Expert Witness Profiler

Category: Accounting Expert Witnesses

  • Accounting Expert’s Testimony on Mitigation Efforts Excluded

    Accounting Expert’s Testimony on Mitigation Efforts Excluded

    This action arises out of a franchise relationship between the Plaintiffs Glenn Misiph and AASK Services, LLC, (together “Plaintiffs”), and the Franchisor Defendants, 360° Painting, LLC, Premium Service Brands, LLC, and Paul Flick (together “Defendants”).

    Plaintiffs alleged that Defendants engaged in fraudulent misrepresentation through marketing materials and Franchise Disclosure Documents (“FDD”).

    To support their claims, Plaintiffs retained Elisabeth O. da Silva, a forensic accountant and damages expert, to calculate, among other things, their damages claims.

    In her report, Da Silva addressed Plaintiffs’ lost opportunity costs, actual and expected profits, and efforts to mitigate damages. The report also evaluated the accuracy of the financial figures disclosed by 360° Painting in its 2017 FDD.

    In response, Defendants engaged Edward J. Herbst, a CPA and CFF with professional experience in both the private sector and federal law enforcement.

    Herbst provided a rebuttal to da Silva’s report assessing her premises, methodology and approach, and rationale. His report concluded that da Silva’s analysis relied on inaccurate assumptions and failed to account for the specific financial and operational realities of the franchise.

    Plaintiffs Glenn Misiph and AASK Services, LLC, and Defendants 360° Painting, LLC, Premium Service Brands, LLC, and Paul Flick filed cross motions in limine to exclude expert testimony.

    Accounting Expert Witnesses

    Elisabeth O’Toole da Silva is a certified public accountant (“CPA”) and is certified in financial forensics (“CFF”) with over 25 years of experience in forensic accounting, auditing, and economic damage calculations.

    Her professional history includes investigating complex financial disclosures and serving as an expert witness for private litigants and the Securities and Exchange Commission. Da Silva also served as a neutral arbitrator in accounting and contract disputes.

    Get the full story on challenges to Elisabeth O. da Silva’s expert opinions and testimony with an in-depth Challenge Study.

    Edward J. Herbst previously served as a managing director in the forensics practice of a private accounting firm and held a senior executive service position within the Federal Bureau of Investigation. His experience includes calculating economic losses in financial crime investigations and providing testimony in federal court regarding fraud and money laundering schemes.

    Want to know more about the challenges Edward Herbst has faced? Get the full details with our Challenge Study report.

    Discussion by the Court

    Elisabeth O. da Silva

    Defendants sought to exclude all of da Silva’s testimony due to: (1) lack of “fit” between da Silva’s calculations and Plaintiffs’ claimed damages; (2) unreliable methodology; and (3) improper legal or narrative conclusions.

    1. The “Fit” Of Damages

    Defendants argued that da Silva’s “but-for” damages testimony did not “fit” the case because Plaintiffs sought rescission damages, and da Silva’s report calculated expectation damages (lost profits).

    In her report, da Silva provided two damages methods. The first method provided a damages calculation that would restore Plaintiffs to the economic position they would have occupied absent Defendants’ representations, the so-called unwind damages theory. The second method accounts for Plaintiffs’ investment in the franchise and provided a damages calculation that would put Plaintiffs in the position they would have been in had 360° Painting fulfilled its obligations, the so-called but-for damages theory.

    Under da Silva’s but-for damages theory, she calculated the difference between Plaintiffs’ actual profit and losses and Defendants’ financial projections for gross revenue and expenses. Testimony regarding this theory is integral to proving Plaintiffs’ damages on their fraud and breach of contract claims.

    Under Massachusetts law, Plaintiffs who have proved negligent misrepresentation are entitled to recover damages including the pecuniary loss caused by their reliance on the false information.

    Defendants argued that da Silva included no evidence regarding the worth of the franchise when Misiph purchased it.

    However, even if Defendants believe da Silva’s testimony is insufficient to prove one specific metric of loss, that does not invalidate her entire testimony, particularly where that testimony is relevant to other categories of damages. Because Plaintiffs bear the burden of proving each of their requested damages, da Silva’s calculations are relevant to their various theories of recovery. 

    2. Methodology

    Defendants argued that da Silva’s testimony should be excluded because her methodology does not include actual performance data and the data on which she relied is too narrow in scope.

