Author: FAZ Forensics

This is a case involving a couple who used the collaborative law process to resolve their marital dissolution along with their business dispute. 

Collaborative Law is a process that allows couples or business partners to resolve disputes working with collaboratively trained attorneys, coaches and financial professionals. The process allows the parties to have fair settlement. The process starts with each party signing a participation agreement outlining the collaborative process. The agreement disqualifies all the professionals from participating in further action should the collaborative process break down and a settlement is not reached.

Case Facts

Husband and wife both own shares of common stock in two companies that they started at the beginning of their marriage. Ten years into their marriage they decided to get divorced and use the collaborative law method to resolve all their differences. They each hired a collaboratively trained lawyer; they hired a collaboratively trained coach and a collaboratively trained financial neutral. Over the next three to four months, they resolved all their disagreements and came to a settlement, including asset division and child support payments. They both remained owners in the business and continued to work together.

Fast forward five years and they decide that they want to split as business partners also. Since the collaborative law worked so well for their divorce, they decided to use collaborative law to determine who was going to buy out who and what would the buyout amount be.

The collaborative attorneys knew that the business needed to be valued but they wanted someone who was collaboratively trained so they called David Consigli partner at FAZ CPAs.

David did extensive interviews with both parties regarding the history of both companies. He also got each one’s perception of value and what they thought it might be worth. Like many other business owners, one had a very conservative view of value and other had an overly optimistic value in mind.

The valuation was complete, and a meeting was set up between the two owners, the attorneys and David Consigli the valuation expert.

David was able to explain to both parties both the art and science of the valuation process. He was able to explain to them the subjectivity that goes into a valuation (the art) and the process. He was able to have conversations with the parties about discretionary expenses and what affect on the final valuation conclusion. 

Being hired as a financial neutral valuation expert allowed David to be open about the whole process and how if certain subjective conclusions were different what the affect that would have. 

In the end, the parties agreed upon the valuation conclusion because of the detailed explanations. In the end though, they decided to remain business partners. They have hired a CFO to run the company and the Company has been growing and thriving since then.

The collaborative process allows the professionals and participants to be open, full disclosure and allow them to reach “across the table” to resolve disputes. It can still be difficult, but when you have four professionals and two parties all agreeing to resolve a dispute together as a team the results can be beneficial to everyone.

The restaurant owner of NYC’s trendy, upscale vegan restaurant, Pure Food and Wine, located in the Gramercy Park neighborhood of Manhattan, was recently captured in Tennessee and extradited back to New York where she will face a 24-count indictment after being on the run for almost a year.

Ivy League-educated Sarma Melngailis was the Owner of Pure Food and Wine since 2004 and Owner of One Lucky Duck juice bar and takeaway in the Chelsea Market since 2009. Pure Food and Wine was listed twice in New York’s magazine’s “Top 100 Restaurants” and five years in a row in Forbes’ list of “All Star Eateries.” The restaurant was beloved by celebrities including Alec Baldwin and Bill Clinton.

The very successful vegan restaurant started to experience financial difficulties when Sarma’s boyfriend and eventual husband, Anthony Strangis, entered her life around 2013. It is reported by former employees that as Strangis became more prominent in her life, she became less concerned with the well-being of the company. Employees also reported that the couple stole cash from the business.

When Pure Food and Wine’s financial issues surfaced, the restaurant closed for a brief period of time. Prosecutors said Sarma had Anthony Strangis pose for potential investors as a wealthy man named Michael Caledonia to solicit investor money.

The couple then went on a $2 million spending spree of restaurant funds that included blowing almost $1.2 million at Foxwoods and Mohegan Sun Casinos before being apprehended in Tennessee.

It is clear that there were limited controls in place for this restaurant and numerous red flags were prevalent in this case. The forensic accountants currently at FAZ Forensics were instrumental in assisting the investors in determining the loss and liabilities associated with this fraud.

Both Sarma Melngailis and Anthony Strangis were convicted of their crimes and sent to prison.