Stout was retained by a biotechnology company to conduct an internal investigation into allegations of theft and fraud by the former COO, including diverting investor funds for personal use. We analyzed the company’s accounting records, payroll records, and corporate and personal bank statements to identify instances of asset misappropriation, including unauthorized direct payments made to the CFO, unauthorized payments to a company controlled by the CFO, unauthorized expense reimbursements, and unauthorized cash withdrawals from ATMs using the company debit card. Stout also identified various accounting and payroll entries used to facilitate the misappropriation through the manipulation of the timing and amount of payments, including payments made to other employees at the company that were facilitated by the CFO to mask the overpayments to the CFO.
Stout presented its findings to the Securities and Exchange Commission (SEC), and the company was able to use the findings to pursue restitution from the CFO, and restore proper payroll accounting processes and internal controls. Stout's analysis led to an SEC enforcement action as well as wire fraud and securities fraud charges by the Department of Justice.