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What Children Can Teach a Private Investigator

Father’s Day gives us all an opportunity to celebrate fatherhood.

My two children have brought infinite joy and happiness to my life. When I became a parent, the one thing I did not expect was that my children would be teaching me valuable lessons about life and my profession.

Here are just a few examples of what my children have taught me about being a private investigator.

Be Open

When children are born, everything is new to them―food, smells and the world around them. Children naturally explore new things and constantly learn from each experience; they are open to new ideas and the things around them. They don’t have any preconceived notions.

Over the past ten years in this business, I have learned that you have to constantly be open to new skills, trends and techniques. As John Gill, from the Association of Certified Fraud Examiners, once said, “Fraud doesn’t go away, it just changes.” A private investigator’s skills should be evolving―not only to continue to provide a valuable service to clients, but also to become a better industry investigator and business leader.

Be Creative

Throughout their early years, children are naturally creative through music, art and reading. Being creative is natural to a child.

As the years go by, we tend to move away from that natural creativity and become “stuck” with the status quo. While some professions are more restrictive when it comes to the rules of the game, being a private investigator has taught me to always “think outside the box” when analyzing a potential objective. So, go ahead and explore a different side. Be creative and get inspired by things outside your own little world.

Be Curious

Being curious is one of the things that makes being a kid so much fun. My children ask questions every day that I don’t have the answers to. Just in the last week, my son has asked me what the oldest country in the world is, who the oldest person in the world is and why the Red Sox were cursed for more than 80 years (the only one I was able to answer). And I love that I don’t need to grab a set of encyclopedias to find the answer.

The Internet, email and other modern forms of communication have opened a whole new opportunity to further investigate and get answers to everyday questions almost instantly. In our profession, if something does not make sense, be curious, do some research and become an expert in a body of knowledge that nobody else is.

Be Bold

The best thing about my five-year-old daughter is that she is bold. She wears mismatched socks or a tutu over her leggings or a completely outlandish outfit that only a five-year-old can get away with. As she grows older, she may continue to dress boldly, but I hope she won’t be wearing a tutu as her daily attire.

Typically, as we grow older, our boldness is tamed and we develop a comfort zone. In our profession, we maintain a similar comfort zone in the types of cases that may fall under our specializations (e.g., due diligence investigations, background checks, surveillance). However, it is only when we take on new challenges or really difficult cases, that we show our boldness.

Be Simple

Explaining to an adult what I do in a few sentences is difficult enough, but explaining to a six-year-old and a five-year-old is downright impossible. Despite that, I still do it, but in terms that they can understand. “Finding information to help someone avoid a mistake” and “protecting a company (or person) from bad people” are how I have explained to them what I am doing.

Part of what I do on a daily basis is to take complex sets of information from disparate sources and synthesize them into easier-to-understand pieces, free of “investigator speak” or lingo.

Be Logical

Children are logical. They learn quickly from their own curiosities. They know not to touch a hot stove after they burned their hand the first time. As an adult, you know not to touch the hot stove (hopefully not based on personal experience) because you know a stove is hot and that it might hurt if you touch it.

You make decisions every day based on knowledge you have acquired over the years. You don’t personally need to have been a victim of a Ponzi scheme to know that someone offering you a 200% investment return is cause for concern. But some people are willing to invest a large portion of their wealth, expecting that some miracle investment scheme will make them millionaires many times over. It’s sad, but it happens all the time, and it’s totally avoidable.

Be Authentic

Kids like what they like, do what they do and are who they are. What you see is what you get. There is no pretending to be someone else, unless, of course, you are playing house or cowboys and Indians.

Professionally speaking, I don’t pretend to be someone I am not. I am not a former spook. I don’t have access to secret spy sources. I don’t have Special Forces training (although that would come in handy). I am very good at what I do, but I can’t be all things to all people, and neither can you.

Your turn. What do children teach you? Let us know in the comments.

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Understanding the Cost of a Background Check by a Private Investigator

Utilizing a professional private investigator to conduct a background check can cost you anywhere from a few hundred to several thousand dollars, depending on several important factors, most notably the depth of information that you are seeking to obtain.

