FTVentures invests in fraud investigation

The New York-based firm has made another investment in the fraud and compliance sector with Daylight Forensic & Advisory.

FTVentures has backed the formation of a new fraud risk management firm that will conduct forensic investigations and advising on regulatory compliance.

The company will be headed by Ellen Zimiles, an expert on anti-money laundering and a former assistant US Attorney for the Southern District of New York, and Joseph Spinelli, a former FBI agent who specializes in white-collar crime.

Financial details of the investment were not disclosed, but the backing was described as a “significant minority investment.” FTVentures is the company’s only outside investor.

The company will perform independent investigative services in the areas of money-laundering, general fraud and misconduct. It will also do preventative work, helping companies maintain regulatory compliance. It will perform monitoring services in regulated industries such as financial services, healthcare, defense and public services. The company will also provide dispute advisory services such as litigation support and educational workshops on compliance. Former New York governor Mario Cuomo will sit on the board of directors.

FTVentures has two other investments in this sector. In 2004 it invested in Actimize, a company that develops software to monitor irregularities or suspicious scenarios. In 2005 the firm invested in Digital Harbor, which develops data integration software.

“The key market opportunity here is there’s tremendous demand for daylight services,” said Mark Lotke, a partner with the firm who will also serve as a Daylight board member. “A lot of the big four accounting firms do this, but there’s an opportunity in the market for an independent company that does nothing but this. They’re free from any conflicts. If you’re the auditor of a customer, you might not be able to do this investigation, compliance or fraud work because of conflicts of interest. But an independent company can.”

The company will open with a staff of fraud and forensic investigators, former federal law enforcement officials, former regulators and industry specialists, and certified public accounts.