Receivership Advisory Services

Cendrowski Corporate Advisors was engaged by a receiver to serve as experts and assist the Federal Trade Commission (FTC) with investigating a mail fraud scheme. The alleged defendants would telephone customers, offering to ship “free” samples of their cleaning products, then bill the customers for these products and demand payment.

If the bills were paid, the defendants would ship more unordered products and larger quantities to those customers, seeking additional payments. Customers paid these invoices, not realizing that they never ordered the product. When customers refused to pay for the unordered merchandise, the defendants allegedly used aggressive collection efforts to pursue the collection of purportedly overdue amounts.

Our trusted advisors assisted the receiver with a Temporary Restraining Order (TRO), asset freeze, and shutting down of the company’s business operations. The FTC supported the motion for the TRO with approximately two dozen sworn declarations from alleged victims and the Better Business Bureaus, which received hundreds of complaints about the defendants. We assisted the U.S. Postal Inspector when they raided the defendant’s place of business and conducted an internal onsite investigation. We gained control over the company, shut down the boiler room telemarketing operation, seized image computer hard drives and servers, interviewed vital employees, and reviewed all on-site files and documents.

Next, Cendrowski Corporate Advisors was tasked by the receiver to retrieve the assets of the receivership estate and investigate the complex integrated business operations and financial condition of the defendant’s entities. Working with the FTC, we uncovered several bank accounts being utilized by the named defendants. Throughout all of these accounts, we were able to trace thousands of transactions equaling millions of dollars. Our analysis of the financial records allowed us to calculate the gross revenues this scheme had generated from the preceding five years. We calculated valuable customer and receivables records through analysis of accounting records to see if their businesses could operate lawfully and profitably.  We discovered that the business operations and finances were substantially intertwined, with one company paying the credit card expenses of another separate company, which was also in question. We also revealed the company was paying the legal and operational fees for a different entity. Additionally, the receivership defendants used each other’s loan facilities, employees, branding of products, and equipment to operate their various businesses. Based on the commingling of the business interests, the FTC moved to have the company structure collapsed, which provided greater funds to be recovered to satisfy the claims of the victims. In the end, several million dollars were recovered by the FTC.