As with any service, the more involved the project (in terms of both time and expenses), the more it is going to cost and typically, neither the cheapest nor the most expensive option is always the best choice.

To assist you in understanding the cost of a professional background check, we have listed some important questions to consider before engaging a private investigator to conduct your next background check.

How prominent is the subject of the investigation?

Conducting a comprehensive background check on Warren Buffett, a pharmacist in San Diego, is much different from profiling Warren H. Buffet, the Oracle of Omaha and founder of Berkshire Hathaway. The larger the footprint, the more public the person has been, the more  information a professional investigator must identify, locate and present to the client.

How much is YOUR potential loss?

Any potential investment carries with it a certain level of risk or loss. While the potential “loss” associated with hiring a nanny who has a criminal record or is a registered sex offender cannot easily be quantified, most people would not consider spending thousands of dollars conducting a background check on their potential child care provider. But there are also some who are hesitant to spend a few thousand dollars for a thorough review of a subject’s background before making a $5 million investment with a relatively unknown hedge fund operation. The key is to balance your potential risk.

What is the objective of the assignment?

Are you trying to find out if an individual can satisfy a $1,500 judgment against him, or is there something in a person’s past that could potentially discredit an expert witness? Logically speaking, it does not make financial sense to spend thousands of dollars to collect $1,500, but if you are seeking any piece of information to discredit someone, you may have to dig deep. Needless to say, the deeper you may want to go, the more expensive the search can get.

How common is the subject’s name?

Conducting background checks on someone with the name “John Smith” and someone named “Farique Noonsaby ” are two very different propositions. While most criminal records in the U.S. provide some sort of identification number (e.g., Social Security number, date of birth, etc.) to match identifying information to the right subject, the majority of other records available do not.

A comprehensive background check may require an in-depth review and analysis of every lawsuit identified, derogatory news article or social media posting about “John Smith,” which will be both time-consuming and more expensive in terms of out-of-pocket disbursements for the investigator.

What is your potential risk or exposure?

A CFO who has access to millions of dollars and an administrative assistant who is answering the phones have two totally different “exposure” profiles. The same thing goes for any investment opportunity; investing with a person or company with loose regulations and oversight (e.g., hedge funds, unregistered investment advisors, etc.) is much different from investing in a publicly traded company – although Enron, WorldCom and Tyco may have taught us otherwise. In the litigation arena, a comprehensive background check on a key witness in a high-stakes legal proceeding may be the only opportunity you will have to sway the case for your client.

Final Thought

Ultimately, what a background check should provide is peace of mind or a deeper understanding of someone so that you can confidently make an informed decision, something that an online background check, a low-cost background check or a private investigator who lacks experience conducting a background check cannot provide.

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What Baseball Can Teach You About a Background Check

This post originally appeared on ACFE Insights, a blog run by the Association of Certified Fraud Examiners.

Bill James revolutionized the way that people look at baseball players. Sabermatricians, as his followers would later be known, felt that there was a direct correlation between a player’s past and future performance. Instead of relying on the subjective judgments of baseball scouts, James compiled objective statistics and analysis to measure a player’s performance, thus helping to predict future performance.

“Brady Ball”

A great example of Bill James’ method happened in 1996, when Baltimore Orioles slugger Brady Anderson hit 50 home runs in 687 plate appearances (equivalent to one home run for every 13.7 plate appearances), while in his previous three seasons, he hit a total of 41 home runs in 1,846 plate appearances (one home run for every 45 plate appearances).

It’s clear that Anderson’s past performance did not correlate with his breakout 1996 season, and sure enough, he regressed back to one home run every 40 plate appearances for the remainder of his career.

Anderson was long suspected of using steroids for the 1996 season, but those reports have never been confirmed. Without analyzing historical statistics, it would be difficult to see the uniqueness of that 1996 season.

How does analyzing “past performance” in baseball relate to a background check?

