Investigating Valuation Economic Work
We perform investigations for civil or criminal valuation economics issues and confidential individual and corporate decision making needs. Whether it is the improper use of appraisals, Ponzi schemes, governmental mismanagement of resources, fraud, professional incompetence, tunneling down for information, or market information we have significant experience in fact finding - quietly when necessary. We have also taught forensic investigative classes for the FBI and its FBI Academy. Some of our specialties in this field include:
Forensic Investigations: One of the principle applications in the practice of valuation economics is forensic investigations of the work of others. Some examples of work we have performed include:
- In a multi-billion dollar class action lawsuit against a corporation, the statistical modeling an opposing expert used to calculate damages was questioned. The expert's files obtained through discovery were so ambiguous that his models could not be understood and deciphered. Through research and reverse-engineering of his files we determined that the numerical variable the expert used mysteriously marked as "SD" in his notes, in fact, represented a property's school district number. The implication of this was that a property in School District 2, was worth 100% more than a property in School District 1; a property in School District 10 was worth 500% more than School District 2, etc. These findings were used as part of a successful Daubert challenge and the witness was disqualified from testifying.
- In less than three week's time, managing a large team of people, we successfully reassembled the deliberately disorganized and partially destroyed records of over 400 boxes of trial evidence. They contained hundred of appraisals, sales contracts, notes, falsified documents and other materials that were evidence of the largest Ponzi scheme in Arizona history. During the three week window, we analyzed the files, quantified the evidence shown to be fraudulent, and provided a basis to demonstrate improper auditing had occurred. These findings were used as the basis for a nine-figure settlement of the case against the auditor.
- We were asked whether the appraisals a major federal agency acquired and/or procured relied upon met its own legal and regulatory requirements. We found that they did not and the agency was restructured. We have examined tens of thousands of appraisals for the federal government in investigating its transactions, actions, and review procedures.
- Quantity does not always reflect quality, but volumes of information are often offered as proof when in fact their content demonstrates otherwise. We are frequently asked to examine valuation or other economics reports to ascertain their factual basis, whether than basis meets the scope of the issues involved, whether generally accepted and professionally proper methods and techniques have been applied. These investigations often involve issues of national importance. Often our work is never disclosed but used for the specific decision purposes of our clients.
Fraud: When is something incompetent and when is it fraudulent? We have seen many appraisals and other economic studies which were commissioned with knowledge that the result would be self-serving rather than accurate. If one offers such reports in business or legal matters when the offeror knows is incompetent, to what degree is that individual committing fraud? Can such representations be simply dismissed with the characterization of the report as being incompetent? With our extensive experience working on issues where these question lie at the core, let us help you make that determination. Significant business and litigation decisions involving expert opinions often merit a professional look-see from an independent expert to detect fraud.
Damage Calculations: The process for establishing a damages calculation in litigation or condemnation is an established and clear process, but many professionals and lawyers do not fully understand their bases or calculation processes. Through examinations of an expert's application of damages/valuation/economic theory, use of survey techniques, use of statistical techniques, improprieties in the data being used, or faulty assumptions in their analysis, among many other issues, we have investigated thousands of damage calculations. We've seen a surprisingly high error rate.
Something to Understand About Appraisal Reviews: The forensic investigative work we perform as valuation economists has some overlap with the appraisal review process, but the two should not be confused. An appraisal review for the most part is a second opinion by an equally qualified appraiser as to whether the value opined to is properly supported for its intended use. Unfortunately, for complex decision making an appraisal review frequently provides less than the full picture. By contrast, a forensic examination of an appraisal or economic report begins with a close look at its foundations, examines how its research was performed, analyzes the data processes and their analytical results, checks the framework of the decision to be made to determine the relevance and reliability of the report, and determines whether all necessary questions have been properly addressed. It is only then that one can judge the "accuracy" of any value number, but recognition of market complexities should make it clear that the number is only valid (perhaps) in the context of what is presented in the report. Appraising is a subset of valuation economics in the same way that Emergency Medical Technician (EMT) training is a subset of general medical practice training. Both share a common body of knowledge, but an EMT and an MD should not be thought of as the same. Our role is to aid in forensic investigations and to provide counsel regarding the results.