Alternative Workouts Part 5: Forensic Accounting and Financials
For a business or ownership entity in distress, there are often many possible paths forward. Some seek Chapter 11 bankruptcy as an option to restructure and reorganize debt. Sometimes there is a court-appointed Receiver who acts as an independent third party to manage the situation and recover value for creditors.
There are many other mechanisms, as well, outlined in parts 1 through 4 of this Alternative Workouts series. In Part 1, Douglas Wilson Companies presented some recent case studies highlighting the Assignment for the Benefit of Creditors, including the recent wind down of national online retailer Zulily. Part 2 examined cases of operating company liquidation and Part 3 gave an overview of several specialized roles DWC holds, such as Accountant for the Trustee, Forensic Accountant and Special Master. In Part 4, DWC highlighted recent work as a Chief Restructuring Officer.
Part 4 of this series delves into some of the scenarios when financial advisory or forensic accounting teams are needed. Sometimes this comes into play during cases of fraud, such as Ponzi schemes investigated by federal agencies. In other instances, the entity in distress is simply in need of finance and accounting expertise to shore up books as part of the path forward.
Forensic Accounting Needs
While most workout scenarios do not require forensic accounting expertise, some do. DWC’s experience in serving as Receiver on cases brought by federal agencies like the U.S. Securities and Exchance Commission has required our team, including two CPAs with experience in forensic accounting, to review tens of thousands of transactions — sometimes involving cryptocurrency transactions — in order to recover funds for fraud victims.
In DWC’s most recent case involving forensic accounting work, company President Michele Vives was named Receiver in a $690-million Ponzi scheme that defrauded investors based on fabricated movie deals. The receivership commenced upon the request of the SEC in 2022.
Under the scheme, conducted by its perpetrator from 2014 to 2019, the entity 1inMM Productions used funds invested in the interest of movie deals to fund its founder’s lavish lifestyle.
The receivership involved continuing to oversee the legitimate business operations of the production company, while delving into the many fraudulent transactions that were made under the scheme. Tasked with recovering damages for the fraud’s victims, the DWC team, including its two in-house CPAs, conducted a full analysis of transactions with five principal aggregators and other professional services firms. This included reviewing more than 24,000 transactions and reviewing nearly 3,000 bank statements.
“Forensic accounting work requires a specific skill set, in that the primary goal is to uncover accounting irregularities and anomalies,” Vives says. “DWC’s team is very strong in this type of work, in addition to traditional accounting that supports assignments of all kinds.”
As Agent for Receiver, DWC recently completed the claims process under the assignment, having reached numerous settlements to make investors whole.
General Accounting and Financial Management
In another ongoing assignment, DWC is tasked with the turnaround of a Washington, D.C. multifamily complex, having been named Receiver in March 2025.
Located in a vibrant neighborhood, the Highland Park property spans 373 units of residential and mixed-use spaces, restaurants and a convenience store. With little documentation on operations, however, the assignment was made challenging from a management perspective.
DWC has since worked to create an accounting structure including documentation of rent collection and all other financial operations, that will support the asset going forward.
“We have acted in this capacity in a number of instances where we need to place financial controls as Receiver, but we don’t have good information available,” says DWC Managing Director Michael Wilson, who has worked extensively on the assignment. “In this case, there was information missing and information that wasn’t accurate, which we corrected. While not a traditional accounting assignment, in many real estate scenarios we are tasked with this type of analysis and financial work in the interest of turning the property around for its future.”
Every assignment is distinct, whether it requires specific accounting expertise or general financial management, but in most instances placing financial controls is a critical part of an asset’s recovery.
“Our team’s experience based on serving as a fiduciary in well over 1,200 matters is unmatched,” says DWC Chairman and CEO Douglas Wilson. “In cases large and small, we are prepared to offer forensic accounting and general accounting services in recovery and turnaround efforts of all kinds.”
