed to provide the investor with negative assurance there were no problems that would prevent the proposed transaction from going forward. One individual who had been identified as the person who had provided the venture with its seed capital had some issues in his background. These initial findings included an indication that his claimed net worth was not consistent with the multiple liens, judgements and bankruptcy proceedings that were ongoing.  Most concerning was a finding that someone with the same name had been indicted by a state Grand Jury in Northern California but for which no further details were available. This finding came 48 hours before the deal was scheduled to close. The closing was postponed pending further investigation.  A field investigator was deployed to attempt to gather further information. The investigator confirmed that the indicted individual was the same person seeking investment capital.  The investigation further revealed that the indictment was in connection with this person's law practice in which he was charged with absconding $3 million in funds held in escrow for his law clients, that his law practice had recently declared bankruptcy and the state's criminal case was on hold pending the forthcoming federal indictment for fraud and money laundering.  During the pendency of the investigation, a federal grand jury did in fact charge the attorney with fraud and money laundering. The investment bank cancelling the transaction avoiding a potential $100 million loss.

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.

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.

On behalf of a federal financial regulator,  performed comprehensive background investigations of applicants to receive federal funds in connection with efforts to restart the country's asset-backed securitization markets by infusing capital into various types of consumer and commercial mortgage lenders. Hundreds of organizations applied for funding including numerous institutions that were eventually charged criminally in relation to the widespread mortgage-backed securities fraud that triggered the financial crisis in the first place.  Through our efforts, the regulator was able to prevent the program from lending to ineligible borrowers such as those that were under investigation.

In connection with a dispute between two mining companies over the ownership of a  foreign mining concession, a comprehensive investigation of the client's legal adversary was performed to include an examination of publicly available information, manual public records and a wide range of human intelligence assets.  The investigation revealed potential improper payments paid to one or more government officials, the involvement of a notorious mining concession broker, unsanctioned logistical support provided a paramilitary group, the unlawful displacement of indigenous people to enable the construction of a country club and a bribe paid to a tribal elder.  The information assisted the company's outside counsel is connection with his ongoing investigations with opposing counsel and the country from whom the concession was granted.

Following revelations that it had been defrauded in a Ponzi scheme with exposure of over $80 million, a major hedge fund requested a comprehensive review of its investment due diligence processes including its use of investigative due diligence of potential investment deals.   The project consisted of a detailed review of the entities and individuals through whom the fund had invested, prior investigative due diligence performed, its sufficiency, how the fund responded when there were adverse findings and the extent to which these reports factored into their overall investment decision.  Upon the issuance of our report, the fund made numerous changes to its investment due diligence processes and investment governance.

In connection with ongoing negotiations with U.S. and Brazilian law enforcement and regulators, a Brazil-based aerospace and defense company needed assistance in the design, implementation and administration of their third-party anti-corruption program, the centerpiece of their newly revamped anti-bribery and corruption compliance program.  The team worked with compliance leadership to inventory the various categories of third party, isolate the intermediaries, harmonize the taxonomy used to describe the various intermediaries and develop a tailored risk scoring methodology that considered country, relationship, relationship size, nexus to government officials and state-owned entities and government agencies, watchlist findings and adverse disclosures.  The team also designed the entire onboarding work flow to include business sponsor forms, third party questionnaires, risk scoring, watchlist screening, investigative due diligence requisitions and fulfillment, interpretation of results, follow-up actions and decisioning.  The company's third party anti-corruption program and other actions it took enabled them to enter into a favorable settlement with Brazilian and U.S. enforcement authorities.

On behalf of a Swiss headquartered investment bank, a due diligence investigation was performed of the investment group seeking investment banking investment in connection with the planned roll-up of numerous assisted living and nursing home facilities.   One of the individuals who had been described in the prospectus as the primary investor, had one item in the initial background check showing a recent criminal charge in the State of California.  State public records have a limited amount of information that is available electronically.   Consequently, a field investigator was deployed to review the manual court records and to make inquiries.  The field investigation revealed that the state prosecution was being held in abeyance in an anticipation of a forthcoming federal indictment charging embezzlement and criminal money laundering.   Further investigation revealed that this individual was an attorney who was charged with embezzling over $3 million from escrow monies on deposit with his law firm and using that money to fund his lifestyle.   It further revealed that his law practice had recently been closed down and filed for bankruptcy liquidation.  The investigation enabled the investment bank to deny the investment which in all likelihood would have been used to assist the main borrower to flee the jurisdiction along with the bank's investment.

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.

A global manufacturer of highly engineered products retained WCF personnel after an acquisition due diligence report of a proposed merger revealed that an acquisition target may have made improper payments to various government officials in exchange for the award of lucrative government contracts. The work included a review of policies, procedures and internal controls, background investigations of key individuals, an extensive review of vendor disbursements and gifts, travel and entertainment expenditures and other forensic, investigative and compliance risk assessment procedures. The culmination of our work was the joint development of a Management Action Plan of steps that the acquisition target was required to take prior the transaction’s closing and then a follow up audit to determine that each step in the action plan had been taken as agreed. This work enabled the client to complete its purchase of a strategically important target while avoiding undue risk of successor liability.