Financial Investigations, Restatement and Accounting

Overview

Handling matters that range from minor procedural and standards violations to allegations of intentional accounting misconduct, the Financial Investigations, Restatement and Accounting (FIRA) team combines the resources of seasoned financial litigators and trial attorneys, Securities and Exchange Commission (SEC) defense counsel, former practicing CPAs, and corporate disclosure and governance professionals to help companies, audit firms and their employees navigate their way through accounting-related special investigations, government inquiries and, when necessary, financial restatements. Our team of accounting- and finance-focused litigators and white collar and corporate lawyers brings decades of experience to the handling of all aspects of accounting and auditing issues.

The FIRA team has represented companies, officers and directors, accountants, audit firms, and auditors in matters involving complex technical interpretations of Generally Accepted Accounting Principles (GAAP), professional auditing standards, internal control issues, bribery and Foreign Corrupt Practices Act (FCPA)-sourced revenue, and allegations of active employee accounting fraud. We know the difference between small accounting mistakes and accounting fraud, and how respond to each situation. With our depth and experience, the FIRA team helps clients handle the full range of accounting-related issues, from discrete matters to complex international securities cases.

The practice team is led by John J. Carney, Jonathan R. Barr, Jimmy Fokas and C. Shawn Cleveland.

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John J. Carney, a former practicing CPA at a Big Four accounting firm, SEC Senior Counsel in the Division of Enforcement and Department of Justice (DOJ) Securities Fraud Chief, has unparalleled experience investigating and defending cases involving technical accounting issues, restatements and allegations of financial misconduct. As a prosecutor, he successfully served as the lead counsel in the Cendant accounting and restatement fraud trial securing a victory after a nine-month trial. As defense counsel, he constructed a “bottom up” accounting defense resulting in an unprecedented non-fraud resolution in the multi-year Diebold, Inc., SEC restatement matter. His expertise and knowledge of accounting issues have earned him recognition by the American Institute of Certified Public Accountants as certified in financial forensics, while his skill as a courtroom advocate has resulted in favorable verdicts and national recognition as the “go to” lawyer in high-stakes accounting cases. Mr. Carney has been nationally recognized as one of the best securities enforcement defense lawyers in the country, and he is a frequent lecturer on accounting, auditing and restatement issues and related trial strategy to both the private bar and government agencies, including the DOJ and SEC.

Jonathan R. Barr, a former Assistant U.S. Attorney, DOJ Fraud Section Trial Attorney and SEC Senior Counsel in the Division of Enforcement, is a seasoned advocate who brings more than two decades of experience to advise and defend clients facing government investigations into complex financial accounting matters. In private practice, Mr. Barr has successfully represented NYSE companies, General Counsels, Chief Financial Officers and a Chief Compliance Officer in complex government investigations. His recent engagements include the representation of a Chief Financial Officer and a General Counsel in SEC investigations initiated as a result of accounting restatements. Numerous rating organizations have recognized Mr. Barr’s skill in representing clients in government investigations, and the Securities Docket notably named Mr. Barr to its “Enforcement 40” list of the 40 top securities enforcement defense lawyers in the country.

Jimmy Fokas, a former SEC Senior Counsel in the Division of Enforcement, was a lead member of the team that investigated and commenced a civil prosecution against Symbol Technologies, Inc., and certain former executives, alleging widespread accounting irregularities. Mr. Fokas’s efforts resulted in Symbol restating its financial results related to revenue, expenses and net income for a four-year period, with adjustments of almost $500 million. Mr. Fokas also investigated and commenced civil actions involving offering fraud and fraudulent trading practices. In private practice, Mr. Fokas has conducted internal investigations and represented individuals and entities concerning accounting irregularities before the SEC and other government agencies. Mr. Fokas helps his clients navigate the complexities of government investigations by mastering complex fact patterns and crafting a strategy intended to deliver favorable outcomes while minimizing reputational and financial risks.

C. Shawn Cleveland is a former CPA who represents clients in high-stakes accounting and corporate crisis situations, with significant experience conducting internal investigations and defending investigations by government agencies including the DOJ and SEC. These matters have included alleged securities fraud, particularly accounting and disclosure fraud, government program fraud, the False Claims Act, the Anti-Kickback Statute, and the FCPA. Mr. Cleveland also regularly represents audit firms and auditors in addressing compliance with applicable auditing standards before the SEC. A trusted advisor, corporate boards and management frequently turn to Mr. Cleveland for counsel on governance and compliance issues in connection with investigations and litigation. He brings a valuable business-oriented approach to problems, based on his many years of experience advising companies as a lawyer and as a CPA in his prior career.