    Specifically, Defendants criticized: her reliance on an assumption that had Misiph continued as a franchisee, he would have operated his franchise for 10 years; her failure to clarify or quantify how franchisor support figured in her calculation; her failure to account for variables like COVID-19 or market conditions; and her failure to use internal tracking metrics in her calculations, among other criticisms. This Court found that these challenges go to the weight of the evidence, not its admissibility.

    Here, da Silva clearly described the economic damages model she used, stating that she used a “widely accepted damages methodology.” Defendants have provided no evidence to the contrary. Indeed, Plaintiffs represent that at his deposition, Herbst did not take any issue with da Silva’s methodology. Further, the ten-year term used in the report is not unsupported speculation; rather, it is rooted in the initial term of the Franchise Agreement itself. The other variables da Silva used are clearly described and supported by a detailed economic model within her report.

    3. Legal Or Narrative Conclusions

    Finally, Defendants argued that da Silva’s opinions on the consistency of the FDD and Misiph’s mitigation efforts are improper narrative or legal argument. Specifically, Defendants contended that: (1) da Silva’s opinion that the FDD provided to Misiph is inconsistent with the financial information supplied during discovery is jury argument; and (2) her use of the word “materially” and her opinions regarding Misiph’s duty to mitigate damages constituted legal argument.

    Here, da Silva’s analysis involves a mathematical reconciliation of disparate financial data sets. This Court found that an accounting of how these figures are derived and reconciled provides a technical framework that exceeds the common knowledge of a lay juror. Da Silva’s opinion would help the trier of fact to understand the evidence and/or to determine a fact in issue. It is therefore admissible.

    In her testimony, da Silva did not purport to render an opinion that Defendants knowingly made a false representation of material fact to induce Misiph to enter the franchise agreement. Rather, she sought to opine that her calculations differed significantly from the figures stated in the FDD.

    This Court did, however, find that da Silva’s opinion that “Misiph has a duty to mitigate damages and did, in fact, take reasonable, non-burdensome steps to avoid losses” must be excluded. While accountants may calculate any offset of earned income against claimed losses, they are not qualified to offer a legal conclusion regarding what the law requires of a Plaintiff’s mitigation efforts. Similarly, an expert accountant may not opine on the reasonableness of a Plaintiff’s mitigation efforts as this is a quintessential jury question. Rather, these facts may be offered to the jury, but not by da Silva in the form of expert opinion. The jury may then reach its own conclusion.

    Edward J. Herbst

    Plaintiffs sought to exclude Herbst’s testimony, alleging that he is unqualified to offer damages opinions, his methodology is unreliable, and his analysis rests on inaccurate factual data.

    1. Qualifications

    Plaintiffs argued that Herbst is unqualified because he has never testified as an expert and has admitted to lacking the competence to perform an independent damages model or business valuation.

    As described above, Herbst, a CPA and CFF, has extensive experience in financial investigations. His lack of history as a testifying expert or prior experience in franchise disputes and business valuation does not disqualify him from serving as a rebuttal expert. An expert’s training in a general field, in this case forensic accounting, is often sufficient to permit testimony on specialized sub-topics within that field.

    2. Methodology

    Plaintiffs further challenged Herbst’s methodology, characterizing it as a subjective “armchair” critique that lacked an independent analytical framework.

    Along with analyzing da Silva’s report and its accompanying premises, methodology, and findings, Herbst’s methodology consisted of reviewing documents such as the complaint, Defendants’ amended counterclaims, portions of deposition transcripts, and copies of Misiph’s 2019-2023 tax returns. Then, Herbst applied his forensic accounting background to identify what he characterized as incorrect or unstandardized variables in da Silva’s calculations.

    His report indicated that he was looking for foundational support for da Silva’s opinion within the bounds of accounting principles. The fact that he did not perform independent calculations to show exactly how a change in variables would move the final damages number may diminish the weight of his testimony, but it does not make his methodology inherently unreliable. Accordingly, the Court held that Herbst’s testimony is not excludable on this basis.

    3. Data Accuracy

    Finally, Plaintiffs argued that Herbst’s analysis is based on incomplete information. Specifically, Plaintiffs alleged that Herbst reviewed only portions of Misiph’s and Flick’s depositions, which led Herbst to make incorrect assumptions and effected his analysis.

