======== Arxis Financial, Inc. ======== ======== Litigation Consulting Update ======== ======== Forensic Accounting - Fraud - Business Valuation ======== ================================================================== Check it on the web for best possible design. https://arxisfinancial.com/category/newsletteremail/ ================================================================== May 2025 ------------------------------------------------------------------ Recent Case: Fraud Examination with Disappointing Results Summary: A volunteer in a charity organization noticed unusual relationships and transactions and decided to investigate. What he found was fraud - funds diverted by a staff member to friends. Background: A religious, charitable organization was very active in matching available funds with specific needs of families. They did not hand out cash. Instead, they paid directly for groceries, car repairs, home repairs, etc. Detailed files were maintained for each of the "clients" providing information on dates of meetings, services needed, services provided, and vendor payment information. A dedicated volunteer noticed that some of the files were not being updated. In other cases, the relationship and payments were not documented at all. The reason given was that everyone was overworked, and they were more intent on meeting the mission of the organization than "filling out paperwork." The volunteer, with the approval of the Board of Directors, began working on reconstructing data for the client files. It became obvious to the volunteer that payments were being made to one specific vendor on a regular basis when no services were being provided. At this point, the project went from cleaning up paperwork to investigating fraud. The oversight board ignored warnings about what was discovered. They eventually ordered the volunteer to stop all work and to not discuss his "opinions" publicly. However, with the approval of one board member, the volunteer took the information he had gathered to local law enforcement. Prosecutors determined that there was good reason to look further but encouraged the volunteer to contact Arxis to help put together a well-documented case that they could prosecute. Arxis Work: Thousands of pages of documentation were provided for review. The records provided were inconsistent and incomplete. This was due to limited information available to the volunteer without access to all relevant data. Work was done to complete an analysis of a single client from commencement of the relationship through payments of a vendor to establish expectations of process and documentation. Even this step was impossible. Without the ability to benchmark, it became nearly impossible to prove unusual or unauthorized transactions. Analysis was done to determine the documents that would be needed to complete the investigation. In meeting with the volunteer, it became apparent that without the approval of the oversight board or key members of management the documents could not be obtained without the weight and reach of law enforcement. Since law enforcement already referred the matter out for documenting the case and providing evidence, it was obvious they were not able or willing to pursue that step. Result: In a case where there was significant evidence of malfeasance, there was the inability to document it sufficiently to prove the legal elements of the crime to a trier of fact. This case highlighted two common hurdles to prosecuting fraud. First, it is not always possible to gather evidence sufficient to meet the standards required to pursue a conviction. Second, in an organization where there is a culture that tolerates or encourages fraud, it is difficult, if not impossible, for one or two people to identify and eradicate fraud. There is enormous pressure on nonprofit organizations to never publicly admit financial malfeasance. Therefore, in these situations, there is little motivation to pursue the matter when malfeasance is found. ------------------------------------------------------------------ Service Profile: Forensic Accounting Servicesfor Unfair Business Practices Unfair business and trade practices involve a wide range of matters, such as business conspiracy, breach of fiduciary duty, misappropriation of trade secrets and other proprietary information, fraud, tortious interference with contracts, misrepresentation, and other oppressive or unconscionable acts or practices. Through an examination of financial records, a forensic accountant plays a vital role in uncovering facts that can support of repudiate an unfair business practice claim. Forensic accountants are uniquely qualified for this role because of their knowledge and experience in financial document analysis, accounting principles and auditing techniques. Arxis Financial offers litigators exceptional forensic accounting support. With thousands of clients served over the decades, we have developed a depth of expertise in working with businesses of all sizes from many industries. This experience carries over significantly to our "Forensic Accounting" practice. Our services include reconstruction of accounting records, analysis of business transactions, document review and tracing, and expert witness testimony. Arxis Financial's professionals apply detailed investigation and analysis that is necessary to uncover essential facts and provide meaningful insights. We assist attorneys in interpreting the data, and help counsel to understand and analyze events or issues. Expert analysis and conclusions are presented in depositions and trial at local, state and federal court levels as well as mediation and arbitration. This level of support can be a key asset in determining a legal strategy as well as reaching a reasonable and efficient conclusion. ------------------------------------------------------------------ Speeches: Upcoming Speaking Engagements for Chris Hamilton Chris Hamilton's recent and upcoming presentations include: "Fraud, Morality, and the Law " Reagan Presidential Library (May 2025) If you are interested in asking Mr. Hamilton to speak at your organization's upcoming meeting, please feel free to contact him. ------------------------------------------------------------------ Contact: ------------------------------------------------------------------ Arxis Financial Certified Public Accountants 2468 Tapo Canyon Road Simi Valley, CA 93063 Ph: (805) 342-0749 Fx: (805) 306-7891 Chris Hamilton, CPA CFE, CVA chamilton@arxisgroup.com http://arxisfinancial.com Clients know us for results. Opposing counsel know Arxis for wishing they had hired us. ------------------------------------------------------------------ Unsubscribe: ------------------------------------------------------------------ This newsletter was sent to #email#. Arxis Financial respects your time and your privacy. If you no longer want to receive e-mails such as this one, please click here: http://newsletter.arxisfinancial.com/Unsubscribe.cfm?Email=#email# Note: Please do not respond to this E-Mail. The reply to E-Mail address is not a monitored account. ================================================================== Copyright 2025 Arxis Financial, Inc. Articles may not be reprinted without permission. ==================================================================