What Types of Evidence Are Discoverable in Financial Fraud Litigation in Florida?

When dealing with financial fraud, knowing that your company has been defrauded and proving that it has been defrauded are different matters entirely. Recovering fraudulent financial losses in litigation requires evidence that is sufficient to convince the judge or jury that an award of damages is warranted. Likewise, convincing a defendant to settle requires sufficient evidence to convince the defendant that he is likely to lose at trial.

But, in many cases, the only direct evidence of financial fraud will be in the defendant’s possession. This is where the discovery process comes into play. Through discovery, plaintiffs can compel defendants to disclose evidence of financial fraud—and an effective discovery strategy can both set the stage for favorable settlement negotiations and put plaintiffs in a position to succeed at trial.  

How a Miami Fraud Lawyer Can Make Effective Use of Discovery in Financial Fraud Litigation

Making effective use of discovery in financial fraud litigation requires a clear and comprehensive understanding of the types of evidence that are discoverable. While the rules of discovery allow plaintiffs (and defendants) to submit wide-reaching discovery requests, the parties’ requests cannot amount to a fishing expedition. Litigants cannot simply request everything in a counterparty’s possession—and if they do, their requests are almost certain to be met with motions seeking to limit their scope (if not quash them entirely). These types of discovery disputes can add to the costs and timeline of litigation, so a careful balance is critical to ensure that discovery requests are sufficiently—but not overly—broad.

Crafting appropriate discovery requests can prove challenging when parties don’t know exactly what they need in order to prove their claims (or defenses). This can be particularly of concern in financial fraud litigation. As a result, working with an experienced Miami fraud lawyer is essential, as effective discovery is critical for both presenting effective arguments and avoiding unnecessary discovery disputes.

What Types of Evidence Can a Miami Fraud Lawyer Obtain in Civil Discovery?

When seeking evidence of financial fraud in discovery, an experienced Miami fraud lawyer will be careful to request all relevant forms of documentation. This includes both electronic and hardcopy records, and it may include records stored at the counterparty’s facility, in the cloud or with an offsite document storage service. During the discovery process, the parties’ counsel may need to visit various locations to review documents or examine files, or they may receive copies of paper files and access to view electronic files remotely. If properly requested, this may include types of evidence such as:

• Internal and External Emails – Internal emails may contain communications about a company’s efforts to engage in financial fraud. Email exchanges with lenders, potential business partners and other third parties may serve as evidence of financial fraud as well.
• Internal and External Text Messages and Direct Messages – Along with emails, text messages and direct messages can also serve as evidence of fraud. This includes (but is not limited to) direct messages sent through messaging apps, social media platforms, and project management software.
• Account Statements and Transaction Records – Through the discovery process, parties that are seeking damages for financial fraud can obtain defendants’ account statements and transaction records when these records help prove how or when the fraud was committed. For example, these records may demonstrate that a defendant misrepresented its financial condition or conducted transactions that amount to fraudulent conveyances.
• Corporate Books and Records – Corporate books and records can also serve as evidence of financial fraud. Both accurate and inaccurate books and records may be valuable as evidence depending on the circumstances underlying the parties’ litigation.
• Financial Statements – Financial statements prepared by a party’s Finance Department or its outside auditors can also serve as evidence of financial fraud. In many cases, fraudulent financial statements will be at the center of financial fraud litigation. In others, they may serve as just one piece of evidence in a broader puzzle of documents and communications that come together to expose a fraudulent scheme.
• Loan Documents, Property Valuations and Other Documentation – Loan documents, property valuations and various other forms of documentation can serve as evidence in financial fraud litigation as well. Ultimately, the documents a plaintiff needs to prove financial fraud will depend on the specific claims at issue and the underlying facts at hand.

Along with these types of evidence, parties to financial fraud litigation can also seek to obtain written answers and oral testimony through the discovery process. Litigants and their personnel must provide accurate responses to interrogatories and provide deposition testimony under oath.  

What if you have concerns that a defendant may have erased or destroyed evidence of financial fraud? Or, what if a party’s CEO or CFO lies during a deposition? In these types of scenarios, there are also several potential options available. Through computer forensics, forensic accounting and other means, it will often be possible to trace obfuscated transactions and uncover evidence that electronic files have been destroyed or deleted. Lies in interrogatory answers and deposition testimony can also be exposed. Parties that engage in these types of acts during (or in anticipation of) litigation can face sanctions during the litigation process, and uncovering efforts to conceal financial fraud will often spur favorable settlement negotiations as well.

Proving financial fraud in litigation is a complex process that often requires various forms of evidence. As a result, a skilled and strategic approach to discovery is critical. If you have concerns about financial fraud, taking action promptly can serve to both mitigate your company’s losses and mitigate the risk of unnecessary complications arising during the discovery process.

Request a Complimentary Consultation with a Miami Fraud Lawyer Today

At Edelboim Liberman, we handle all types of financial fraud litigation in Florida’s state and federal courts. If you need to know more about what it takes to prove financial fraud, we encourage you to get in touch. To speak with an experienced Miami fraud lawyer in confidence, call 305-768-9909 or request a complimentary consultation online today.