Money BagSadly, Ryan and Zach agreed that their venture was well on its way to that proverbial ditch, where far too many small businesses land, deep in the mud of financial ruin. No matter how he tried, Ryan couldn’t pinpoint where they went wrong. He had been managing the expenses and cutting costs. He had an idea of the money coming in, too.

In the last year, Ryan had brought big clients which became huge money makers for the business. He expected to see relief. But Zach, who was in charge of all the bookkeeping, only shrugged and explained that Ryan’s efforts were too late. Nothing could be done. According to Zach, he and his buddy were losing money every day the doors were open.

At his wife’s insistence, Ryan asked to see the books. Sure enough, just as Zach explained so many times before, the proof was in print. Their business was officially in a nose dive. Cash flow was a mess, that’s why vendor payments were late. They could barely pay the building lease.

Zach then told Ryan that they would likely lose all the cash they’d invested in the business. Ryan tried to explain the situation to his wife Kate and confirmed that he had actually seen the books. When Kate insinuated that perhaps Zach was dishonest, Ryan got angry. After all, Zach was a long time friend.

But Kate stood her ground. She insisted that she knew something wasn’t right. This time, Kate started crying and begged her husband to investigate further. She reminded him that if he passively walked away, it would take years to rebuild their nest egg that Ryan had invested in the business.

More to appease Kate than anything else, Ryan contacted . He brought in his records about money coming in from clients and the expenses of the business. After looking at the records Ryan had and hearing the situation, several options were discussed:

  • Have a forensic accountant review the books including accounts payable, accounts receivable, expenses and payments made.
  • Install surveillance equipment, specifically cameras, to uncover any inventory theft.
  • Complete computer digital forensics on computers in the office, specifically those used by anyone in the accounting or finance areas.
  • Complete a personal asset search and a business asset search on every person who had opportunity to misdirect funds, write checks or make accounting adjustments.

With the budget already in a tailspin, Ryan knew he couldn’t afford to do it all, so he requested a personal asset search for Zach and the office manager, Barb, who wrote checks for the business.

It wasn’t too long before the data base research was able to locate off shore accounts in Zach’s name. By investigating Zach’s business email, we found monthly deposits, made online to those particular banks. When this information was presented to Ryan, he responded by dropping off the computer Zach used in the office for a complete computer forensic investigation. Forensic data recovery was able to find hidden files which the computer forensic analyst identified as a second set of books for the business – at least the part of it that Zach was skimming for himself.

As Kate suspected, her husband’s partner was stealing money from the business, hiding it across the ocean and explaining the loss as failure of the business. uncover the facts so decisions can be based on the truth – even when the truth isn’t something you want to hear.

-Brenda McGinley, CEO, All in Investigations, All in Investigations