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Due to years of professional experience and specialized credentials, we know the hiding places for “lost,” “hidden” or “forgotten” assets and income. We invite you to read the following case histories, which give an accurate and enjoyable insight to the scope of our experience.

The Dentist Wanted to Sink His Teeth Into His Contractor

We took a bite out of his lawsuit. The threat of financial embarrassment in court can make the most belligerent plaintiff lose his appetite.

Dr. Lee,* a suburban Chicago dentist, wanted an unconventional design for his new office, including a vast amount of glass and interior reflecting pools. His builder, Mr. Sullivan, noted these were problematic for the Midwest, pointing out significant issues with heating, cooling and excess humidity. Sullivan’s contract listed his concerns, and stated he could not assure satisfaction with Dr. Lee’s design.

Despite the warnings, Dr. Lee proceeded with his plans, taking occupancy of the $2-million structure in September. Just five months later, humidity from the reflecting pools had already begun to rot trim and freeze on window sills and exterior doors.

In March, Dr. Lee filed a $5-million lawsuit against Mr. Sullivan, claiming losses for the structure, cost of repairs and a decline in his dental practice value. To help him prepare a defense, Mr. Sullivan’s attorney retained Dennis M. Taylor as an expert witness in business valuation. Mr. Taylor requested a lengthy list of documents, including detailed daily transactions for the years before and after moving to the new office.

After carefully reviewing several years of records, Taylor made an interesting discovery. Over a two-year period, quarterly payments of $3,000 were attributed to “dental supply expenses.” Yet the payee appeared to be in the business of music, not bridges and crowns. The answer was found within the dentist’s QuickBooks** records, where Mr. Taylor uncovered a memo entry for “grand p.”

At the deposition, Taylor testified that the dental practice had not declined. Instead, he revealed the mysterious entries were payments for a $24,000 grand piano, improperly declared on income taxes as dental supply expenses. Faced with the potential embarrassment of public disclosure in the courtroom, the “deceptive dentist” was suddenly much more open to compromise.

Aided by the adept forensic accounting skills of our experts, Sullivan’s attorney was able to settle the next day for $12,000; a mere fraction of the original suit.

* For confidentiality, case names have been changed.
** Quickbooks is a registered trademark of Intuit Inc.

A Fish Rots from the Head Down

The CEO said his people were fishy. We said, “This fish rots from the head down.”
A CEO pressure on employees to “perform” makes the CEO dance.

Pinnacle, Inc.,* a publicly traded Fortune 500 manufacturer of electronic parts headquartered in Baltimore, managed several operations around the country, including Summit, Inc.,* of Chicago.

The once-profitable Summit already faced financial clouds when president Sam Willis* and controller Mark Williams* joined the company. Challenges included a coming transition to digital products and delays in implementing new production costing software.

Despite optimistic budget projections, profits began to fall in year two, generating meetings and demanding phone calls from Pinnacle CEO Ted Mantle*. In a further confrontation on August 20, Mark reported he was doing everything possible to enhance third-quarter earnings, but adjusting the numbers further would be “cooking the books.” Before the call ended, Ted again insisted Mark “make the numbers” as originally budgeted.

Matters worsened by year end. With no way to accurately value ending inventory, Sam and Mark adjusted the cost of sales to match the budget. Ten months later, the new cost accounting system was finally functioning, and the true picture of understated costs emerged. Shortly after contacting Pinnacle’s external auditor about the discrepancy, Sam and Mark were terminated, and slapped with a civil lawsuit for financial statement fraud by Pinnacle.

Ted and other Pinnacle executives denied the frequent conferences had occurred, along with any unreasonable demands to produce budget-level financial performance. In response, the defendants’ attorneys retained Dennis M. Taylor as an expert witness in forensic accounting. In helping the attorneys make their case, Mr. Taylor reviewed several years of financial documents, internal and external communications, audit notes and detailed transaction records for the years before, during and after the alleged fraud. His work revealed a clear pattern.

Taylor determined that Pinnacle mandated questionable entries in past financial statements, and Summit’s cost accounting records and financial reporting system were both inadequate and insufficient. At trial, he testified the defendants had no better alternative than to rely on the budget’s gross profit percentage when valuing inventory.

The judge agreed, ruling the defendants had acted reasonably. The adept forensic accounting skills and resources of our experts revealed the facts of a real “fish story”– and helped the attorneys convince the court their clients were not guilty.

* For confidentiality, case names have been changed.

Seeing Eye to Eye

Seeing eye to eye.
Yet, looking at the facts.
A domineering minority shareholder’s vision of control was blinded by majority shareholder’s focus on the facts.

Dr. William Simon*, a successful ophthalmologist and surgeon, encouraged his sons to follow his footsteps. Older son, Bradley, joined his father after his residency. Randy, the younger son, followed a few years later. William gifted equally a few shares to each of his sons.

William retired and redeemed all his shares except for shares equivalent to a 2% ownership of the corporation. Bradley, a skilled surgeon, and Randy, who was great with patients, seldom saw eye to eye, yet practiced together for their father. Bradley and Randy, being 49% stockholders, had the same salary and prerequisites. Bradley controlled all business aspects and Randy acquiesced to Bradley’s dominance out of respect for his father.

After many years, Bradley’s son, Craig, joined the medical practice as a non-stockholder physician employee. Bradley’s wife, Cindy, became the office manager. Craig’s patient lists grew substantially over the years because Cindy favored her son in the assignment of new patients.