    In a deposition, Herbst acknowledged certain errors, such as his misclassification of commissions which were actually fixed franchise fees. These admissions and other alleged inaccuracies go to the weight and credibility of his testimony.

    A jury is capable of determining whether Herbst’s critique remains valid despite these errors or if his misunderstanding of the underlying data renders his conclusions unpersuasive.

    Held

    • The Court granted in part and denied in part Defendants’ motion to exclude all of Elisabeth O. da Silva’s testimony.
    • The Court denied Plaintiffs’ motion to exclude Edward Herbst’s testimony.

    Key Takeaway

    The reliability of an expert’s methodology “is a flexible inquiry, allowing for consideration of factors like whether the expert’s methodology has been objectively tested; whether it has been subjected to peer review and publication; the technique’s known or potential error rate; and whether the expert’s technique has been generally accepted within the relevant industry.”

    An expert’s failure to include specific variables in a complex financial model does not render the testimony inadmissible so long as the underlying assumptions are those that experts make with some frequency.

    Case Details:

    Case Caption: Misiph V. 360 Painting, LLC
    Docket Number: 1:22cv11778
    Court Name: United States District Court, Massachusetts
    Order Date: March 03, 2026
  • Vocational Rehabilitation Expert Witness’ Testimony Admitted Because he used Data from Industry-Specific Sources

    Vocational Rehabilitation Expert Witness’ Testimony Admitted Because he used Data from Industry-Specific Sources

    This is an action for Jones Act negligence, unseaworthiness and unpaid maintenance and cure brought by Eric Ward. On or about December 13, 2021, Ward joined the Yacht as the Electro Technical Officer as part of the Yacht’s engineering department in Miami Beach, Florida at a private residence.

    On night of December 23, 2021, the Yacht collided with the Tropical Breeze, a gasoline tanker (“Tropical Breeze”), off the coast of the Bahamas due to the Captain’s negligence. Plaintiff Ward was working on the Sky Lounge aft of the Bridge with the charter guests, assisting them in connecting to the Yacht’s onboard entertainment systems. During the collision, Plaintiff Ward was thrown off his feet and collided with a wall, causing his injuries. The Defendant Yacht and its owner, Utopia refused to pay and delayed payment for the medical expenses as part of Plaintiff Ward’s cure benefit as a seaman.

    The Defendants filed a motion to exclude the testimony of Ira Morris and Oscar Padron for failure to meet the minimum standards of expert testimony.

    Vocational Rehabilitation Expert Witness

    Ira Morris performs vocational evaluations to identify occupational options and determine earning capacity, as well as assessments to evaluate the loss of earning capacity resulting from an injury or illness. As a Life Care Planner, he develops plans to identify future needs, including medical, therapeutic, adaptive equipment, and ancillary or residential services, resulting from an injury or illness. He provides expert witness testimony on these issues, and his opinions have been accepted in state and federal courts, in civil, family law, and state workers’ compensation matters.

    Get the full story on challenges to Ira Morris’ expert opinions and testimony with an in-depth Challenge Study. 

    Accounting Expert Witness

    Oscar Padron holds multiple professional designations and qualifications in the fields of accounting, financial planning, and valuation. His credentials include Certified Public Accountant, Certified Financial Planner and Certified Valuation Analyst. He has earned a B.B.A. in Accounting (1980) and an M.S. in Finance (1989), both from Florida International University. Padron is currently a partner at Turner & Associates, LLP, with extensive experience in litigation support, economic valuations, and forensic accounting.

    Want to know more about the challenges Oscar Padron has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Ira Morris

    Ira Morris is the Plaintiffs’ vocational rehabilitation and life care plan expert, and Oscar Padron is the Plaintiffs’ expert on economics. The Defendants argued that Ira Morris used an unreliable methodology because he “relied heavily on Ward’s accounts of the facts pertaining to them without independently verifying the same when formulating his life care plan.” Moreover, he relied on his own summaries of private telephone conversations he had with treating medical professionals in formulating his opinions, though he admitted he lacks the medical knowledge to evaluate the medical findings.

