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Highlights From the 2022 NYSSCPA BVLS Conference

Money laundering, earnouts, valuing debt, and SPAC enforcement are a few of the topics presented at the Business Valuation and Litigation Services (BVLS) conference hosted by the New York State Society of CPAs. Here are some key takeaways.

BV News and Trends May 2022

A monthly roundup of key developments of interest to business valuation experts.

The Long Arm of the Bankruptcy Court: Valuation in Fraudulent Transfer Matters

When a company files for bankruptcy, the first analysis is to determine what the company has and what the company owes as of the filing date. Next is a thorough analysis of what had been paid out of the company before the filing date to determine whether such payments can be clawed back into the estate for the benefit of creditors. Payments made within 90 days of the filing may automatically be considered preferential. Beyond ...

The first thing to look at in a strip club

When valuing an adult entertainment venue or nightclub, one of the most important things to examine is the point-of-sale (POS) system.

Business Valuation Case Law Yearbook, 2022 Edition

January 2022 PDF, Softcover (177 pages)

BVR (editor)

Business Valuation Resources, LLC

The legal coverage and in-depth analysis from the BVR legal team deliver lessons learned to help appraisers reach better and more defensible valuation conclusions. All the cases featured in this book impart important lessons about applicable legal principles, approved and discredited valuation methodology, and the act (and art) of presenting expert opinions. This must-have collection benefits both the generalist as well as the specialist.

Learn more >>

Global BV News and Trends December 2021

Business valuation news from a global perspective.

Appellate court KOs unaccrued interest on dissipated assets

In a divorce case, an appellate court vacated the order of the trial court that erroneously charged the husband with over $4 million in unaccrued interest on marital assets that the husband fraudulently dissipated from the marital estate.

Global BV News: Most large firms suffer major impact from illicit activity

Kroll’s Global Fraud and Risk Report reveals that 57% of respondents at companies with a turnover of more than $15 billion reported a very significant impact of illicit activity, such as fraud, corruption, and money laundering, on their organization, with a further quarter (25%) describing the impact as somewhat significant.

Paganelli v. Lovelace

This case resulted in the court issuing a partial summary judgment in favor of the defendant (and counterclaimant) in a matter regarding a sale/purchase contract between the plaintiff and the defendant. The cross-allegations resulted from the defendant allegedly breaching the purchase contract, while the defendant alleged that the plaintiff first breached the contract and committed fraud in entering into the contract.

Court Issues Partial Summary Judgment in Favor of Party Alleging Breach of Contract

This case resulted in the court issuing a partial summary judgment in favor of the defendant (and counterclaimant) in a matter regarding a sale/purchase contract between the plaintiff and the defendant. The cross-allegations resulted from the defendant allegedly breaching the purchase contract, while the defendant alleged that the plaintiff first breached the contract and committed fraud in entering into the contract.

Mohen v. Mohen

In the trial court (TC), the wife was awarded $4,360,158 of mostly unaccrued interest on the corpus of trusts the husband set up unilaterally for the children. The TC took the value of those trusts, $9,291,372, as part of the marital estate. The TC also added $990,945 of interest that the trusts had received and the remaining unaccrued future interest for a total value of “distribution” paid to the husband of $14,642,475 related to the trusts. The appellate court (AC) determined that the future interest was future interest and, thus, not part of the marital estate. However, the AC let stand the determination that the value of the trusts were to be treated as a distribution to the husband.

Husband Dissipates Assets by Placing Them in Trusts for the Children, but the Appellate Court Does Not Allow Unaccrued Interest

In the trial court (TC), the wife was awarded $4,360,158 of mostly unaccrued interest on the corpus of trusts the husband set up unilaterally for the children. The TC took the value of those trusts, $9,291,372, as part of the marital estate. The TC also added $990,945 of interest that the trusts had received and the remaining unaccrued future interest for a total value of “distribution” paid to the husband of $14,642,475 related to the trusts. The appellate court (AC) determined that the future interest was future interest and, thus, not part of the marital estate. However, the AC let stand the determination that the value of the trusts were to be treated as a distribution to the husband.

New case to address goodwill impairment dispute

Goodwill impairment does not appear often in litigation, but a court case in Tennessee will go forward after a judge ruled not to dismiss the plaintiff’s claims.