Collectively, the FIRA team has successfully represented accounting firms and individuals in accounting-related matters before the SEC, the Public Company Accounting Oversight Board (PCAOB), the DOJ and state regulatory offices. We conduct internal accounting-related investigations, which are timely, targeted, confidential and comprehensive and designed to avoid disrupting business operations and minimize reputational and financial risks. We also advise public company boards concerning their handling of accounting errors and irregularities.

Our corporate lawyers handle corporate governance, securities compliance and related matters on behalf of our clients. These governance issues include working alongside legal and compliance departments on behalf of management, audit committees, special committees and boards of directors to identify violations and recommend remedial actions, including facilitating any mandatory or voluntary self-disclosures to government agencies and developing corporate governance programs. Our FIRA team also regularly assists clients with compliance and disclosure requirements under securities laws and related regulations.

The FIRA team has been nationally recognized and is Chambers-ranked for white collar matters. Our members have been named to the Securities Docket “Enforcement 40,” a list of the 40 top securities enforcement defense lawyers in the country. FIRA team members regularly lecture and write on important accounting issues, including financial statement materiality, technical accounting applications and emerging disclosure issues.

Select Experience

  • Successfully represented senior management of Diebold Inc. in multiple federal and state proceedings concerning highly technical revenue recognition issues, disclosure and securities fraud in connection with a multibillion-dollar accounting restatement over a five-year period. Resolution resulted in court-approved dismissal of all fraud-related charges.
  • Successfully performed a comprehensive investigation for the audit committee and executive management of a global payment operator regarding compliance with federal financial regulations.
  • Successfully defended a major audit firm in multiple alleged civil audit failure cases related to audit processes and professional audit standards. The matters were dismissed outright or settled on favorable terms to the client.
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Professionals

Name Title Office Email
Partner Washington, D.C.
Partner New York
Partner Dallas
Partner Cleveland
Partner New York
Partner Washington, D.C.
Associate New York
Associate Chicago
Associate New York
Associate New York
Partner New York
Partner New York
Partner New York
Counsel Washington, D.C.

Experience

  • Successfully represented senior management of Diebold Inc. in multiple federal and state proceedings concerning highly technical revenue recognition issues, disclosure and securities fraud in connection with a multibillion-dollar accounting restatement over a five-year period. Resolution resulted in court-approved dismissal of all fraud-related charges.
  • Successfully performed a comprehensive investigation for the audit committee and executive management of a global payment operator regarding compliance with federal financial regulations.
  • Successfully defended a major audit firm in multiple alleged civil audit failure cases related to audit processes and professional audit standards. The matters were dismissed outright or settled on favorable terms to the client.
  • Secured a verdict in favor of a Big Four accounting firm in a seven-week jury trial related to alleged noncompliance with audit standards.
  • Achieved a rare “no action” case termination by the SEC regarding alleged accounting-related allegations against a Fortune 50 company. Result was achieved without witness testimony.
  • Litigated SEC administrative proceeding against former division CFO alleging accounting misconduct. Effectively leveraged the expert testimony of former chief accountant of the SEC to nullify the Staff’s accounting position and to dismiss misconduct-related charges.
  • Defended the Chairman and CEO of a multibillion-dollar public company in an SEC investigation related to alleged revenue recognition, internal control and governance misconduct.
  • Conducted an internal investigation of revenue channel stuffing and accounting violations related to rebate programs promoted by an international healthcare products company, and drafted training guidelines for business and sales employees.
  • Conducted a revenue recognition-related investigation for a defense contractor in Russia, Belarus, Kazakhstan and the Ukraine to assess potential exposure.
  • Conducted an internal investigation of senior European technology company executives in connection with alleged accounting violations relating to prepayment provisions in customer contracts.
  • Represented the former officers of a major governmental financial institution under parallel investigations brought by multiple federal agencies, including the SEC, and related class action litigation following a $4.5 billion accounting restatement.

Recognition

  • Chambers USA: Litigation: White-Collar Crime & Government Investigations in New York (2013 to 2019)
  • The Legal 500 United States: Dispute Resolution: White-collar criminal defense (2016)
  • Ranked in Global Investigations Review’s GIR 100, a ranking of 100 firms from around the world able to handle sophisticated cross-border government-led and internal investigations (2017 to 2019)
  • Law360 White Collar “Practice Group of the Year”
  • U.S. News - Best Lawyers "Best Law Firms" Criminal Defense - White Collar (2019)
    • National, Tier 1
    • Metro Cleveland, Tier 1
    • Metro New York, Tier 1
    • Metro Washington, D.C., Tier 3
  • The Best Lawyers in America© (2019)
    • 7 lawyers named in Criminal Defense: White-Collar
  • Recognized as one of the top law firms for client service, BakerHostetler was named to the 2020 BTI Client Service 30 for the sixth consecutive year.