In This Issue


We are grateful to have the opportunity to provide you this valuable information via our monthly e-newsletter and our unparalleled forensic accounting and fraud investigative services.
The goal of this e-newsletter is to provide you critical, inside information that will help you "follow the money" in business disputes, divorce cases, fraud cases, estate matters, corporate embezzlement and to prevail when defending an IRS criminal case. We will do this by sharing the knowledge we have from our 25+ years of experience as an IRS Special Agent and 15 years as a private investigator / forensic accountant. 

We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available.  In this edition, we teach you about Business Valuation for Divorce and How Surveillance Delivers a Bigger Piece of the Pie.

We want to write about topics that will assist you in prevailing with criminal or civil cases whether IRS cases or divorce cases. Please e-mail us your topics of interest to 
We encourage you to share our e-newsletter with others in your sphere of influence. 
Edmond J. Martin
Principal, Chief Investigator
Certified Fraud Examiner (CFE)
Texas Certified Investigator (TCI)
Business Valuation for Divorce       

In many marital situations, the closely-held business or professional practice is the most valuable asset of the marital estate. Often times the party without knowledge of the closely-held business or professional practice will have a belief the value is either lower than it is or much higher than it really is. Therefore, the valuator must educate the client regarding business valuation for divorce.

The generally recognized standard is Fair Market Value which is defined in Treas. Reg. 20.2031-1(b) as:

The price property would change hands between a willing buyer and a willing seller, neither under any compulsion to buy or sell and both having knowledge of relevant facts.

There are three basic methods of valuing a business or professional practice. They are as follows:
  1. Asset Method,
  2. Income Method and
  3. The Market Method.
The Asset Method - with this method, the business or practice is valued based on the fair market value of the assets less debt. In this case, there is no goodwill attributed to the business or practice.

The Income Method - with this method, the income or cash flow of the business or professional practice is the basis for valuation. The income is adjusted to eliminate nonessential expenses, such as personal expenses, personal travel, nonessential employees, such as children on the payroll and any other nonessential expenses charged to the business. The normalized income is then capitalized by a rate of return to determine the fair market value of the business.

The Market Method - with this method, the metrics used to... Read More
Surveillance Delivers a Bigger Piece of the Pie   

Normally family law matters, including child custody and cheating spouses are proven through surveillance techniques involving video, still pictures, pulling trash, and other techniques relating to the subject. The surveillance is based on a discussion between the investigator, the client, and his/her attorney to determine what is necessary to prove the case. When the surveillance is completed and the reports written, a lawsuit is filed in the courts. At a hearing or a trial the attorney has the private investigator (PI) testify to the observations, pictures obtained during the surveillance, and pertinent trash collected. The court hearing both sides of the case then makes a decision.

There are a number of states based on community property laws including, Texas, Louisiana, New Mexico, Arizona, California, Nevada, Washington, Idaho, and Wisconsin. In those states, property, assets, and income are presumed jointly owned. In some cases, wealthy individuals marry and own property and assets as separate property acquired prior to the marriage. Proper recordkeeping must be maintained to avoid damage to the separate property estate improperly benefiting the community estate. The accounting techniques are specialized and should be performed by an experienced forensic accountant.

Case Scenario
A divorced woman received a large settlement from her previous marriage. She was smart, and prepared for her future by investing her money in property, brokerage accounts, Certificates of Deposits, gold, and cash. Her separate property estate totaled $20 million. Her divorce attorney coached her and she maintained the records necessary to prove her separate property interests. A few years later, she... Read More
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At Sage Investigations we are dedicated to serving our clients nationally, to help them navigate the difficulties of dealing with the IRS, and other complex (forensic) financial fraud investigations both civil and criminal. By narrowing our focus to our primary strength of following the money, we steer our knowledge, efforts, and experience to financial issues. We help our clients propel their cases forward by assisting in the review, acquisition, and organization of financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology we analyze complex financial data quickly, easily and efficiently, saving our client's time and money.


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