Industry – IT

Territory – UK, USA

Client – Leading IT services group.

Case – The client was the controlling shareholder of a start-up that developed innovative technology, in accordance with certain R&D milestones determined at investment stage. The Founders held the key positions of CEO, CFO and CTO and were responsible for providing quarterly reports on commercial, financial and R&D progress. At some stage, during a Board meeting (“the BOD meeting”), the client was informed that a key technology development failed to meet the set milestones and could not be commercialized without an additional investment. Negotiations between the parties over the scope of the required investment and change in shareholding composition, in light of the R&D failure, ended with client’s acceptance that its shares would be bought back by the Founders, at the original sum invested.   A year later, the client discovered that the start-up, under a different name, had listed in the LSE based predominately on innovative technologies and its potential (achieved at a peak a market value of approx. 3,000,000,000). Our services were retained in order to conduct a fraud examination related to the validity of reports and presentations provided to the client by the Founders that led to the client’s disinvestment.

Actions – The examination was conducted by a team of Certified Fraud Examiners and competitive intelligence specialists. The information that was received and gathered from the client and other sources, was verified and analyzed over various jurisdictions. We discovered documentary material, consisting of presentations, business plans, draft agreements, etc, provided by the Founders to potential investors in the US, which proved that the Founders defrauded the client by concealing the fact that the development of innovative technology was completed and could be commercialized at a time prior to the BOD meeting.

Outcome – Based on our findings, the client initiated legal procedures that resulted with an out of court settlement and substantial compensation to the client.