1953 – Understanding Financial Validation with Valid8’s Chris McCall

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1:06With us right now, it is Chris McCall. Chris, you are the co-founder and CEO of Validate Financial. You're on the web at ValidateFinancial.com. And yes, I said that correctly. It's Valid, the number eight, Financial.com. Chris, thank you so much for joining us. Thank you, Josh. Great to be here. Yeah. Well, give us an overview of the work that you do. Yeah, so I've developed or our team has developed a platform that that's targeted at professionals, specifically lawyers, accountants, government investigators. And it's just it automates all the process and procedures to rapidly ingest massive amounts of financial evidence and create a database so that you can compress the time of doing all the dirty data work and then doing your analysis more quickly.

1:54our tagline is follow the money that's that's basically what our customers are using us for is uh figuring out where where the flow of funds what what happened to the money basically yeah so so this is being used once again by what who would be your users of your product it would be a cpa so a certified public accountants or attorneys paralegals looking at doing kind of litigation complex financial litigation stuff, or government investigators looking to catch and prosecute fraud. And so the kind of stuff that we see when there's any kind of financial fraud, you got to do the postmortem, you got to dig in, and it's a lot of work.

2:36Before Validate, how are people doing this work? Yeah, it's funny you say that. Fraud is actually really simple when it comes down to it. It's easy to commit. You just move money where you're not supposed to. It's really hard to investigate because of what was available. And, you know, you have to go get evidence, which is typically images of banking statements or checks or copies of brokerage statements, credit cards, those sorts of things that will prove, you know, what exactly happened to the money. but that kind of stuff is really cumbersome to deal with. So again, what we've done is created a platform that extracts that information using the latest AI technology, creates a database, standardizes everything, and then has algorithms to match and trace the flow of funds in and out of various accounts from legal entities so that the professional has a clear picture exactly what happened to the money.

3:32Yeah. So how did you step into this role? Like, how did you know that the market needed this? Yeah, that's a really good question. I'm a classically trained electrical engineer, so I'm not going to do with accounting. But my co-founder was a CPA. He started his career out as an auditor, kind of moved into corporate controllership roles, spun out his own management consulting firm. and uh him and his partner went around the country doing kind of complex restructurings and and basically when things would go sideways they would get called in to to kind of fix the situation in fact i give my my uh co-founder a bunch of crap i always tell him that uh um that the the ben affleck um character on the movie the accountant was was was uh based on him and what he was doing in his prior life.

4:25But yeah, that's a whole side conversation. But anyways, in one of the cases that he was working on, he got tapped by an investor and said, hey, there's this mortgage securities fund that's having some liquidity problems. Can you come and take a look at it? He walked in there and it turned into Seattle's largest Ponzi scheme. Actually, an episode on American greed. It's called Seattle Roasted. But he was the lead investigator of that. And in those situations when you've got, this is a$350 million Ponzi scheme, and it had taken place over a period of like 10 or 12 years. So you're dealing with dozens of banks, tens of decades of bank records, and there's litigation and clawbacks and complex calculations involved.

5:14So you have to go through and prove that all of your data is accurate so you can do those calculations. It took about 18 to 24 months to get everything together to move the case forward. And it's because that data is so hard to work with. And you're starting with very low resolution, bad copies of bank statements and checks because that's what you have. So that was the genesis of the idea is just like, hey, there's got to be a platform to accelerate this whole thing. And then when we realized that, you know, any CPA, even financial statement audits, you have to base your opinion on evidence. It's like, you know, we can solve this problem if we hit the highest bar of data quality, you know, the, you know, data that holds up in a court of law, we can apply it to the entire accounting profession and help, you know, provide more transparency, more evidence, more confidence in, you know, the opinions that CPAs are providing out there.

6:08Yeah. So, Chris, let me just make sure I understand how the platform works and how exactly like what is it doing for for accounting professionals that they would otherwise have to do manually? Well, it creates a clean database of all the transactions that represent the financial evidence. So if they didn't have the platform, they would either be just reading through the copies of statements and trying to find things and highlight things or potentially typing it in. And a lot of folks will do that or have outsourced teams that type in the transactions. Or the most progressive firms would use some dedicated OCR software.

6:55But even OCR software, you cannot trust it. So then you have to go back in and do a bunch of checking and quality checks so that you can prove that the data that you're using to base your opinion on is 100 % accurate. So we've developed the logic and the algorithms on top of extraction technologies so that when you get that data, they have the confidence that you can rely on it in a court of law. And it's all of those checks that you need to be able to offer a professional opinion. And not only, you know, again, for thinking about like white collar crime and that sort of thing. It looks like you do a lot of work in the family law space to help.

7:37So I haven't been through this, but why would it be important to have access to a platform like this for family law? Yeah, well, if you think about a divorce and let's say there's a couple of businesses in the mix and you've got a joint checking and then you've got personal checking accounts, you've got brokerage accounts. And then there's transfers flowing between the various businesses and the personal accounts. You need to unwind that to understand who owns what, what is community property, what isn't community property. It all comes down to looking at the granular, detailed transactions of what makes up all of those funds and how were the funds, where were they going and who was spending and what are they spending it on.

8:26All those questions have to be answered. So, you know, again, we're the data provides that that low level look and aggregates everything. So it's very simple to understand as opposed to having to deal with spreadsheets and pivot tables and everything else. Yeah. So to our friend that's listening to our conversation right now, do you mind maybe just sharing a little bit about how the platform is priced and how it's structured there? What does engagement look like? I mean, is it just something that they're buying a license to a software and how does the application actually work? Yeah, typically we sell annual licenses that's based on the amount of data that you think you're going to use.

9:14So there's different levels. The higher level, the more data you get, the price per data is lower at the higher levels. There are no seats that's unlimited users, unlimited amount of cases. And then once you're provisioned an account, you just start posting all of your evidentiary documents. Our system will extract all the transactions, create the database, and then you can export that however you want. We have various formats of PDF and Excel files that you need. And then, you know, you're just using it that way for each and every case. In addition to that, we have visuals that are set up to help provide case narratives around what we call stories, so specific vignettes within the data.

9:59And then we set up visuals to show kind of a source use analysis of sources of funds flowing into accounts, legal entities, and then flowing out into a set of uses on the right. But it's all about providing the professional what we call verified financial intelligence. And it's just a fancy name for data that will hold up in a court of law. Yeah. All right. So your website, valid8financial.com, where does someone go from here? Yeah, the best thing to do if you're a professional lawyer or accountant that has to follow the money, just contact sales. We'll do a 15 to 30 minute demo and the value will be relatively obvious.

10:42most of the customers will say, yeah, I need that or no, I don't right now. And that's the best way to do it. We don't like wasting people's time if it's not relevant. Excellent. Yeah, I see. There's a button right on the website right here. It says request to demo. So, well, excellent. Again, Chris McCall, co-founder of Valid8 Financial and CEO. Chris, it's been a great conversation. Thank you for the work you're doing, keeping people honest. And in the end, that is good for everybody. You know, kind of coming from the consumer advocate world, fraudsters should be brought to justice. And so thank you for being one of the good guys out there.

11:25All right. Well, thanks, Josh. I really enjoyed the conversation. Thank you.

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