DDC identifies more than $50 million in assets missed by PIs and forensic accountants

An international law firm recently engaged DDC on behalf of a client to conduct a large-scale search of assets owned by a large, closely-held, private company. Regrettably, the client had already engaged several law firms, two forensic accountants and multiple investigation firms before turning to DDC for assistance at the recommendation of its new counsel. The client had little to show in terms of concrete results from those other firms despite spending more than $1 million in fees.

Corn field close-up against stormy sky

After reviewing approximately 30 percent of past material, the client’s new counsel suggested that DDC and the law firm could best serve the client by starting from scratch, due to the unreliable data produced by other professionals. DDC and the client’s new counsel both determined that the data was improperly sourced and poorly analyzed, which led to incorrect results.

Using advanced data analysis techniques, DDC obtained large-scale data sets and created a proprietary in-house database to utilize in its asset search for the client. With advanced mapping and proprietary techniques, DDC was able to identify more than $50 million in assets missed by other professionals and identify more than a dozen potential joint ventures and related entities for additional research. In less than 10 weeks’ time, and under budget, DDC was able to locate almost triple the dollar amount of assets previously identified, all with proper sourcing appropriate for litigation, as needed.

Due Diligence Consulting LLC (DDC) provides research support for $1.2 billion acquisition

Naples, FL — Due Diligence Consulting, LLC (DDC) provided research support and due diligence as part of a foreign corporation’s $1.2 billion acquisition by one of the largest conglomerates in the United States.

DDC-Logo-Trademark-Square-300pxThe cross-border transaction was subject to approval by various government agencies, and a final order approving the previously announced plan of arrangement was issued in September. The deal closed in the fourth quarter.

“We were pleased to provide the target corporation and its legal team with research on the acquisition to assist them in preparing for review by various government agencies of this cross-border transaction,” said Peter Barakett, president of Due Diligence Consulting, LLC. “Our goal is to provide deep-dive, detailed research to assist our clients and help them navigate legal and business risks. In this instance, DDC’s research enabled the target and its counsel to proactively address any concerns that may be brought up in government review of this transaction.”

About Due Diligence Consulting, LLC — DDC’s clients include Fortune 500 companies, private companies, family offices, law firms, hedge funds, private equity funds, venture capital funds, foundations, and accounting firms. Founded by Peter Barakett, formerly General Counsel and COO for Atticus Capital LLC, DDC focuses on executive background checks and investment related research and provides due diligence for mergers and acquisitions, proxy contests, litigation and special situations. DDC has a global reach, with clients around the world and decades of experience in sophisticated, detailed research in the USA as well as in foreign jurisdictions. DDC has consistently discovered information that others have missed, including numerous instances of corporate and supply chain fraud, as well as CEOs, investment managers and public company board members misrepresenting their education or work experience. In addition, DDC has assisted its clients in avoiding Ponzi schemes and other fraudulent schemes. DDC Investigations LLC is a full service private investigation firm (License #A1300198) and an affiliate of Due Diligence Consulting, LLC.

Contact: Peter Barakett, President, (239) 434-8393 Email: info@DueDiligenceConsulting.com

CEO who served time for wire fraud had launched a hedge fund from prison

DDC specializes is detailed executive background checks, and often finds information others do not.

DDC was recently engaged by a private equity firm to conduct a detailed background check on the founder and CEO of a privately held technology company.  DDC found that about 10 years ago the CEO was indicted for wire fraud and bank fraud while employed as a trader, and had pled guilty. He was sentenced to approximately 2 years and restitution of over $1mm.  DDC’s research also found that after 2 months in federal prison he formed an entity that he claimed in various bios to be either a hedge fund or a diversified financial services company, and the applicable dates of employment covered his entire sentence plus several other years, less those 2 initial months in prison.  In addition, he later provided our client with a written statement expressing remorse and regret while mischaracterizing the charges, claiming it was “a regulatory matter” and that it was settled without “admitting guilt”.

DDC’s client passed on this potential investment and later provided DDC with a background check done by an investigation firm that was engaged by a potential co-invest partner. That report did not find the indictment, the guilty plea or the prison sentence.

Ex-con fools investment bankers

DDC was recently engaged by a private equity focused family office to conduct investment due diligence on a person and business that claimed to be in the midst of a geographically focused “roll up” of smaller companies in a very fragmented industry in the eastern USA.

DDC found that the founder had been using a similar name to his actual name, was previously incarcerated for fraud, had been banned from the securities industry, had negligible assets while running large expenses (lease luxury vehicle, luxury rental home, etc.), and misrepresented his employment and education history.

