Rachlin has a
team of experienced professionals that specialize in providing
forensic accounting services, conducting fraud investigations,
and assisting counsel in litigating criminal cases. Many
of our professionals hold designations as Certified Fraud
Examiners and have experience in providing testimony before
state and federal courts.
As a result of the industry knowledge our professionals
possess, we are capable of providing comprehensive analyses
that look beyond the numbers to explain the realities of
economic and business matters.
In this regard, our assignments have included:
- Evaluation of internal control systems for
preventing and detecting fraud
- Client services for bankruptcy trustees, class
action securities, fraud, law firms, SEC, Department
of Justice, and FDIC
- Analyzing complex financial transactions to evaluate propriety of accounting treatment, trace funds from source to disposition, identify parties, affiliates, and ownership interests of principals involved in the transaction
- Preparation of supportive documentation for
trial exhibits
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Financial Assessment of Rail and Highway Government Agency
The Advisory Services Group of Rachlin was engaged to provide an in-depth financial assessment of the financial management practices of a government agency responsible for rail and highway transportation.
Rachlin identified the financial problems and shortcomings in the finance and accounting operations of the entity that threatened the completion of a major rail expansion, if not addressed, would result in an approximately $2.8B shortfall in funding to build this new rail expansion. Some of the issues related to financial uncertainty and instability that were identified include:
- Underfunded expenditure plan and inadequate funding for planned capital projects
- Underfunded asset maintenance
- Underfunded pension and retiree plans
- Over-reliance on reserves to support operations
- Over-reliance of volatile revenue sources to support operations and capital projects
- Unrealistic fare box recovery expectations
Historically, a perception existed among the entity’s constituents that the organization did not have effective financial management. The entity even experienced a grand jury investigation into mismanagement.
Rachlin identified, through its assessment, areas of shortcomings in the financial management and provided recommendations to address and overcome these shortcomings and to begin to put the entity on a path to sound, prudent and conservative financial management.
Financial Advisor to the Trustee and Receiver of Major Ponzi Scheme
In a major Ponzi scheme in Florida involving over $300 million, Rachlin was retained as financial advisors to the Trustee and Receiver. As consultants, Rachlin assisted with the identification and recovery from avoidance actions and litigation involving other parties, and also performed claims analysis for an investor base of over 2,000 claimants. As accountants, Rachlin maintained the books of the Estate and the Receivership and helped to resolve numerous tax related issues. The defrauded investors recovered almost 65% in this proceeding.
Investigation of Ponzi Scheme in Palm Beach County
Rachlin professionals were involved in the investigation of a Ponzi scheme in Palm Beach County.
The perpetrator of the scheme, through an intricate web of investment and brokerage firms, raised over $40 million from over 300 unsuspecting investors and siphoned funds to offshore locations and related parties. Rachlin professionals assisted Counsel with the identification and recovery of preference transfers, fraudulent conveyances, and assets transferred to offshore locations and related parties, and also assisted with claims analysis and objections.
Implementation of Economic Damages Model to Calculate Breaches of Employment
Rachlin prepared a regression-analysis-based economic damage model to calculate loss of income incurred by a computer software company resulting from breaches of employment contracts and non-compete agreements by former employees.
Mortgage Warehouse Loan Advances Tracking
Our economic damage team developed a database management application to track funding, shipping, sale and repayment of mortgage warehouse loan advances and related collateral security. We further developed an expert report of damages in connection with litigation resulting from a fidelity bond company’s denial of claim relating to collateral sold out of trust.
Economic Damage Calculations for Ex-Employees Denied Compensation
Our team of professionals prepared economic damage calculations for each of several partners who left a major consulting firm and were denied payments relating to salary, profit-sharing, capital distributions, and unbilled time and uncollected receivables. We analyzed and critiqued damage calculations prepared by the opposing expert relative to lost profits alleged to have been incurred by the consulting firm.
Forensic Audit of International Embezzlement Scheme
Rachlin recently conducted a forensic audit for a corporate client overseas during which a documented embezzlement scheme that was allegedly conducted by the Plant Manager and his Administrative Assistant was uncovered. The forensic audit determined that a separate corporation had been formed by the husband of the Administrative Assistant, and that this corporation submitted invoices to the corporate client for products that were allegedly not delivered. The audit involved detailed analyses of financial records, recovery and analyses of electronic data, interviews of key corporate employees, and a review of internal controls.
The audit resulted in a written opinion regarding the implementation and operation of this scheme by the Plant Manager and his Administrative Assistant, as well as recommendations regarding the design and implementation of the client’s internal controls.
Receivership for High Profile Medicare Fraud Conviction
Receivership for forfeited assets from a high profile medicare fraud conviction in South Florida. Liquidated over $44 million worth of assets. Within a year, the $44 million included:
- $16 million business as a going concern (approx). Post receivership, this business continued operating in an effort to keep the employees employed, avoid creditors losing money, and to get as much value from the business towards the forfeiture amount. The forensic team helped run the business to keep it afloat until the sale of the assets.
- $21 million commercial building in Miami with tenants
- $5.5 million in 3 warehouses/ commercial property in Miami
- $3 million in personal property including a plane, cars and a yacht Close to $400,000 residential property in Savannah, GA
- $5.1 million residential property in the Florida Keys is under contract and ready for closing. $800,000 commercial property is under contract in Georgia
The firm was commended by the Federal Judge for liquidating the highest amount of assets of this type of forfeiture for medicare fraud ever in the United States.
Appointed Receiver for $80 Million in Fortified Assets
Appointment in federal district court as receiver for $80 million in forfeited assets, which are being liquidated under order of the court, and include $45 million in commercial and residential real estate. The receivership has successfully liquidated or is liquidating these assets and is realizing over 90% of appraised values for this estate.
IRS Criminal Investigation Case Review of Understatement in Taxes
Rachlin professionals were engaged to assist an attorney and his client on a criminal tax case at the 12th hour of the investigation and facing indictment. The client had been under an IRS Criminal Investigation for almost four years and IRS was proposing an understatement of over $600,000 over a two year period. Rachlin’s cadre of forensic accountants and former special agents with IRS-Criminal Investigation were retained under a “Kovel letter”, quickly evaluated the documentation available, and determined there were both technical and procedural problems with the Government’s case. The client’s attorney had previously tried to dissuade the IRS and later Department of Justice attorneys in prior meetings from going forward with the investigation. Rachlin professionals assembled a report reflecting potential weaknesses identified in the case and presented new arguments to the US Attorney’s office for consideration. The meeting resulted in a sealed indictment to protect both the Government’s interest as well as any unnecessary negative publicity to the client. Currently, the indictment has remained sealed for almost a year as the Government attempts to addresses the weaknesses identified in their case.
Representative Damages Determination Engagements
Other examples of representative damages determination engagements include the following:
- Prepared regression analysis based damage model to calculate loss of income incurred by a computer software company resulting from breaches of employment contracts and non-compete agreements by former employees.
- Developed database management program to track funding, shipping, sale, and repayment of mortgage warehouse loan advances and related collateral security. Prepared expert report of damages in connection with litigation resulting from a fidelity bond company’s denial of claim relating to collateral sold out of trust.
- Evaluated and quantified amounts relating to partnership liquidations, profit allocations, and partner distributions. Prepared analyses, computer model, and trial exhibits relating to distributions projected/made to partners of a limited partnership which owned commercial office property in New York City.
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