"In the absence of light darkeness prevails.
There are things that go bump in the night;
We are the ones who bump back..."
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The majority of cases we work turn out just fine and fall within guidlines set by decision makers - However, if you don't take a look up front or fail to set up adequate checks and balances - be careful; "there be dragons out there..."
A few recent client engagements where we've helped out:
Research the true status of an offshore supplier(s) before the deal
Arizona M&A set to close, 70% of acquisition target sales relied on a medical device supplier in the Middle East. Undisclosed to the acquiring company, the supplier is under investigation by U.S. Customs and recently received several product warning alerts issued by the FDA. The deal has been postponed until further notice.
Classic Offshore Ponzi
Forex - a hot topic of the day. After a key introduction by an accredited associate, four businessmen pooled up $1.5mm for an incredible opportunity demonstrating 38% returns - multiple market trading mixed in with a bit of arbitrage spanning both U.S. coasts, Hong Kong, Nikkei - Osaka, Panama, the Bahamas and the European Union. Once we took a look, along with a total absence of a thriving Caribbean presence claimed [offices and activities with other investors and multiple portfolio funds at work], we also provided the background histories of each of the several trading firm partners involved which proved to be of dubious credibility; no one had any licenses, U.S. or abroad, and we found a few dated convictions to add to the "do we invest or not" decision mix. The lead Forex investment contact deal maker, an exceptional sales guy, had total personal assets of $20k and liabilities of $420k. No checks were written.
Partner ran off with the money; but we found him [the money too]
A partner in an Illinois construction company wiped out the bank accounts, and along with a few accomplices packed up most of the company's equipment in one night and sent it of to auction - a weak LLC operating agreement left doubts as to who actually owned what and law enforcement took little interest. We located 80% of the hard assets and cash; through negotiations with the absconding partners' attorney, we were able to have these assets returned to the other partners.
Remain cautious, even with family recommendations
Recommended by a family member of a closely held company, a new CFO was brought in for additional oversight and to help manage significant growth the company was experiencing. Fourteen months later, a total discrepancy of $279k mixed among three general accounts was found by an outside auditor along with evidence of ghost vending [audit was unknown to all employees]. Brought in by General Counsel to review the matter; through our investigation we found this gentlemen had been in serious financial distress the past several years and further learned he had quite a racket set up. He stayed just enough below the radar where he thought no one would notice, paying invoices to four fictious LLC's he had set up. The trick here to gain proper leverage is to learn what he did with the money before he knows you're looking, and we did. We negotiated return of most of the money on a time basis in lieu of criminal charges.
Investment for start-up halted two days before closing; Fraud
Closing date set, investment of $750k seed money - prior to GTI entering the case, initial due diligence reviews had passed muster of each of the investment decision makers; local Economic Development Authority, a VC funding group, and a not too sure yet private investor participating, all taking equity positions in a promising life-science start up firm in Washington State. Retained by the skeptical private investor a few weeks before closing; Facts our team provided: the company misrepresented cash on hand/partner skin the the game funding and key operating equipment they owned, letters of customer order intent were false, although dated by 10-15 years two principals had felony convictions for fraud [in three states, one in Canada] a third had filed bankruptcy twice over the past 12 years, several months after receiving similar investments for other start-ups he was involved with, and the PhD on their team was indeed a highly qualified scientist, however he was also an illegal alien working in the U.S. using a "borrowed" identity. No closing occurred.