Upon his death, William, who was concerned about the years of disagreements between his two sons, left his two percent ownership to Randy. Randy then owned 51% and Bradley owned 49% of the corporate stock.

Shortly, thereafter, it became unbearable between the brothers and liquidation was necessary. Since Cindy, managed the office and its employees, Randy made plans to move his practice. He then sought to recover his 51% stock ownership of the corporate assets, both tangible and intangible, from Bradley. Bradley refused to provide any monetary consideration citing what he believed to be years of excessive compensation paid to his brother. Randy filed a lawsuit against his brother seeking his 51% share of the corporate assets.

To help him prepare the case, Randy’s attorney, retained Dennis M. Taylor as an expert witness in business valuation.

Mr. Taylor cited the manner in which the practice was operated and determined a value for both the tangible and intangible assets including a value of the practice goodwill of the corporation and the professional goodwill of the physicians. At trial, he testified that Randy should be entitled to 51% of the corporate tangible assets net of liabilities and the value of the corporation’s practice goodwill. Detailed calculations were also provided.

Assisted thorough analysis and forensic accounting skills of our experts, the judge ruled that Randy was entitled to a judgment amount equivalent to Mr. Taylor’s expert witness report.

* For confidentiality, case names have been changed.

Think You’ve Had a Bad Day?

We’ve all had the occasional bad day – but few can compare to the day when Rick forgot to take his medication and police involvement became necessary. Now Rick is no longer with us, and his wife Stacy needs to think about her future!

Like most people, you’ve experienced the occasional bad day. Perhaps the car won’t start, or the kids won’t give you a moment’s peace. But certainly, you’ve never experienced a day quite as bad as Rick’s’

Rick* and Stacy seemed to have a perfect future in store for them. Stacy was six months pregnant with their second child and Rick was in his second year of a Doctorate program at a Northeastern University. He had suffered through bipolar episodes in the past, but he seemed to have the problem under control, thanks to regular doses of an effective medication.

Then came that tragic weekend when their wonderful life together fell apart. The couple and their son, a toddler, had traveled a great distance to attend the wedding of Rick’s baby sister Monica. When the festivities came to an end, Rick and Stacy were exhausted, but they still decided to begin the eight-hour road trip back home.

Caught up in the excitement of the wedding, Rick had forgotten to take his medication. Worn out, Stacy did not notice anything amiss with his behavior until it was too late. Rick’s erratic behavior quickly escalated. Stacy convinced him to pull over but was unable to get him to take his medication. She knew she had lost all control when he exited the car.

Pregnant and protecting their toddler from harm, Stacy knew she could not help her husband on her own. She called 911 and soon deputies were on their way. By the time they arrived, Rick had removed his clothes and was screaming at passing traffic while standing on the centerline of the rural highway.

The situation soon turned from tense to tragic. Rick was killed at the scene when deputies used an electroshock weapon to subdue him. In the aftermath of the incident, Rick’s family made a wrongful death claim against the police department. The future of Stacy and her two children needed to be taken into consideration.

Hired by the Plaintiff’s Counsel, Mr. Petersen of TD&T CPAs and Advisors, P.C., went to work. He prepared a detailed report communicated the economic damages in a straightforward manner, correlating the facts of the case with accepted damage theories and methodologies. At TD&T, we have the expertise and experience to address the complex issues surrounding the determination of damages related to a wrongful death, personal injury and wrongful termination matters.

The clear and supported damage calculation prepared by TD&T aided the attorney in settling the case. For Stacy, this is a merciful outcome – certainly she has already suffered enough. She can now find comfort in the fact that she will not have to endure financial hardships in the years to come.

* For confidentiality, case names have been changed.

Surgeon Seeks Help When Stabbed in the Back

Dr. Morgan thought his sweetest dream had come true when he opened a world-class surgery center, staffed by the best and brightest. But that dream soon turned into a nightmare when his colleagues decided to conspire against him…

In just a few short years, Dr. Morgan*, a successful surgeon, realized his dream of creating a world-class surgery center. He was joined in his venture by the best and brightest. In the beginning, his relationship with his colleagues was amicable. But before long, Dr. Morgan’s sweet dream began to turn into a nightmare. Every decision seemed to flare up into an argument concerning the direction of the business.

Dr. Morgan soon found his role as leader being surgically removed from the center. As founder, he initially held the largest ownership interest in the center – but he’d given up his controlling interest while bringing in new surgeons as owners of the center. Those same surgeons, to whom he had generously given a portion of his ownership interest, now rallied against him in a corporate coup.

Dr. Morgan had asked incoming surgeons to sign non-compete agreements to protect the surgery center he had developed. That same agreement was soon used against him. He wanted to leave the hostile environment, but the coup leaders did not want to lose the cash flow that he brought into the center. In an effort to save what was left of his practice, Dr. Morgan left the surgery center and joined a local hospital.

As a result, lawsuits were filed on both sides. Dr. Morgan’s attorney retained Mr. Petersen’s team at TD&T CPAs and Advisors, P.C., to calculate the damages and the value of the doctor’s minority ownership in the surgery center. At TD&T, we have the expertise and experience needed to address the complex issues surrounding a business valuation and also determine the proper standard of value and appropriate premiums and discounts.

Thanks to the concise information provided by TD&T, Dr. Morgan’s attorneys were aided in arguing a favorable outcome for the surgeon. Dr. Morgan is now free to pursue exciting new dreams – hopefully, with more agreeable associates.

* For confidentiality, case names have been changed.

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