Asset discovery is a vital litigation support tool, providing attorneys and their clients with information on an individual’s or company’s assets. This information may be necessary for various forms of litigation, including:
- Fraud investigations
- Marriage or business dissolution
- Regulatory or compliance cases
- Bankruptcy proceedings
In addition to the above, asset discovery services are vital for major transactions like mergers and acquisitions (M&As), where it is used to perform due diligence. Asset discovery techniques are also helpful after a judgement is made, as they can uncover assets used to satisfy the terms of the judgement.
What Do Asset Discovery Services Include?
Forensic accounting experts are also asset discovery experts, using techniques like public records searches and financial data analysis to determine asset ownership. Specifically, your asset discovery team can support your case by utilizing the following methods:
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- Public and private database searches – Asset discovery professionals have access to an array of public and private databases that can provide insight into asset ownership. This includes land use and real estate records, which are typically maintained in county-level databases – many of which are online. Through real estate databases, asset discovery teams can uncover mortgages, deed or property transfers that may indicate current ownership.
Other databases can be used to pull business registrations or financial statements through the Universal Commercial Code (UCC) to identify ownership interests.
Local, state and federal court records (available through PACER or county clerks) are also valuable for asset discovery purposes, as they can be used to find existing legal judgments or liens against the target individual or entity.
- Financial data analysis – Forensic accounting experts can review any financial reports attained through consent or subpoena. During a review of the target’s financials, forensic accountants can flag any suspicious activity that may suggest hidden bank accounts. Repeated small transfers, deposits or withdrawals may indicate attempts to avoid detection. Forensic accountants can also trace cash flows to identify where hidden funds may be going – often to a trust, shell entity or non-existent vendor.
- Business ownership mapping – Hidden business interests are a type of hidden asset, and your investigation team can determine if the target has a concealed ownership interest in a company. To do so, investigators attempt to map the company’s ownership structure, using corporate documentation like its articles of incorporation or shareholder ledgers. Public filings can also be scanned to determine if there’s a trust affiliated with the entity and used to hide assets.
- Site inspections – Onsite inspections are a potential asset discovery tool and can be strategically deployed to uncover any hidden assets stored at a facility. This could be hidden equipment, hidden vehicles or anything the target is attempting to conceal. Common inspection targets are warehouses and undeveloped real estate that’s tied to the target. Your investigation team may interview onsite personnel or the target individual to build evidence for litigation support purposes.
- Digital forensics – Asset discovery teams typically have a digital forensic expert on staff (or are partnered with someone who can provide this skill). Digital forensics professionals can recover metadata from computers, smartphones and other devices – and this metadata can be analyzed for red-flag keywords (“trust,” for example) and to uncover hidden communications with other relevant parties.
- Public and private database searches – Asset discovery professionals have access to an array of public and private databases that can provide insight into asset ownership. This includes land use and real estate records, which are typically maintained in county-level databases – many of which are online. Through real estate databases, asset discovery teams can uncover mortgages, deed or property transfers that may indicate current ownership.
Asset discovery requires a diverse mix of skills, including investigation, accounting, data analysis and cybersecurity capacities. As such, your case will likely be handled by a full team of forensic accounting and investigation professionals.
What Types of Litigation Support Can Asset Discovery Services Provide?
Asset discovery services can support many forms of litigation, including:
- Fraud investigations – During a fraud investigation, asset discovery teams are focused on uncovering assets concealed to avoid liability or to avoid scrutiny from creditors. Criminal investigators may partner with forensic accounting teams to support a fraud case and to potentially uncover additional criminal activity.
- Marriage or business dissolutions – Asset discovery services may also be needed when multiple parties are looking to fairly distribute assets – like during a divorce or when liquidating a business. The goal is to identify assets that have been concealed from the process.
- Compliance or regulatory investigations – Asset discovery services can be used to support criminal litigation against a business entity, such as for tax evasion or money laundering cases.
- Bankruptcy proceedings – Interested creditors may also employ asset discovery services to identify assets that have been hidden during a bankruptcy case. If such assets are found, they may be incorporated into a bankruptcy case to pay back those creditors.
- Due diligence – Before an M&A or other major transaction, a company may bring in forensic accountants to verify the other party’s asset base and to verify that no off-sheet assets are present, which may complicate a deal.
- Fraud investigations – During a fraud investigation, asset discovery teams are focused on uncovering assets concealed to avoid liability or to avoid scrutiny from creditors. Criminal investigators may partner with forensic accounting teams to support a fraud case and to potentially uncover additional criminal activity.
Essentially, if your case involves a financial judgment, a high-impact transaction or potential fraud, asset discovery is a necessary litigation support tool.
Build a Better Case with Expert Asset Discovery Services
Information is power when pursuing litigation, and asset discovery techniques provide legal teams with up-to-date information about their target. Specifically, what that target owns, either an individual or organization. With a clear asset ownership profile in place, criminal investigation teams can pursue fraudsters, creditors can investigate a target during bankruptcy proceedings, and clients can protect their interests when dissolving a marriage or business.
Asset discovery is a complex, multi-faceted process that requires a diverse range of skills. For most cases, you’ll need a full team to perform a thorough asset discovery search, such as a team of investigation and forensic accounting experts.
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