Forensic Accounting anyone?

[Jesse Kreun]

Does anyone have any experience with Forensic Accounting or had to do it on a property? I, unfortunately, need to go back in time to see if a property manager I was using was stealing from me or doing anything shady.  Is this something that any accountant can do? Or a specialist of some sort?

[Christian Rojmar]

@Jesse Kreun Sorry to hear. The company I work with specialize in determining damages in intellectual property litigation but we have done some forensic accounting work as well (never related to an investment property however) and there are certainly people/companies that specialize in forensic work. I would need more information from you to be able to give a more detailed picture but on a high level:

If you have statements going back in time from your property manager, as well as your own bank statements, vacancy periods, etc. a first step may be to go through that data yourself to get a big picture idea of whether something odd is going on and at what level. If you find discrepancies, you may want to call the property manager and explain the situation and ask him/her to provide statements/information surrounding the discrepancies and that you will get a lawyer if not.

If property manager refuses to provide such documentation, the next step may be to hire the attorney and go through the court system to get discovery from the property manager. Also note that there is a good chance that the property manager may have destroyed or "do not have" the relevant documentation anymore depending on how far back you believe these activities has been going on for which will complicate the process.

Hiring a lawyer will be expensive and especially if it goes through the arbitration process. And if you do not feel comfortable and confident going through all the data yourself to determine the damages due to the wrongful acts of the property manager as well as testifying in front of an arbitrator as to the appropriate damages, you will need to hire an expert whether it is a CPA, forensic accountant, or a more general damages expert. The cost of hiring an expert can add up quickly depending on the amount of discovery. If you know any CPA's, they could likely do the work for you because it is pretty simple and straightforward work - problem is that it can be very time consuming. The benefit of hiring an expert is that the credentials can be helpful in arbitration.

If the property manager works for a management company, going through BBB can be one approach as well even though BBB is so and so in my opinion.

Maybe also a small courts claim to avoid litigation expenses depending on amount that may have been stolen from you.

PM me if you have any particular questions or would like to discuss in more detail.