Dr. Lee,* a suburban Chicago dentist, wanted an unconventional design for his new office, including a vast amount of glass and interior reflecting pools. His builder, Mr. Sullivan, noted these were problematic for the Midwest, pointing out significant issues with heating, cooling and excess humidity. Sullivan’s contract listed his concerns, and stated he could not assure satisfaction with Dr. Lee’s design.
Despite the warnings, Dr. Lee proceeded with his plans, taking occupancy of the $2-million structure in September. Just five months later, humidity from the reflecting pools had already begun to rot trim and freeze on window sills and exterior doors.
In March, Dr. Lee filed a $5-million lawsuit against Mr. Sullivan, claiming losses for the structure, cost of repairs and a decline in his dental practice value. To help him prepare a defense, Mr. Sullivan’s attorney retained Dennis M. Taylor of Taylor Rees Beckey as an expert witness in business valuation. Mr. Taylor requested a lengthy list of documents, including detailed daily transactions for the years before and after moving to the new office.
After carefully reviewing several years of records, Taylor made an interesting discovery. Over a two-year period, quarterly payments of $3,000 were attributed to “dental supply expenses.” Yet the payee appeared to be in the business of music, not bridges and crowns. The answer was found within the dentist’s QuickBooks** records, where Mr. Taylor uncovered a memo entry for “grand p.”
At the deposition, Taylor testified that the dental practice had not declined. Instead, he revealed the mysterious entries were payments for a $24,000 grand piano, improperly declared on income taxes as dental supply expenses. Faced with the potential embarrassment of public disclosure in the courtroom, the “deceptive dentist” was suddenly much more open to compromise.
Aided by the adept forensic accounting skills of Taylor Rees Beckey, Sullivan’s attorney was able to settle the next day for $12,000; a mere fraction of the original suit.
* For confidentiality, case names have been changed.
** Quickbooks is a registered trademark of Intuit Inc.
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