Business Expert Discusses Inappropriate Commingling of Corporate Funds

Money Laundering Expert WitnessThis case involves the use of shell corporations in order to deflect corporate liability. The plaintiff was an employee of the defendant firm who suffered major injuries during a workplace accident that occurred while he was operating a forklift. Following the accident, the man attempted to sue his employer, but found that he was unable to due to the fact that, on paper, the business had no value. It was discovered that the business’s owner had been using another, separate business to move funds at the end of each quarter, thereby giving the impression that the original business had no value.

Question(s) For Expert Witness

  • 1. Please describe your familiarity with the specifics of money laundering, especially in situations such as the one presented in this case.
  • 2. Are you familiar with how shell corporations work and how they may apply in this case?

Expert Witness Response E-006686

The situation as described isn’t really money laundering. Rather, it is more of an alter ego case, in which the finances of the individual and the company are tied together so closely that the two lose their distinction. In essence, we pierce the corporate veil because the owner is commingling funds and not respecting the corporation as a separate entity. I have worked on a number of cases of piercing the corporate veil, in which I was essentially tracing funds and showing how the money flowed (source and use). I understand shell corporations and have worked on cases involving them. The more important issue, I think, is whether the expert can properly trace the funds to set forth the case. I work exclusively in the area of forensic accounting and have been designated as an expert about a hundred times.


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