Collecting and analyzing information based on a baseball player’s past performance is similar to what a private investigator does when conducting a background check. Objective information is collected about a person’s past through open sources and public records to help clients make more accurate predictions about the future. Historical bankruptcies, financial difficulties, criminal acts, a litigious past, misrepresentations and regulatory sanctions are all indicators of potential problems down the road.

Past performance issues in a background check

There were many “past performance” issues that should have been major red flags in Bernard Madoff’s Ponzi scheme, including a two-person accounting staff overseeing a $50 billion firm, a highly secretive investment strategy and investment gains that neither Wall Street professionals nor Harry Markopolos, the Madoff whistleblower, could recreate.

Other examples of “past performance” as an indicator of the future can be found in our recent post about 11 convicted Ponzi schemers who had already served jail time for other frauds or in the ACFE’s recent post about Barry Minkow’s recent criminal charges.

Final Thought

Just like in baseball, there is no one piece of information or statistic in a background check that can help predict the future. In fact, there are multiple layers of information over a period of time that must be analyzed to fully understand someone’s past behavior.

When trying to learn more about a person’s background, if you think that a few reference checks, Google searches, a referral from respected members of the community or a couple of face-to-face meetings are the most reliable predictor of future performance, you need to take a page from the great Bill James and evaluate past performance.

Thanks to Seth Godin’s “Bill James and you” for the brilliant idea.

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4 Examples of a Bad Background Check

A presentation at a local networking group got me thinking about examples of a bad background check.  In fact, what people described as a background check, was not only a bad background check, it was downright awful.

At a Westchester County, New York business networking, I had the opportunity of doing a presentation to the group entitled The Anatomy of a Background Check; What it is – Why it’s Important and How it Can Apply to You.  The presentation was an introduction to owners and business leaders about the type of information you can obtain in a background check and some real-life examples of how a background check could avoid a potential disaster.

Prior to the presentation, we had a round table discussion.  Everyone was asked if they have ever had an experience conducting a background check on a potential employee or if they have been the subject of a background check themselves.

Based on the feedback from the group and some general misconceptions about what a background check is, I’ve put together a list a four examples of a “bad” background check:

1Search the Internet

The Internet is extremely powerful, but it does have its limitations.  Consider this – the surface web (a typical “Google” search or search engine) accounts for less than 3% of the Internet and by Google’s own admission, it would take more than 300 years to index all of the world’s information and make it searchable.

I use it every day as part of what I do, but only searching the Internet is a mistake.  The Internet contains only a small slice information that you can find about a person.

2Search Social Networks

Facebook, LinkedIn, Twitter, blogs, Myspace and other social networking sites have changed the way people interact on the web.  Some people will say just about anything about themselves, without any regard to the fact that the entire world may be watching.

Sure, you may find some inappropriate pictures, vulgar tweets or insight into how they spend their free time, but social networking sites are not going to tell you if the person is a convicted criminal, sex offender or if they have been arrested for drinking and driving, fraud or passing bad checks.

3Check References

If you are entering into any type of significant relationship with a vendor, business or  employment matter, checking with references should be a part of the process.  Understand, however, that these “references” have been hand-picked and you may not be getting an honest opinion.

If you truly want an unvarnished opinion, call people that aren’t listed as references; the former CEO at the company where the person served as Executive Vice President, a former business partner or a vendor not listed as a reference.  You will get a more honest, real-life assessment.

4Rely on Others

“Well if he worked at [enter a reputable company here] and went to [enter Ivy League school here], they must be reputable!” Or the related “If [enter reputable person in your community] invested with him, they must have been vetted!”

Relying on what you think others did is a mistake. First off, because other people have hired or invested with somebody, does not mean they did their homework. Secondly, what if he really didn’t go to that Ivy League school or work for that reputable company? You wouldn’t know unless you checked it out.

Final Thought

In certain situations, searching the Internet, checking social profiles and checking references may be the only thing you need to do.  But it’s important to understand, that this is only part of the process of conducting a background check.

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Does your Broker have a Felony, Bankruptcy or Fraud Accusation?

Yesterday, The New York Times published an article on the “checkered history” of Wall Street reporting infractions by its brokers.

