We hope you’ve had a chance to see the several real case studies we’ve included in a few topic sections of this Website. In case you missed them:
Here are several more examples of cases in which we’ve helped clients save—or recover—hundreds of thousands of dollars.
Case study: Oil in, cash out
Several years ago, we were hired by a lawyer whose client, the owner of a retail oil heating company, was concerned about what seemed to be very low cash flow.
We interviewed the bookkeeper, who was charged with computerizing the accounts receivable. Apparently, she had been procrastinating on the change from manual to automated system. The company had 1,800 customers, so no one suspected she was trying to keep information from management. That’s the first thing we thought of.
We asked for the most recent manually prepared schedule of accounts receivable and asked one of my associates to add up all of the columns. The schedule didn’t add up.
The total accounts receivable was about $1 million; the books showed the receivable balance to be about $400,000. We asked the company’s accountant about the variation. He said he’d never checked: All he was ever paid to do was prepare the corporate tax returns based on the information in the books.
When we had an opportunity to speak with the bookkeeper privately, we told her what we had found. She then pulled out a schedule reconciling the $600,000 difference. It turns out, she had been stealing about $200,000 per year for three years.
Case study: Hiding horses
In this case,we were hired to determine the fair market value of a marital estate during the divorce of a wealthy couple.
We asked for the Statement of Net Worth and tax returns for the previous five years. It took a while, but in comparing the assets listed on the Statement of Net Worth to the income derived from the assets, as reported on the income tax returns, we determined that there were bank accounts, stocks and bonds accounts, and several race horses (some had been disclosed) that had not been listed on the Statement of Net Worth.
Eventually, we uncovered $100,000 in hidden cash, securities worth $400,000, and previously undisclosed horses worth more than $200,000.
Case study: Pay now or pay more later
Interestingly, this was a divorce mediation case in which the couple was amicably determining equitable distribution, child support (based on New York State standards), and reasonable spousal support, or maintenance.
In this instance, the husband was the propertied spouse. But this case also was a startling example of the fact that “amicable” does not necessarily mean “honest.”
We were hired to do a business valuation of the couple’s small family business and to complete a list of marital assets and liabilities. During the course of our investigation, we found the husband was hiding some investments, including a piece of real estate in Europe.
The real estate had not been appraised. Once she learned about it, the wife insisted that the property be available to be scrutinized for several years after the divorce, so she could find out what it sold for and thereby split the actual proceeds “down the road.” The sale would take place and each spouse would hire a lawyer to review the proposed settlement.
We had to educate the husband that it was in his best interests to be up front with all the facts now. That way, he would avoid the inevitable discovery that would ensue if the wife’s attorney, upon reviewing the paperwork, suspected that something wasn’t right.