Five Areas to Explore If You Suspect a Spouse Is Hiding Crypto Assets in a Marital Dispute

In BVR’s recent webinar, Cryptocurrency Fraud and Forensics: What Valuation Professionals Need to Know, forensic and cryptocurrency experts Katerina Gaebel and Mark DiMichael, both of Citrin Cooperman, covered various hot topics on fraud and forensic accounting issues in digital assets and how they affect the business valuation profession. Here, we summarize five key areas where one would find proof of crypto asset fraud in a marital dispute, including interviews, tax returns, bank accounts, credit card statements, and more.

Strougo v. Tivity Health, Inc.

In this case regarding alleged fraud in the purchase or sale of securities, the defendants pled a motion to dismiss the plaintiffs’ claims. The parties categorized the defendants’ alleged misstatements into two groups: (1) the Nutrisystem claim, where the defendants allegedly misled investors as to the success of the Nutrisystem acquisition; and (2) the goodwill claim, where the defendants allegedly impaired goodwill by carrying goodwill at a value that exceeded its implied fair value. The court denied the motion to dismiss.

Court Denies a Motion to Dismiss Plaintiffs’ Claims That Defendants “Hid” Losses and Impaired Goodwill

In this case regarding alleged fraud in the purchase or sale of securities, the defendants pled a motion to dismiss the plaintiffs’ claims. The parties categorized the defendants’ alleged misstatements into two groups: (1) the Nutrisystem claim, where the defendants allegedly misled investors as to the success of the Nutrisystem acquisition; and (2) the goodwill claim, where the defendants allegedly impaired goodwill by carrying goodwill at a value that exceeded its implied fair value. The court denied the motion to dismiss.

Cryptocurrency Fraud & Forensics: What Valuation Professionals Need to Know

Cryptocurrency has more recently achieved a level of mainstream appeal as an investment vehicle, regardless of its limited current application in retail transactions. As cryptocurrency usage increases, more individuals will use this new asset class as a means of committing fraud or hiding assets from creditors or ex-spouses. Join Mark DiMichael and Katerina Gaebel for an introduction to cryptocurrency, how it works, and the current regulatory environment. Experts and consultants should know the types of ...

Bitcoin & Digital Assets: The Industry, Valuation, and Forensics

Every day, bitcoin and digital assets seem to become more mainstream for both businesses and investors. Over time, valuation and forensic professionals are bound to encounter clients with digital asset holdings, and they will need to face the unique challenges they create. Experts Mark DiMichael and Jennifer Cohen will provide valuation and forensic accounting professionals with the information they need to help their clients deal with this complex asset class.

Court Rejects Creditor’s Objection to Discharge Based on Debtor’s Alleged Concealment of Client List From Accounting Business Client

In this bankruptcy case, the court found there was no support for a creditor’s objection to discharge, where the creditor had sold her accounting business to the debtor and later claimed the debtor had concealed the existence and value of the business’s client list allegedly with the intent to defraud the creditor or the bankruptcy trustee.

In re Baker

In this bankruptcy case, the court found there was no support for a creditor’s objection to discharge, where the creditor had sold her accounting business to the debtor and later claimed the debtor had concealed the existence and value of the business’s client list allegedly with the intent to defraud the creditor or the bankruptcy trustee.

Pandemic, ESOP Woes, Fair Value, Crypto, and Fraud at NYSSCPA Conference

The 2020 conference season is underway, and Business Valuation Update was on the scene—virtually, of course—for the New York State Society of CPAs Business Valuation/Litigation Services Conference webcast live from New York City May 18.

Accounting fraud causes Berkshire Hathaway subsidiary to overpay for sinking German manufacturer

Financial experts were unable to prevent a Berkshire Hathaway subsidiary, Precision Castparts Corp. (PCC), from acquiring a German family business for five times as much as the collapsing company was worth, recent articles in the New York Times and the German newspaper Handelsblatt report.

Court Agrees Market Approach Generates Most Accurate Value of Plaintiff’s Interest

In business dispute alleging breach and fraud, court adopts plaintiff expert’s methodology to value contested interest by way of the market approach; court notes expert well explained why the income approach was not available and the asset approach was too limited to provide an accurate valuation.

Edelson v. Cheung

In business dispute alleging breach and fraud, court adopts plaintiff expert’s methodology to value contested interest by way of the market approach; court notes expert well explained why the income approach was not available and the asset approach was too limited to provide an accurate valuation.

Failure to Do Independent Price Impact Analysis Begets Class Certification

Court certifies securities fraud class action where plaintiff expert’s analysis shows market efficiency and where defense expert fails to perform independent event study to show lack of price impact and disprove effect of alleged misrepresentations.

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