    With respect to Morris, the Plaintiffs argued that his methodology was reliable because it adhered to the Standards of Practice for Life Care Planners, a peer-reviewed manual prepared by the International Academy of Life Care Planners, and the RAPEL Method, also a peer-reviewed and widely accepted method. The Plaintiffs also noted that Morris: (1) relied only on materials that were in his possession and obtained through interviews; (2) used data from industry-specific sources in assessing Ward’s loss of earning capacity; and (3) relied on health recommendations from the parties’ independent providers that were provided with “signed verifications attesting to the summaries of information and analyses they provided in support of Morris’ opinions and conclusions.”

    Plaintiffs also disputed various contentions made by the Defendants. The Plaintiffs noted that Morris relied on market data in addition to Morris’ contract; Morris did not provide causation opinions; Morris’ reports do not include paid cure expenses or expenses incurred after Ward reached their Maximum Medical Improvement; collateral sources such as Medicare are not considered when making life care plans; Ward’s tax returns were not necessary because Morris relied on labor market data.

    Oscar Padron

    As for Oscar Padron, the Defendants alleged that his methodology is likewise unreliable because it is based almost entirely on Morris’ conclusions and it was prepared in less than a day. According to the Defendants, Padron admitted in his deposition that he did not independently verify any information regarding Ward complaints because it was “beyond the scope of what he was asked to do,” and “he simply accepted and quantified the opinions of Ira Morris.”

    With respect to Padron, the Plaintiffs argued that when quantifying Morris’ conclusions, Padron used widely accepted standard practices such as using the applicable interest rates, growth rates, discount rates, inflation rates, and life expectancy data. He also relied on reputable publications, including those that were peer-reviewed. Moreover, his methodology was consistent with the standards of the Association of Forensic Economics and the American Institute of CPAs.

    Held

    The Court denied the Defendant’s Daubert motion to exclude the testimony of Ira Morris and Oscar Padron. The Court found that the experts were qualified and their methodologies were reliable. Therefore, their testimony will be helpful to the jury. The Defendants may cross-examine the experts on any perceived deficiencies.

    Key Takeaway:

    The Defendants did not dispute that the experts are qualified. They contended that Morris should be precluded from providing any medical or liability testimony. They maintained that Morris used an unreliable methodology because in addition to the reasons cited in the original motion, he relied on an incomplete record. 

    As to Padron, the Defendants maintained that his methodology was unreliable (and therefore not helpful) because he exclusively relied on Morris’ unreliable findings. 

    However, the Court found that the experts were qualified and their methodologies were reliable.

    Case Details:

    Case Caption: Ward V. M/Y Utopia Iv Et Al
    Docket Number: 1:22cv23847
    Court: United States District Court, Florida Southern
    Order Date: October 3, 2024
  • Court rejects expert opinions justifying Trump’s business records citing lack of credibility

    Court rejects expert opinions justifying Trump’s business records citing lack of credibility

    After a rigorous three-year investigation conducted by the Office of the Attorney General, involving in-depth interviews with over 65 witnesses and the examination of extensive documentation provided by the Defendants and other involved parties, it was established Defendants Donald J. Trump (“Trump”), Trump Organization LLC and the Trump Organization, Inc. (collectively with the other named entities, the “Trump Organization”), Allen Weisselberg, and the other individuals and entities affiliated with Trump and his companies named as Defendants, were engaged in a pattern of fraudulent activities and misrepresentations spanning the years 2011 through 2021. These deceptive practices primarily revolved around the preparation of Trump’s annual financial statements, known as the Statements of Financial Condition.

    The investigation revealed a consistent and deliberate pattern of fraudulent conduct orchestrated by upper management within the Trump Organization. This conduct was deemed a collective effort to manipulate the content and presentation of the Statements of Financial Condition. Moreover, crucial information was deliberately withheld or concealed from Mazars, the entity responsible for compiling these financial statements. It’s important to note that Mazars, in its role of compiling assertions of Trump and the Trustees’ into financial-statement format rather than conducting comprehensive audits, remained unaware of many of the fraudulent strategies and misrepresentations embedded within the financial statements.

    These fraudulent actions were not isolated incidents but were instead part of a systematic effort that received approval at the highest levels of the Trump Organization, including Donald J. Trump himself. The intent behind these actions was to present a misleading and inaccurate financial portrayal through the annual statements.

