Columbus Zoo Case

Former executives misused Zoo funds for personal benefit, including vacations, vehicles, sporting events, and other expenses

How much was involved in the Columbus Zoo case and how long did it last?

It involved over $2.3 million and lasted from 2011–2021 (10 years)

How was the Columbus Zoo case uncovered?

A forensic audit helped uncover the fraud

Types of Damages in Litigation

Economic Damages Non-economic damages Punitive damages

Economic damages

Money a person or business lost because of someone else’s actions

Non-economic damages

Non-financial losses that are harder to put a dollar amount on (pain & suffering)

Punitive damages

Money paid by the defendant to the plaintiff as punishment for especially wrongful conduct

Types of Economic Damages

Benefit of the Bargain (expectation damages) Reliance

Lost profits calculation

Lost revenue minus avoided costs

Lost Profits componenets

Lost revenues Incremental costs Loss period

Types of Monetary remedies

Unjust Enrichment Double-counting of expectation damages & unjust enrichment

Unjust Enrichment

Returning money or profits someone unfairly gained

Double-counting of expectation damages & unjust enrichment

You can't get paid twice for the same loss

4 Lost revenue methodologies

Before-and-after method Yardstick or Benchmark method Contract-based Method Market-share Approach

Before-and-after method

Compare what the business made before vs. after the event to calculate the loss

Yardstick or Benchmark method

Use a similar unaffected business as a “yardstick” to estimate what the plaintiff would have earned

Contract-based Method

Use the contract to determine how much revenue the plaintiff should have received

Market-share Approach

Estimate lost revenue based on the share of the market the business would have captured

Considerations in computing damages

Budgeted or expected performance Changes in business model Condition of economy Performance of similar businesses or locations Performance in client company's industry

Causation

Proving that the defendant’s actions caused the financial loss

Reasonable Certainty

Damages must be based on solid evidence, not just an estimate or guess

Proving Causation steps

1. Plaintiff must prove defendant committed a wrongful act 2. Plaintiff must prove they experienced economic harm 3. Plaintiff must prove defendant's wrongful act was proximate cause of their damages

Proximate Cause

The defendant’s actions directly and foreseeably caused the financial loss

What can a forensics' acct do to prove reasonable certainty?

If client provides: -financial projections -assumed growth rates -select market information then it can determine if its reasonable

Discounting Economic damages by using...

Time Value of Money

Time value of money equation

FV/[(1+Discount rate)^periods]

choosing right discount rate

defined rate by agreement rated identifies by court risk-free rate of return rate based on specific investment