Deposition preparation in a fraud or embezzlement matter focuses on the reconstruction: how each transaction was identified as part of the scheme, how the amounts were confirmed against external records, how periods with missing records were handled, and how the traced funds were followed forward. Opposing counsel will test whether transactions were included on assumption rather than evidence, whether the consequential losses were caused by the diversion, and whether the chain of custody for the records is intact. The economist should be able to walk through the method transaction type by transaction type and separate what was proven from what was estimated.
Checklist
Confirm each transaction in the loss schedule ties to a bank record or third-party document
Review the treatment of periods with missing records and the basis for any estimate
Verify the causal link between the diversion and each consequential loss claimed
Confirm the chain of custody for every record the expert received
Prepare the economist to distinguish the direct loss, consequential losses, and traced assets
Questions to ask the economist
How did you decide which transactions belonged to the scheme?
What did you rely on to confirm amounts outside the internal books?
How did you handle periods with no bank records, and how much of the total rests on estimate?
How did you establish that each consequential loss was caused by the diversion?
Timeline
One to two preparation sessions in the two weeks before the deposition, after the reconstruction and the opposing report are final.
Required documents
The loss schedule with each transaction tied to its source document
Bank statements, cancelled checks, and wire records for the period
The chain of custody log
The opposing expert's report
Common pitfalls
Including transactions in the loss on pattern alone without a supporting record
Blending estimated amounts for missing periods into the proven total without labeling them
Claiming consequential losses the business would have incurred regardless
What is the most effective way to present a loss reconstruction at deposition?
As a schedule where every line carries its source document and its transaction type, with proven and estimated amounts labeled separately. When opposing counsel can trace any line to a bank record, the argument shifts from whether the loss occurred to how much of the estimated portion should count.
How does the expert prepare for questions about the inclusion criteria?
By being able to state, for each transaction type, the test used to include a transaction in the loss and the record that satisfied it: a payment to a vendor that did not exist, a payroll entry for a person who never worked, a deposit that never reached the entity's account. Transactions that met a pattern but lacked a supporting record are shown separately as estimated. The criteria are written into the report so they can be read into the record.
Who handles chain of custody questions?
The expert, for the records the expert received and logged, and counsel or the custodian for how the records were obtained. The engagement should have produced a log of what was received, when, from whom, and in what form, and the preparation session should confirm it is complete. A gap in the log is better disclosed than discovered.
References
Association of Certified Fraud Examiners. (n.d.). Association of Certified Fraud Examiners. Retrieved August 27, 2026. acfe.com