24/7 CLAIM NUMBER: 866-722-5246
A crop grower alleged that actions of a pesticide company resulted in a major decrement in crop production. The crop grower sued for lost profits of around $500,000
Our team was engaged to review the calculations made by the plaintiff’s economist. We noted inconsistencies between the production records and former field manager’s testimony, gaps in the sequence of sales invoices, a number of large unexplained cash receipts, and a large amount of proceeds from federal crop insurance. The plaintiff later withdrew its suit and was indicted for insurance fraud.
A furniture store was closed for four months due to water damage. The CPA hired by the company calculated a loss exceeding $1 million.
In addition to detailed review and analysis of the company’s books and records, we interviewed personnel from other local furniture retailers, talked with the company’s suppliers, researched secretary of state filings, and obtained historical newspaper articles that were pertinent to the matter. We discovered that prior to the loss, the subject company lost key sales people to a newly formed regional competitor, and the company had recently lost key suppliers. In addition, we learned that a number of stores similar to the subject company had recently gone out of business due to increased competition and stagnant demand. By piecing it all together, we calculated a loss of $250,000. The company’s CPA subsequently withdrew from the engagement.
A retailer of high-end eye wear experienced roof damage and subsequent flooding. The store was closed for a few weeks and subsequently moved to a new building located approximately 4 miles away. The company claimed the move confused customers and submitted a business income loss and extra expense claim exceeding $1 million. The claim was largely based on a sales comparison between the subject store and sales for the company’s other stores located within a 10 mile radius.
We determined the sales growth realized at the other stores was not related to an increase in demand. Instead, the apparent sales growth was due to a consolidation of stores. Several neighboring locations were closed and customers from those locations migrated to the next closest store. Therefore, we determined that sales growth at the subject location during the loss period was not appropriate. In fact, we determined that sales were expected to decline due to an increase in the number of vision correction surgeries performed in the area. We calculated a combined business income and extra expense loss of around $150,000. The company accepted our findings.
A restaurant suffered a total loss, as a result of a fire. The company was seeking $640,000 in lost profits from the responsible party.
The CPA hired by the plaintiff predicated his calculations on the assumed continuation of a 13% prior year growth rate. By looking behind the numbers, our professionals determined that the prior year “growth” was merely the result of changing to a 7-day operating week. Furthermore, we noted that prior to the fire; the restaurant reverted back to a 6-day week. So not only would sales not have grown during the suspension period, they would have declined. Accounting for the operational changes drastically reduced the lost sales. The plaintiff was awarded the amount calculated by us of around $340,000.