Corporate Internal Investigations

The highly publicized problems of Enron, Arthur Andersen, WorldCom and others have highlighted the increasing liability corporations shoulder for employee misconduct.This increasing liability results in a greater emphasis being placed on internal investigations of possible corporate misdeeds.If handled appropriately, an internal investigation provides a corporation the opportunity to determine if employee misconduct occurred and if this misconduct could implicate the corporation, as well as the opportunity to limit the potential damage to the corporation.

Tauber & Balser, P.C. typically works hand-in-hand with outside counsel to investigate allegations raised to the corporation.These allegations may come from employees, suppliers, customers, government agencies or other third parties.Once these allegations are received our focus is to determine the exact nature and extent of the alleged wrongdoing.This is generally accomplished through the use of employee, or related party, interviews as well as through reviews of relevant documents.Throughout our review process we provide outside counsel and the corporation, as appropriate, regular updates regarding our findings and the status of our review.

The results of our review can be used by the corporation to: take action against the party or parties responsible, prepare for the possibility of a formal civil or criminal complaint or self-report criminal wrongdoing to the government to avoid future prosecution or reduce the potential for fines or injunctions.

Members of our forensic accounting services team have been involved in various internal investigations including the following selected matters.

• A large bankrupt energy trader required information on the role outside institutions played in its off balance sheet transactions.We were asked to identify the structure, the assets involved and the lending institutions that participated in over 50 different transactions.The information gathered regarding the dollar amounts and players involved was used by the company to press its claims against the various lending institutions.

• A subsidiary of a large conglomerate received the majority of its revenue from contracts with the Defense Department.An employee of this subsidiary called the company hotline to report allegations of fraud in one of these contracts.We were asked by outside counsel to investigate these allegations in anticipation of an investigation by the government.Through the use of employee interviews and document reviews, we supplied outside counsel with the information needed to correct the problem and report our findings to the government.

• We were retained by a property management company to investigate allegations of fraud by senior management.We identified a scheme where payments totaling approximately $2.5 million were made to 25 fictitious suppliers that invoiced for goods and services not provided.Proceeds of the scheme were traced to the personal bank accounts of certain management personnel.Our role included the preparation of a proof of loss under the fidelity coverage policy, which resulted in a substantial recovery of losses.

• A large privately held real estate developer/management company was accused by a government official of over billing a municipality for space it leased as well as providing kickbacks to the leasing manager of the municipality.Based on the allegations provided, we researched the transactions involved.Although we did note a number of internal control weaknesses and potential business process improvements, no support for the allegations was found.In connection with our findings, discussions were held with the government official and the accusations were dropped.

For further information contact:

Paul Dopp404-814-4988
Karen Fortune404-814-4968
Richard Millman 404-814-4905
Mark Murovitz 404-814-4940
Howard Zandman 404-814-4915