The article cited numerous examples over the last several years of Wall Street’s failure to report infractions in a timely fashion (or in a few cases, a failure to report anything at all) to FINRA, the nongoverment regulator that oversees brokers:

  • Last year, Morgan Stanley Smith Barney took months to report that its broker Martin Joel Erzinger was charged with a felony when he “hit a cyclist, leaving the rider seriously injured on the side of the road” and abandoned his car in a Pizza Hut.
  • In 2004, Morgan Stanley was fined $2.2 million for failing to report 1,800 customer complaints and other wrongdoing.
  • Citigroup was fined $150,000 in 2010 for filing “inaccurate” disclosures about 120 brokers who were accused of theft or fraud.
  • In 2010, Fifth Third Bank was fined for failing to disclose that seven of its brokers had “personal financial blemishes” including bankruptcies and liens.

What can you do to protect yourself?

Do your own homework or hire a professional to do the work for you.

While FINRA recently expanded the information available about brokers through its online BrokerCheck service, you can still get much more detailed and historical information from your local state securities regulators.

Additionally, you can hire a professional private investigator to identify information that may not be fully disclosed on regulatory records including past bankruptcies, criminal records, liens, civil lawsuits and historical arbitration awards involving your broker.

Waiting for your financial institutions to self-report a felony, bankruptcy or allegations of fraud is a recipe for disaster. You can’t always rely on regulators to do the work for you; just ask the victims Bernie Madoff.

Photo used under Creative Commons from epicharmus.

 

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Can a Private Investigator Get a Credit Report?

One of the most frequently asked questions that a private investigator typically receives is “Can you get a credit report?”

The short answer to this inquiry is “yes,” an investigator can legally obtain a subject’s credit profile report, however there are a few important caveats to consider before asking the question.

Caveat #1 – You must have an “Official” signed release from the subject

The first requirement is that you must have a signed authorization or waiver from the subject of the inquiry to obtain their credit report.

Due to enhanced federal privacy laws, there are no (legal) means to obtain a subject’s credit report unless you have a signed release.  Regardless of what “loopholes” another rogue investigator may inform you, there is truly no way around it.

Caveat #2 – You must have a “permissible” business purpose

Access to a subject’s credit report is governed by the Fair Credit Report Act (“FCRA”) which was initially enacted in 1970 and has been amended to address heightened privacy laws.  Sweeping and substantial amendments to the FCRA were made in the Consumer Credit Reporting Reform Act of 1996 that further limited access to information contained in a consumer credit report through a set of “permissible purposes” that would later be adopted by the Drivers Privacy Protection Act (DPPA)  and the Gramm Leach Bliley Act (“GLBA”).

These federal statutes limit the use of a credit report to certain “permissible purposes” such as a person acting in a fiduciary or representative capacity, for employment screening, or a “legitimate” business need on behalf of the consumer.So how does a private investigator typically obtain a credit report?

Some private investigators act as a third-party source for credit reporting agencies and have a direct link to obtain a subject’s credit report, however most investigators will utilize outside sources to obtain the information through legitimate third parties. These third party resources typically have access to only one of the three major credit reporting agencies in the U.S. (i.e. Experian, Equifax or Trans Union).

Does obtaining a person’s credit report affect their credit score?

Whenever a potential creditor (bank, lending institution, utility company, etc.) obtains a person’s credit report as part of a lending decision, his/her score is ultimately negatively affected as a “hard inquiry.”

However, when a subject’s credit report is requested by a potential employer or landlord it is considered a “soft inquiry” which does not have a negative affect on the credit score.

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Why Google Search Results Suck and What to Do About It

There has been a lot of talk recently about the degradation of Google search results due to spam.  In a nut shell, search engine optimization experts (much smarter than us about this stuff) argue that people are figuring out how to manipulate Google in order to rank highly in organic searches and as a result, search results have effectively become useless.

As an example, SEOmoz recently found that a search under the term “NFL Jerseys” found that the top 10 results were spam; not one of the results led you to NFL.com or any other legitimate site.

