Whistleblower Investigations

Backdating of Stock Options

Beth Junell and Jeff Ferguson, FTI Consulting

FTI will host an hour-long presentation of the current Stock Option Backdating issue. It will provide, in general terms, an overview of the following:

Why is the SEC investigating the backdating of stock options?
What is stock option backdating?
What are the important issues companies face?
Current statistics on SEC investigations of backdating of stock options.

Specific areas to be discussed are the past and current accounting principals that govern stock options, differences between how this issue is the result of either intentional fraud or a poor internal control system, (both of which may lead to a restatement of the company’s financial statements) and the external effects of a backdating investigation on companies. Additionally, the course will provide straightforward examples in order to assist in the understanding of this complex issue.

Elizabeth "Beth" M. Junell, CPA, CFE, is a Director in the Dallas office of FTI’s Forensic and Litigation Consulting practice. Ms. Junell has over 14 years of experience in forensic accounting, financial and fraud investigations, litigation consulting, and financial statement audit and assurance.

At FTI, Ms. Junell’s area of practice focuses on matters with an accounting emphasis, including financial investigations, post acquisition disputes and privileged consulting in securities litigation. Her prior forensic and litigation consulting experience also includes financial analysis in complex matters involving fraud investigations, breach of contract claims, termination-for-convenience claims, and bankruptcy claim resolution. Ms. Junell has assisted in various phases of dispute avoidance and resolution including discovery, investigation and analysis, expert report preparation and testimony both at trial and by deposition.

Ms. Junell has worked with businesses in numerous industries including manufacturing, distribution, construction, technology services, real estate, banking, insurance, energy, transportation, telecommunications and not-for-profit.

Prior to joining FTI, Ms. Junell was a manager for an accounting firm specializing in bankruptcy and litigation support. She has also worked for regional and national public accounting firms as a financial statement auditor and management consultant. Her publications include: "An Acquisition in Wonderland,” Fraud Magazine, September/October 2005; co-author of “Keeping a Watchful Eye,” The BottomLine (The Journal of Hospitality Financial and Technology Professionals), March 2003; and “Data Mining Opens Doors for Collections,” Recovery Adviser, July/August 2002.

Jeff Ferguson, CPA, CFE, is a Director in FTI’s Forensic and Litigation Services practice in Dallas. Mr. Ferguson has over eight years of experience in providing forensic accounting services and financial analysis to clients in litigation and over five years of industry experience. Mr. Ferguson has assisted clients in a variety of industries including the construction, healthcare, telecommunications, energy, manufacturing, and travel services.

Mr. Ferguson has extensive experience in post-acquisition disputes, involving balance sheet valuations, purchase price adjustments and other financial statement misstatements. These disputes required the analysis of various accounts to determine whether they were stated in accordance with GAAP, reviewing contractual terms and warranties as they relate to the financial statements, and assisting counsel with filings in both litigation and arbitration.

Mr. Ferguson is also experienced in fraud and forensic investigations involving earnings management matters and manipulation of financial results, embezzlement by company officers and other types of alleged fraudulent activities. These investigations have involved the analysis of sources and uses of funds, identifying missing and/or misappropriated assets, and assisting counsel and their clients with civil actions for recovery of assets.

Prior to joining FTI, Mr. Ferguson was a Senior Manager at KPMG, LLP where he gained experience in fraud investigation, forensic accounting practices, analysis of damages, and related financial issues. Before joining KPMG, Mr. Ferguson was a Manager at Arthur Andersen, LLP in its litigation consulting practices. Mr. Ferguson also gained accounting and financial statement experience with an energy firm, Amerada Hess Corporation, in Houston Texas. His experience included various types of oil and gas accounting.

Red Flags of Financial Statement Fraud
Cathy Ries and Gus Kirkland

Cathy Gribble Ries is an attorney with over 20 years of experience in multiple areas of law, including 15 years of specialization in white-collar criminal investigation, lawsuits, prosecution and representation of corporate interests. She has extensive experience in analysis of businesses and their practices in these areas, and in related training. Ms. Ries was Assistant General Counsel for two Fortune 500 companies for over 14 years. In the course of this work, she coordinated numerous investigation efforts, working with in-house and independent investigators, senior management and both in-house and outside counsel, as well as working with the FBI, US District Attorneys’ offices, and local authorities on various matters. Ms. Ries led and worked on efforts on developing and implementing processes and procedures to identify and reduce risks to corporations, and to comply with Sarbanes-Oxley and the requirements of the revised Federal Sentencing Guidelines.

Gus Kirkland is a Certified Fraud Examiner with over 20 years experience in various areas of criminal justice, ranging from agent for the Department of Tobacco and Firearms, senior in-house investigator at a Fortune 500 Corporation for over 14 years to Director of Investigations at a Fortune 500 company for 4 years. In his capacity as Director of Investigations, he was instrumental in developing and implementing an in-house compliance program. Mr. Kirkland has extensive experience working with law enforcement and with various agencies with regard to white-collar crime. Mr. Kirkland has served as a witness, and as an expert witness, in prosecution of cases he has worked on.

Both Mr. Kirkland and Ms. Ries have been instrumental in pursuing recovery for losses, including the preparation, filing and pursuit of insurance claims related to crime losses.

Investigations Do's and Don’ts
Larry Worthy, Trinity Industries

This session will explore techniques that should and should not be used in conducting an investigation. We will discuss the importance of the pre-work that occurs prior to an investigation. We will also explore various interview techniques that will solicit the most information and also interview techniques that will inhibit effective communication. Examples from real investigations will be used to demonstrate these techniques.

Larry F. Worthy, CIA, CISA, CFE, is the Director of Internal Audit with Six Flags Theme Parks where he directs financial, operational and compliance audits in the fast paced family entertainment environment. Previously he was the Vice President of Internal Audit for Clear Channel Communications and Manager of Internal Audit for the H. E. Butt Grocery Company and an Operational Auditor with the Air Force Audit Agency for 11 years.

He is a past President of the San Antonio Chapter, Institute of Internal Auditors (IIA) and remains active on the Board of Governors. He is a volunteer instructor for the Institute of Internal Auditors, presenting seminars throughout the nation on various internal auditing topics. Larry earned the Distinguished Faculty Member designation in 1997.

Larry is a frequent speaker at international and national events such as the IIA’s 57th Annual International Conference, IIA’s Internal Auditors in the Government Conference and the IIA’s Best Practices Conference. He is also a frequently requested speaker for the San Antonio Chapter, Institute of Management Accountants, San Antonio Chapter, Texas Society of Certified Public Accountants events and various universities.

Larry earned a Bachelor of Science degree in Accounting from Southwestern Oklahoma State University in 1977. He earned the Certified Internal Auditor (CIA) designation in 1989 and the Certified Information Systems Auditor (CISA) and the Certified Fraud Examiner (CFE) designations in 1996.