Fraudulent Tax Credit Purchases Harm Plaintiffs' Credit Scores

Case Overview

This case involves several high-income individuals who purchased tax credits that were later denied as fraudulent, resulting in the individuals receiving notices of tax deficiency for the years of the tax credit. Specifically, the individuals purchased tax credits with the intention of lowering their taxable income. The tax credits were later deemed fraudulent and the seller served prison time for federal tax fraud. The credit scores of the individuals who purchased the tax credits were subsequently harmed due to the tax deficiency notices they received. As a result, the individuals experienced credit related issues when attempting to invest and purchase property. An expert in financial damages was sought to quantify the damages related to the plaintiff’s lowered credit scores.

Questions to the Business expert and their responses

Please describe your experience in financial damages, specifically cases involving harm to credit scores.

I am a principal at a financial consultancy, where I have been analyzing financial damages for both individuals and corporations for the past 12 years.

How would you calculate financial damages related to lowered credit scores?

It sounds like what you need is an analysis of the difference in returns and interest these individuals have experienced versus what they would have if their credit scores had been higher. This type of 'but-for' analysis has been required for many of the cases I have worked on over my career. The key will be proving what returns and interest rates would have been available to the clients if their credit scores were higher. If this information is not readily available from the discovery in the matter, there is publicly available information to establish this for interest rates.

About the expert

This highly qualified expert in financial consulting earned her BS in finance and her MS in accounting, both at the University of Illinois. She is a certified public accountant, as well as a certified fraud examiner and holding an accreditation in business valuation. She is a member of the American Institute of Certified Public Accountants as well as the Association of Certified Fraud Examiners, and is an associate member of the American Bar Association. This expert worked her way from consultant through principal and is currently the CFO at her current firm, where she conducts complex financial analyses for dispute resolution and economic damage analyses.