Uncovering financial fraud, asset misrepresentation to secure a 10-figure settlement for company purchaser.
Our Client's Challenge
Our client came to us in the midst of a full-blown business nightmare. He had paid $25 million to acquire the controlling interest in a company and its related businesses that manufactured and rented mobile storage units. He also invested additional capital to expand the company’s retail network and manufacturing abilities. On paper, this looked like a solid investment, with the disclosure documents from the selling shareholders indicating significant growth and substantial inventory.
Within months, however, our client became concerned the companies he’d acquired were not in as good a position as he’d been led to believe. His suspicions turned into alarm when the company’s founder, who had retained a minority interest and stayed on as president and CEO, went missing.
Within days of the founder’s disappearance, we met with our client and the employees of the companies he had acquired. While the full extent of the fraud was not yet known, there was more than enough to support filing a federal securities fraud claim against the founder and the other selling shareholders, including a small publicly traded insurance company, as well as the companies’ former auditor.
To make our case we had to painstakingly reconstruct the corporate business records — which were in a shambles and we also could not rely on them being accurate. Our team spent countless hours along with the company’s new CFO sifting through hundreds of boxes stored in a warehouse. We mined custom databases used to track rental units, found former employees and subpoenaed records from banks and suppliers.
Ultimately, we proved that much of the companies’ assets as represented in audited financial statements were fraudulent and never existed.
The case settled at the courthouse. Lightfoot’s willingness and ability to take the case to trial – after more than two years of hard work – resulted in a $1 billion+ settlement.