Identified $2.7M in Misappropriated Funds Through Deep Financial Analysis for a Law Firm

A Joint Venture (JV) partnership, consisting of a large national firm operating as the 90% equity partner, noticed declining distributions despite high occupancy, consistent expenses, and low delinquencies. 

First step was understanding the JV agreement and the rights of each partner.  The JV agreement allowed the equity partner to gain access to the financial records of the property. We reviewed the financial records from the inception of the JV to fully understand the history of the profits and losses.  We determined that “following the cash” was the best approach to understand the flow of funds within the JV.  During the review of the bank statements, we noted several wire transfers to unrelated bank accounts.  It was determined that these bank accounts were for properties owned by the operating partner and another party.  Through additional investigation, we found that the wire transfers were paying the mortgage debt for unrelated properties. The JV agreement prohibited transferring funds to bank accounts outside the JV. We also questioned several “miscellaneous expenses” on the statement of operations, and it was determined that the operating partner was purchasing personal luxury items.  

Our team uncovered misappropriated funds totaling more than $2.7 million. Our analysis was used by the law firm in court proceedings resulting in the 100% transfer of ownership to the equity partner.