The problem is that people have figured out how to beat the system; how to rank at the top of search queries.

What fraudsters are doing?

Using the same techniques used to get “NFL Jerseys” to the top of search results, fraudsters are burying the not-so-flattering information.

Take for example a convicted fraudster, whose past indiscretions would show up at the top of Google’s results every time his name was searched. By creating online links in social networks (i.e. LinkedIn, Twitter, Facebook, etc.), purchasing domains, publishing press releases, and publishing blogs, fraudsters can “bury” the derogatory news article, lawsuit or message board posting below the first few pages of search results – which most people don’t typically navigate past.

Or take the example of a recent story of a fraudster who literally encouraged negative reviews so that people would link to his site, which would actually promote his site to the top of Google’s rankings for eyewear.

What you can do?

Google is still the most powerful search engine out there, so turning your back on it is not such a great idea.  For the time being you may need to dig a little deeper in the search results in order to find what you are looking for until Google can figure out how to improve their search algorithm.

This may surprise people, but there are other search engines besides Google including Bing (although they have been accused of copying Google’s results) or upstart DuckDuckGo.

Important Takeaways

  • You can’t always trust what you see on the Internet; somebody may have planted it there
  • Just because you don’t find anything of interest on the first few pages of Google, doesn’t mean there is nothing “of interest” out there
  • Press releases, self-promotional websites and self-reported information is not a “source” of fact-based information
  • The Internet is not “neutral”; it’s an open forum for anyone to comment on just about anything, and unless it’s coming from a reputable source, it’s not fact based information…no matter how many times you see it

What do you think?  Do Google search results suck for you too?  What are you doing about it?  Let us know in the comments?

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Professional Background Check v. “Free” Background Check

So with all of these “free” background checks available on the web and other “free” web resources, why should you pay for a professional background check?

Nothing is “free”

First off, in case you don’t know already, nothing in this world is “free.” Most of these “free” background check websites entice customers with free offers only to hook them in to purchase additional information for a fee.

Typically you will be given some “teaser” information, such as a name or partial address, to entice you to purchase additional information.

What follows, of course, is a request to purchase additional information for $19.95, $49.95 or $99.95.

So what do you get for a “free” background check?

The report that you will ultimately get is what investigators like to describe as a “data dump”; various information from various sources is “dumped” into a formatted report usually consisting of some sort of address history, list of neighbors and maybe some limited identifiers such as partial date of birth.

There may be some public records including limited criminal history (typically only state penitentiary records), judgments, some civil records and other records from various sources.

So what’s the problem?

The problem with these “data dumps” is that records are mixed up, data is stale, inaccurate and incomplete.

While reviewing and analyzing data is important in conducting a background check on anyone, having accurate, up-to-date information that is relevant to the person that you are conducting a background check on is essential.

For example, many of these “free” and paid background check services suggest that they conduct “national criminal checks”, but if you look at the fine print they only search state penitentiary records and don’t check criminal records in every jurisdiction, which is a manual, time consuming and expensive proposition.

A common complaint is that the reports provide data on different people with the same name.

So what do you get with a professional background check?

A professional background check is conducted by a trained investigator, adept at navigating through the maze of open sources, public records and databases to provide a detailed background of the subject.

An investigator trained in conducting a professional background check reviews and analyzes documents to determine the relevance or risk involved.

A professional background check goes beyond providing you with hundreds of pages of public record data; we provide a concise easy to follow report that provides you relevant details and analysis.

In addition to conducting exhaustive searches through open sources and analyzing documents and records, if you are interested a more complete background check, investigators can conduct interviews of former colleagues, business partners or friends to identify other information that may not necessarily be on paper.

Final thoughts

The point of this is not to scare you away from using these “free” background check services (we do recommend that you check out a review of web-based background check services by the Wall Street Journal).

There is certainly a time and a place for doing a little snooping around for whatever reason you may have, such as finding an old boyfriend, a long lost relative or a former colleague.

But when if you have a serious issue or if there is a serious risk involved, please call a professional; you don’t want stale, inaccurate or incomplete information to get you into a bad situation.

 

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