The US Department of Justice (DOJ) recently joined a federal qui tam lawsuit1 brought against a private equity firm that specializes in health care pharmacies. Notably, the case also charges individual partners of the private equity firm, Riordan, Lewis & Haden, Inc. (RLH) based in Los Angeles2. They are charged with violations of the federal Anti-Kickback Statute (AKS) and the federal False Claims Act (FCA) in connection with their management of Diabetic Care Rx/Patient Care America (PCA), a compounding pharmacy. The case involves reimbursements from TRICARE, the health care program for the military and their families.
When a dishonest CFO or controller cooks the books, it can be devastating for the victim organization. In addition to direct financial losses, financial statement frauds erode trust between management and other stakeholders, including lenders, investors and employees who own company stock. Unfortunately, it's common for smaller companies to associate financial misstatement with large public companies that focus heavily on earnings per share.
A recent Donan forensic fire investigation found that a poor connection in a floor-mounted duplex receptacle was the cause of fire. The receptacle was located in the area of origin and all other identifiable causes were eliminated during the investigation. While conducting the research for this particular case, Donan investigators evaluated many scholarly sources in order to clearly educate the client on how a loose connection in a receptacle could lead to a structure fire which, in this case, nearly consumed the bedroom. The best explanation was found in the chemistry associated with the formation of an oxide that contributes to the condition.
Two years ago, you finally closed the big merger deal you spent what seems like years working on. Perhaps, your business is tied to commercial real estate development, construction, or building materials. Just when you were ready to start that big ramp up, the bottom fell out.
It is an unfortunate fact of business that from time to time one of your customers will not pay for goods or services you provide. It is a frustrating and sometimes helpless feeling that you have knowing that even though you provided a valuable product or service, for reasons beyond your control you are simply not paid. How do you collect your money? What follows are some techniques that will help you effectively collect your receivables.
I receive phone calls throughout the year from attorneys who have taken on their first FINRA case and they frequently are unaware how the FINRA Dispute Resolution process differs from other venues. I thought it would be helpful to provide a quick overview for new participants and a refresher for those more experienced securities attorneys on how the FINRA Arbitration and Mediation process works.
In FINRA-related cases many attorneys see discovery requests objected to by opposing counsel. Typically, opposing counsel objects to discovery requests citing that items requested are either "overly broad, vague, or ambiguous", or "impermissible per FINRA's Code of Arbitration Procedure". However, despite opposing counsel's reasoning, many objections to discovery requests are irrelevant and do not hold up in regard to FINRA's Code of Arbitration Procedure. Attorneys should not be intimidated or discouraged by these objections, but rather should understand that FINRA's guidelines concerning arbitration allow for most applicable and reasonably obtainable discovery information to be delivered.
As billionaire Warren Buffet once noted, "Price is what you pay. Value is what you get." Interested buyers, investors and bankers looking at new initiatives with companies often share similar objectives in 'kicking the tires' to be sure a target company has properly documented its business activities. On the other side of the transaction, the subject company's Founder, Board of Directors, CEO, Chief Financial Officer, Chief Operating Officer, Accounting and/or other departments can find themselves overwhelmed by the volume of documentation requests. Third parties can test the bounds of both courtesy and reasonableness before committing to and funding a new transaction.
The emergence of structured finance products over twenty-five years ago enabled major commercial banks and investment houses to develop higher volumes of real estate, credit cards, automobiles and other asset-based loans in new and often more profitable ways. Historically, lenders normally generated these types of loans as portfolio loans, where the bank kept and monitored these loans on its own balance sheet and at its own risk. But beginning in the late 1980's, banks began to investigate taking an intermediary or conduit role for certain types of loan portfolios. When generating loans which met the advance underwriting criteria of large investors, banks and loan originators recognized they could simultaneously generate large fees and also promptly move these 'tailored' loan portfolios off the bank's books, by pre-packaging them for investor third parties.
"When it happens to you, you'll know it's true." Old Proverb A financial expert witness experienced in the due diligence process and in complex business negotiations can help unlock the valuation issues at the core of many business disputes. Merger and acquisition-related lawsuits can become an exercise in piecing together both the timing and materiality of various communications by representatives from both parties. Analysis of the specific due diligence activities undertaken and the data exchanged can yield key answers. With a full understanding of the processes and communications developed in due diligence and underwriting, business disputes can be more readily resolved.