During the course of this assignment DDC found that this person had raised almost $50 million from individuals and family offices who were shown the “opportunity” by two different investment bankers. Both investment bankers claimed to have done due diligence on this person and business.

The best way to avoid scenarios like this one is to (1) do a thorough check on a person or entity everywhere there is a contact or connection to the most original source level possible, and (2) do your own due diligence rather than rely on what someone else says they have done (especially if you are not given a copy of the written report).

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Peter Barakett

President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

 

Bauer Hockey accused of fraud, channel stuffing

Performance Sports Group, which owns the Bauer and Easton brands, has been accused of fraud and stock market manipulation stemming from channel stuffing.  Channel stuffing is more common than people think, and can occur in various forms / schemes.  We see it most often in direct to affiliated retail and distributor arrangements in clothing, home goods, and tech, but it can happen in any industry, in a myriad of ways.

Detailed and professional due diligence can often identify various forms of channel stuffing early. Channel stuffing not only affects the accounts of public companies and their stock price but is also common in the sale of a privately held business in order to inflate revenue that will be subject to a negotiated multiple the parties agree upon for valuation. One example is a law firm that asked its clients for retainers in advance of anticipated work, using the retainer amounts to inflate sales and represent to an acquirer that the retainer amounts were part of services invoiced and collected, thus inflating the price paid by the acquirer. For more info, click here.

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Peter Barakett

President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

Man charged with investment fraud a 4th time

A few years ago we were engaged by an investor group to research a man who claimed his firm was the largest pasta, olive oil and tomato sauce importer in the USA. The client was introduced to this man by a trusted source with whom they had co-invested and/or shared investment ideas with from time to time. Our research showed numerous aliases, dozens of false claims, and 3 prior arrests for fraud (2 for bank fraud and 1 for mail fraud). In 1998 he was arrested for scheming to defraud a Canadian investment firm out of $180 million, while serving time in jail for a different fraudulent scheme. Based on our report, our client did not invest, and told the person who referred him to them of our findings. He was arrested by the FBI again in June 2016.

The most recent scheme, hatched around 2012, involved soliciting loans and other financing from investors in Kansas City and Florida to purchase olive oil in order to deliver on contracts to major retailers that did not exist. The man created phony bank statements and tax records to show the investors, and he did not have the cash, inventory and contracts that he said he had. He faces up to 20 years in jail should he be convicted, after serving approximately 9 years for the prior offenses.

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Peter Barakett, President

Due Diligence Consulting LLC

DDC Investigations LLC

Partnership Fraud

DDC was engaged to research an investment partnership, its principals & CFO, and review   certain documents including, but not limited to, investor presentations, the offering memorandum, partnership agreement, LLC agreement, side agreements, tax returns, and unaudited financial statements. DDC found multiple instances of fraud and mismanagement, and our client has filed suit.  DDC notes that no background checks or doc review were conducted prior to, or after, each capital investment was made because the principals were “reputable lawyers who must know what they are doing”.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

Florida ponzi scheme

DDC’s recent research on behalf of an investor led to the discovery of a ponzi scheme in Florida.  DDC also located the perpetrator, who was trying to evade service of process, after other firms had failed to find him, by using deep research techniques that are unfamiliar to the typical PI, former law enforcement officer, or military veteran.  How DDC researches, and what DDC researches, makes all the difference in generating actionable information to our clients.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

Businessman burns his residence

DDC was engaged by a hedge fund to research certain persons and entities as part of a potential investment.  DDC found that one person was arrested and convicted on 4 felony counts of arson for burning of his own residence.  The subject served approx. 7 years in jail.  Notably, major federated databases did not associate these arrests, and convictions, with this businessman, just his traffic related violations.  DDC uncovered his criminal history by reviewing his divorce case file, and found that his wife listed “imprisonment” as grounds for divorce.  DDC then contacted the courts relevant to the time frame and was given partial details.  DDC subsequently contacted the relevant dept. of corrections and was able to gain the missing details.

10 years later, a person DDC believes may be the subject’s brother was arrested and convicted for burning his residence, in the same small town.

 

Peter Barakett, President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

A bio of errors

DDC recently conducted a thorough background check of a private company executive as part of our client’s pre-investment due diligence.  DDC found that every line of the executives bio had an issue.  He listed some employers, with incorrect dates, or incorrect titles, or both.  He misrepresented his titles, and/or his duties and responsibilities.  He claimed to have a degree that he did not have, from a school that he did not attend.  He omitted some employment from his work history. Each one of his credentials, licenses, and affiliations was incorrect. The only thing that was right was the spelling of his name.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC