This case involves a seller that collected customer payments for the buyer under a transition services agreement. Although it was undisputed that the seller withheld some of that cash, the parties disputed the amount withheld. The sale agreement identified quantities of inventory owned by the sold business. The buyer asserted that the inventory was short by $3 million worth of items. In the same accounting system, inventory was identified by total dollar values and also by values per item. The seller’s quantity calculations did not match the number of items in the SPA disclosures, demonstrating a shortage. An expert in forensic accounting was sought to review the accounting system data, conduct a cash reconciliation, and verify the demonstrated quantity shortage.
Question(s) For Expert Witness
1. Please describe your experience in forensic accounting as it relates to the details of this case.
Expert Witness Response E-018428
I have extensive experience conducting these types of analyses and the facts described are solidly within my areas of expertise. It is important that your expert be able to independently corroborate your client's calculations. Ideally, the expert would reconfirm the client's conclusions while using a methodology that differs from the client's methodology (or be able to clearly explain why your client's methodology is the most appropriate. This would strengthen the credibility of both your client's figures and your expert.
Expert Bio:
This highly experienced forensic accountant is a Certified Public Accountant and a Certified Fraud Examiner. He has 20+ years of experience with operations and oversight of financial reporting, accounting and audit functions (internal and external), primarily publicly-traded companies reporting in compliance with GAAP, GAAS, and SEC regulations. He began his career as an auditor for an elite consulting firm. Later, he worked at private companies as controller and chief financial officer, and a public company in SEC reporting. For 11 years, he was an in-house forensic accountant at three law firms on the west coast. He has extensive experience with well-publicized alleged accounting frauds by public companies. He also has led forensic investigations into numerous audit failures and helped counsel recover and return to shareholders $2.4 billion in losses from alleged securities fraud, an average recovery of ~$55 million per case.
About the author
John Lomicky
John Lomicky is a J.D. candidate at FSU Law with a multidisciplinary background. He earned his Bachelor's degree in Neurobiology and Near Eastern Studies from Georgetown University and has graduate degrees in International Business and Eurasian Studies. John's professional experience includes working in private equity as an Associate at Kingfish Group and in legal business development and research roles at the Expert Institute. His expertise spans managing sales teams, company expansion, and providing consultative services to legal practices in various fields.
