December 13, 2019

Unwinding Financial Fraud; Uncovering Potential Risk

Q: What's the #1 lesson learned over 40 years of providing financial due diligence, litigation support, forensic accounting and workouts/restructuring services? A: Fraud happens in both good and bad economies. Runner-up answer: The private capital markets never rest. Check out our recent engagements below.  What have you been working on?

SEC Halts Fraud Targeting Vietnamese-American Community

The SEC obtained an emergency court order freezing assets of a Santa Ana, California-based company and its founder, who allegedly carried out an ongoing fraud raising millions from at least 80 Vietnamese-American investors. The defendant falsely presented himself as an experienced former Wall Street banker, and failed to disclose that he was a convicted felon, including once for a prior investment scam.  The SEC appointed Brandlin to be the Receiver of the business in June 2019.

SEC Case Summary

Scrubbing Financials before Private Capital Firms Invest

$110MM Senior Secured 2nd Lien Term Loan A direct lender had agreed to lend growth capital to a fashion business with a subscription-based online product and stores in key markets. Brandlin performed a Quality of Earnings study and the deal funded

$15MM Term Loan A specialty finance company and a regional bank had agreed to provide working capital to a diversified media and technology company. Brandlin performed a Desk Top Review of the borrower's financials and the deal funded

$11MM Asset Purchase by Private Equity Firm A private equity firm had an LOI to acquire a manufacturing company as an add-on for an existing portfolio company. Brandlin completed pre-investment due diligence and issued Quality of Earnings report within 2.5 weeks

Helping Private Capital Firms When Investments go Upside-Down

$25MM Term Loan at Risk due to Borrower's Unpaid Sales Taxes A direct lender provided capital to an online subscription-based retailer . Less than a year later, the borrower filed bankruptcy and it was discovered the founder had failed to pay collected sales tax. Brandlin completed a forensic investigation of the unpaid sales taxes and identified multiple sources of recovery within 2 weeks

$9MM Term Loan at Risk after Interest Payment Default A private investment firm provided a term loan to a data technology research and marketing company with a pay-per-click revenue model. The borrower's cash flow was severely hampered and it defaulted on its interest payments when Google implemented anti-spam technology. Brandlin completed a forensic investigation into its owner's expenses and to assess the business's viability

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Brandlin & Associates is an exclusive provider of financial workouts and restructurings, forensic accounting, financial due diligence and litigation support for senior lenders, mezzanine funds, private equity groups, attorneys and middle market companies.  We pride ourselves on offering superior technical expertise, years of practical experience and unparalleled service to decipher financial and operational performance metrics. As a result, our clients are able to make informed decisions in a timely manner.

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