The why is easy to understand. Today’s business news trumpets how “break through” technologies emerge overnight and start-ups transform into Facebook in months making instant millionaires.  Investors, young and old, from all walks of life are presented with “opportunities” to take advantage of a “special” situation and invest in a business deal that will result in them losing most or all of their money without every actually having a chance at making any profit. These schemes targeted at all types of investors, not just the gullible or naive. Here in Detroit, they can involve a special future way to secure a lucrative contract, a new automotive or electronics break through the Big 3 will need, a soon to be announced real estate zoning change, etc., etc. With interest rates low and most legitimate, regulated investments offering little yield, the temptation to make easy money is all the more attractive. Wealthy, sophisticated investors fall into these traps and the result is usually no action by law enforcement or a difficult, sometimes fruitless civil battle to try to get money back.

Like any Ponzi scheme, these investment schemes almost always involve three factors:

• They offer exceptionally high or guaranteed returns.
• They appear legitimate and often rely on reputation.
• Exclusivity and secret.

These deals pray on investor greed and play to the ego and desire not to miss out on something that is a “once in a lifetime” deal. What none of these investments can stand up to is actual due diligence.

At RCT, we know business and we can help identify a fraudulent investment in Michigan. If you have a client who is considering an investment that sounds too good to be true, give us a call. As forensic accountants and licensed investigators, we provide that vital due diligence that can help mitigate your clients risk and avoid the pain and embarrassment. The cost is minimal in comparison to the benefits.

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Five ways to maximize the use of your expert forensic accountant are as follows:

1. Be very specific about the deliverable you expect. What do you need produced and in what form? memorandum of initial finds, just a final report, testimony, affidavit, etc.
2. Establish a clear timetable and due dates at the onset. This is easily one of the easiest to do and proves over and over to be a critical element that can often lead to trouble. Don’t forget, as your case calendar changes, be sure to notify your expert so they can adjust their schedule and workflow to keep everything in sync.
3. Identify any additional resources that the expert may need. Forensic accountants often have to interview people, request additional documents and in some cases work in conjunction with other experts like appraisers and investigators. Try to identify these people and coordinate their involvement very early on in the process. This will help to keep schedules and deadlines on track.
4. Establish a reporting protocol. Establish milestones and criteria on what information should be relayed and to whom. Clarity upfront in this area will reduce wasted time and aggravation.
5. Take the time to reduce all of the above to writing and share with everyone involved. The best laid plans prepared on a telephone call will quickly become a convoluted mess, ripe with misunderstandings. It is always best to have a written plan and to memorialize any material changes in writing as well.

At RCT we aim to not only give you expert forensic accounting services but to do so in a manner that is tailored to each specific case and strategy. For more information on ways that RCT can give you an advantage, please contact Robert Tunney or Paul Dank. We look forward to enhancing your case.

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