Eric Poer,¹ a Managing Director in Secretariat’s Global Investigations & Disputes practice, was retained by the U.S. Securities and Exchange Commission (SEC) to serve as their forensic accounting expert in a high-profile securities fraud dispute.  

The case stemmed from the SEC’s allegations that a consumer products company raised tens of millions of dollars from investors through misleading disclosures and misuse of investor proceeds. Mr. Poer’s detailed, independent forensic accounting work played a critical role in evaluating the accuracy and completeness of the company’s representations. 

Background 

In its complaint, the SEC alleged that the company and its principals fraudulently raised tens of millions of dollars from thousands of investors over a two-year period by repeatedly promoting an imminent initial public offering (IPO) that had not been registered with the SEC, and by misrepresenting key details, including how investor proceeds would be used, the company’s revenues from product sales, and the principals’ own investments in the business. The SEC’s complaint asserted that these actions violated federal antifraud and offering registration provisions. 

In a subsequent ruling, a U.S. federal court entered final judgments against the company and its principals, permanently prohibiting future violations of securities laws, and barring the individual principals from serving as officers or directors of public companies. The court also ordered significant financial remedies, including disgorgement of ill‑gotten gains, prejudgment interest, and civil monetary penalties. 

Expert Impact  

Scope and Rigor of Mr. Poer’s Forensic Analysis 

Serving as the SEC’s testifying forensic accounting expert, Mr. Poer led an extensive, multi-year forensic analysis of the company’s investor proceeds and financial disclosures. His work involved reviewing thousands of records to assess and quantify the capital raised from investors. Mr. Poer sought to validate each individual investor transaction by tracing them to bank records, financial statements, and/or accounting entries, and evaluating how investor proceeds were actually used.

Mr. Poer compared this detailed analysis to what the company presented in its offering documents and identified mischaracterizations in how the company represented revenues, used investor proceeds, and reported business-related expenditures.  

Presenting Evidence-Based Findings That Withstand Scrutiny  

Drawing upon independently verifiable financial records, conservative assumptions, and established accounting principles, Mr. Poer’s analysis provided multiple examples for the court to consider how some of the company’s activities were consistent with ACFE -recognized fraud risk indicators (“red flags”) — ultimately supporting the Court in an objective evaluation of the company’s financials and representations to investors. 

During court proceedings, Mr. Poer’s methodology and conclusions were subjected to challenge and judicial scrutiny. The Court allowed his expert opinions to stand, affirming the admissibility and defensibility of his analysis in supporting the Court’s findings. 

1. As of May 2024, Eric is a Managing Director at Secretariat. At the time of this engagement, Eric was a Senior Managing Director with FTI Consulting.  ↩︎