The Role of Forensic Accountants in Real Estate Litigation by Scott Bouchner, CMA, CVA, CFE, CIRA, and Fernando R. Diaz, MBA
Posted on December 11, 2024
by
Scott Bouchner
Real estate litigation involving disputes over financial mismanagement, theft and fraud require detailed analysis of financial records using various techniques, tools, and computer software to uncover the facts and assist in a resolution. These reports and the expert testimony of forensic accountants are critical to helping attorneys build their cases.
Financial malfeasance and fraud can occur at various stages of the real estate cycle, from construction to acquisitions to closing and property rentals. Common examples of illicit activity in the real estate sector can include funds misappropriation, falsification of valuations and financial statements, property flipping scams, money laundering and mortgage, financing and title fraud. It is the role of the forensic accountant to sort through multiple layers of complex financial data to identify these schemes and provide comprehensive narratives of expert witness testimony that is critical to support claimants’ legal arguments.
Forensic investigations in real estate disputes involve meticulous analysis of financial records, including tax returns, real estate transaction documents, expenses and invoices, to identify patterns, inconsistencies and discrepancies that may signal a lack of financial integrity in property dealings. By scrutinizing cash flows, bank statements and lease agreements, forensic accountants may unearth red flags that might indicate fraud or embezzlement. This may include examples of inflated expenses, irregular transactions and drastic declines in revenues that can support or refute legal theories.
These specially trained professionals may also use this information to valuate real estate interests between multiple parties and support accurate assessments of ownership percentages, which can be critical in disputes between developers and builders and for family law property settlement purposes.
One of the most significant contributions of forensic accountants in real estate disputes is the preparation of detailed reports and the presentation of expert witness testimony. Their ability to translate complex financial data into comprehensible language gives the court a clear financial narrative supporting legal arguments. These services further help to ensure property matters are grounded in financial transparency, accuracy and integrity. Consequently, their findings and valuations carry substantial weight in court proceedings.
About the Authors: Scott Bouchner, CMA, CVA, CFE, CIRA, is director-in-charge of Forensic and Advisory Services with Berkowitz Pollack Brant CPAs + Advisors, where he serves as a litigation consultant, expert witness, court-appointed expert and forensic investigator on several high-profile cases. Fernando R. Diaz, MBA, is an associate with Berkowitz Pollack Brant’s Forensic Advisory Services practice. They can be reached at the CPA firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.
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