    New York University Stern School of Business research professor, Eli Bartov testified that upon his review, he did not identify any indications of fraud within Trump’s family real estate company’s financial statements. This assessment contrasts with the allegations made by the New York state’s attorney general, who pointed to overstated property values meant to secure advantageous loan and insurance terms.

    Jason Flemmons, a forensic accountant who’s a senior managing director at Ankura, an international consultancy firm and a a former deputy chief accountant at the U.S. Securities and Exchange Commission acknowledged that Trump’s annual net-worth statements spanning a decade exhibited “glaring” issues. However, he attributed the content of these statements to Trump’s accountants, asserting that they held the ultimate responsibility for the statement’s contents.

    Accounting Expert Witnesses

    Eli Bartov, renowned for his expertise in accounting and academia, serves as a Professor of Accounting at New York University’s Leonard N. Stern School of Business. With a Ph.D. from UC Berkeley in 1989, he’s recognized globally for his award-winning research and teaching prowess. His extensive research spans a diverse array of topics including financial reporting, executive compensation, social media’s impact on capital markets, forensic accounting, stock price dynamics, M&A analysis, and diverse facets of equity valuation and trading strategies.

    Jason Flemmons, currently serving as a Senior Managing Director at Ankura in Washington, DC, boasts an extensive career spanning more than 25 years. His expertise lies in forensic accounting, corporate investigations, and technical accounting and auditing. Notably, Flemmons previously held the position of Deputy Chief Accountant within the Securities and Exchange Commission’s Division of Enforcement. In this pivotal role, he oversaw and actively conducted a multitude of investigations focused on financial and accounting fraud, involving SEC registrants and other involved parties.

    Discussion by the Court

    The Court held that the “overarching point” of Bartov’s testimony was that Trump’s subject statements of financial condition were “accurate in every respect” yet the Statements of Financial Condition were found to consist of numerous inadvertent errors with even a previous ruling to that effect. Bartov contended that no expert countered or disputed his testimony, nor did any expert testify that they had uncovered evidence of fraud.

    During his testimony, Bartov disclosed that he dedicated approximately 650 hours to the case, charging at a rate of $1,350 per hour, resulting in compensation totaling around $877,500. He clarified that payments for his services came from both the Trump Organization and Save America, a political action committee that backed Trump’s prospective 2024 election campaign. Bartov held this rate to represent his standard billing fees.

    Justice Arthur Engoron wrote that the testimony merely demonstrated that, for a considerable sum of money, certain experts could be swayed to align their statements with the desires of those footing the bill.

    During his testimony, Flemmons admitted to lacking expertise in property valuation, yet attempted to offer opinions on property values. He testified that a wide variety of “methodologies” could legally be used in estimating property and asset values. These methodologies could produce net-worth values that differ from each other by “orders of magnitude.”

    He emphasized that according to ASC 274, as long as a method permitted by the standards was selected by the Defendant, figures could be inserted into such methods without regard for their accuracy or relation to reality.

    Additionally, Flemmons conceded the necessity of discounting future income to present value in financial statements but paradoxically stated there were no departures from Generally Accepted Accounting Principles (GAAP) when Defendants failed to apply a discount rate to future income.

    He expressed the opinion that Mazars should have pursued items in the Statements of Financial Condition (SFCs), but firmly stated that it would have been “highly unusual” for Mazars to inquire about any appraisals in the possession of the client.  “There would be no obligation or expectation on the part of Mazars or any accountant performing compilation services” to request appraisals that weren’t the basis for values on the statements, said Flemmons.

    Held

    The Court held that the testimony of Defendant’s expert Eli Bartov and Jason Flemmons lacked credibility. Closing arguments in the trial are set for January 11, 2024.

    Key Takeaways:

    The Court noted discrepancies in Eli Bartov’s assertion of accuracy with regard to Statements of Financial Condition, considering previous findings of errors. Justice Arthur Engoron flagged concerns about substantial compensation potentially influencing expert alignment with the paying party’s interests. Jason Flemmons emphasized the wide legal scope of methodologies for estimating property values, often without accuracy or relation to reality, as allowed by accounting standards. Flemmons’ stance on GAAP compliance presented a contradiction regarding discounting future income. Additionally, while suggesting Mazars should have pursued items in the Statements of Financial Condition, Flemmons deemed it “highly unusual” for them to inquire about unrelated appraisals, absolving Mazars from obligation in such cases.