Helped A Leading Asset Manager Identify Misappropriated Funds Through Deep Financial Diligence

An asset manager who was responsible for monitoring the cash flow of a defaulted loan had concerns that funds released from the lockbox were misappropriated. They needed an expert to dive deep into the financials and identify any wrong doings.

Our team determined that a complete review of the monthly funding requests, including support such as vendor invoices, contracts, and payroll reports for a period of six months was necessary to establish if inconsistencies existed.  We noticed several inconsistencies such as duplicate amounts for vendors and payroll, therefore a deeper dive was warranted.  We obtained the property bank statements, reconciliations, check registers and general ledgers and traced the funds disbursed from the lockbox as well as inspected the vendor list for fictitious vendors and scanned payroll reports.  

Through forensic procedures, we found that the borrower misappropriated approximately $150k over six months.  The lender decided to foreclose on the property and we highly suggested performing investigative procedures on the other properties that held debt by the same borrower.  We found an additional 3 properties that contained misappropriations totaling $200k.