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Certified Public Accountants
(805) 306-7890

Litigation Consulting


Forensic Accounting - Fraud - Business Valuation


June 2010

Feature Article:
"Inventory Fraud: Detecting, Preventing & Prosecuting"

Inventory fraud occurs in companies of all sizes, from small distributors or retailers to major Fortune 500 companies. A noted case in the last few years involved two former executives of the Bristol-Myers Squibb Company who were accused of conspiracy and securities fraud charges related to a wholesale inventory manipulation that artificially inflated company revenues by millions of dollars. Bristol-Myers Squibb ended up paying over $800 million to shareholders and others financially harmed by the manipulation. This article discusses the types of inventory fraud, how to detect and prevent it, and litigation that can ensue from the fraud. (click here for complete article)

"Insights on Valuation" -- 2nd Quarter, 2010 Issue

We are pleased to include our quarterly newsletter "Insights on Valuation." In this issue, we discuss:

"Changing Tax Rates— Changing Value": The value of a business is equal to the present value of the future benefits of ownership of that business. Business valuations of operating companies are often based on projected net cash flows to the shareholders. Since Uncle Sam participates in the bottom line up to 40%, it is axiomatic that a change in tax rates will result in a change in the value of a business.

"Family Limited Partnerships and the Courts—An Update": The improper development or use of an FLP can result in a significant loss of those assets to taxes and penalties. From the inception of the FLP as a tax planning entity, the Internal Revenue Service (IRS) has challenged its use by various means.

"Breach of Contract": The calculation of damages from the breach of a contract involves the analysis of historical financial data, analysis of the current status of the parties involved, and projections of future economic activity.

Practice Profile:
Litigation Consulting Services for Inventory Losses

Inventory losses can mean the difference between profitability and negative income. When inventory loss does incur, whether due to financial statement fraud, misappropriation or other means, litigation may be necessary for recovery of losses. For example, insurance coverage may not always be a simple negotiation in the event of theft. The cost to replace such inventory or the actual validity of the loss might be questioned by the insurance carrier.

In such cases, clients hire the trained specialists in Arxis Financial's "Litigation Consulting" practice to assist in determining the extent of monetary loss or damages and to help uncover how the loss occurred. Our professionals utilize various investigative and analytical procedures to support criminal or civil actions against an individual(s) or provide evidence for insurance claims. We also represent shareholders in suits against companies where inventory fraud has occured. Expert analysis and conclusions are presented in depositions and trial at local, state and federal court levels as well as mediation and arbitration.

We assist attorneys in interpreting the data and help counsel to understand and analyze events or issues as they develop the case and prepare discovery. Clients are pleased with Arxis Financial’s abilities to clearly, persuasively, and accurately present economic and financial evidence and opinions.

Partner Profile:
The Litigation Consulting practice is headed by partner Chris L. Hamilton, CPA, CFE, CVA, DABFA. Mr. Hamilton is a Certified Public Accountant, Certified Fraud Examiner, Certified Valuation Analyst, and a Diplomate with the American Board of Forensic Accounting. He is a licensed life and disability insurance agent and a General Securities Representative. Mr. Hamilton has published articles in several publications, and has made presentations at national conferences, training institutes and seminars on topics including forensic accounting, fraud and business appraisal.

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Copyright 2010 Arxis Financial. Articles may not be reprinted without permission.

Chris Hamilton Photo
Chris Hamilton, CPA CFE, CVA, DABFA
(805) 306-7890
Chris Hamilton Photo
Litigation Consulting
Forensic Accounting - Fraud - Business Valuation

Clients know us for results. Opposing counsel know Arxis for wishing they had hired us.