Why the client needed our help
During one of its routine audits, our client became aware that a number of debts had been notified to it by its client pursuant to the terms of a debt purchase agreement that did not represent bona fide (i.e. genuine) transactions.
In particular, and in an effort to conceal the fraud, the financier’s client had purchased the domain and web accounts for a number of companies which purported to be from the debtor.
The financier’s client then generated numerous emails and documents which purported to come from its debtor both verifying the receipt of the goods and the validity and apparent veracity of the associated invoice. The financier’s client then forwarded those “communications” to the financier to support the contention that the underlying contractual obligations had been performed and that the debts notified to the asset based lender were genuine. Having relied upon the representations made and the written communications offered in support, the asset based lender approved a number of significant prepayments to its client in accordance with the terms of the debt purchase agreement.
How we helped
We undertook a rigorous investigation of the written communications provided and immediately contacted the relevant debtors to either verify the information given or obtain sufficient evidence to support a claim [against both the asset based lender’s client and the key stakeholders involved in both the notification of the fictitious debts and the subsequent manipulation of the month end reconciliations provided to the financier to conceal the existence of and extent of the fraud.
Our extensive experience of dealing with fraud and recovery scenarios for various financial and commercial clients meant we were able to quickly identify the inconsistencies and irregularities in the written communications provided to the financier and establish both how the fraud had been perpetrated and then subsequently concealed. In addition, we were able to identify all key individuals involved in the commission and concealment of the fraud and prepare evidence bundles relating to each. We arranged and attended meetings with the directors and shareholders of our clients’ client whereupon we set out the evidence we had obtained. By identifying the relevant actions of each individual we were able to provide proof of their knowledge of and complicity in the fraud perpetrated against the asset based lender.
We were able to take swift and decisive action to recover substantial payments on account of the outstanding balance owed to our client and immediately take security to secure the balance of the account owed. We successfully negotiated a settlement with the relevant individuals which allowed them to re-finance certain third party assets and discharge the entire balance owed to the asset based lender (inclusive of all professional costs and certain contractual costs and charges that they were entitled to in accordance with the terms of the debt purchase agreement). Due to the speed with which we managed to obtain the relevant evidence we were able to prevent our client from making any further prepayments, prevent their client and / or its directors and shareholders from disposing of their assets, prevent any supporting documentation being destroyed and by working alongside appropriate professionals (IT data recovery and retrieval specialists) to ensure the integrity of the electronic data relied upon.