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So, what really is a background investigation?

A background investigation takes on many shapes, forms and sizes, and is dependent on how far you want to dig into a person’s past, how much you are willing to pay for the investigation and the type of access authorized within the law.

Definition of a Background Investigation

A background investigation is the process of obtaining and collecting data from public, proprietary and other sources to determine: 1) if the person is who they say they are, 2) if the person has any adverse history and 3) the authenticity of the person’s qualifications and character.

A background investigation can take on numerous forms and the level of the information included in the background investigation is largely dependent on 1) access to information, 2) how much you are willing to pay for the information and 3) how far you want to dig into a person’s past.

Let’s break this down a little further.

Three Basic Questions in a Background Investigation

Is the person who they say they are?

A critical first step is to verify the basic details pertaining to an individual, such as a person’s name, date of birth, Social Security number and address history. Additionally, confirming that the person is not on any government watch lists, a convicted sex offender or really a wanted terrorist.

Is there any adverse history?

In addition to reviewing state and federal criminal histories, adverse history searches can include a review of any civil litigation history, bankruptcy records, judgments, and liens as well as any derogatory news media articles. It may also include reviewing social media sites for references to this person.

Can we authenticate their qualifications and character?

This would include verifying the authenticity of professional details such as employment history, education history and professional licensing history, as well as uncovering any sanctions, disputes or complaints. This may also include interviews with colleagues, business partners or adversaries to develop information outside of the public domain.

Factors To Consider

The background investigation can take on several forms, depending on several factors.

If someone working in the federal government is doing a background investigation for security clearance purposes, he or she has to have access to certain nonpublic information. The FBI background check on Steve Jobs, however, is an example of the need to access public information as well.

Dig Deeper: How to Conduct a Background Check Like the FBI

Similarly, when you purchase a gun, your name gets run through the National Instant Criminal Background Check System, or NICS, which is a nationwide criminal record repository that is also not publicly available.

For an investigator or any background screening firm, information in a background investigation is gathered from public and proprietary sources. While it may also include a review of a person’s credit history or personal financial details, this data can only be obtained with specific consent.

How Far Do You Want to Dig Into a Person’s Past?

There is a big difference between a background check and a background investigation. While we will dedicate some more time to this in a future post, in general, a background check is typically a quick way to quickly verify the integrity of a person by inputting their name into one or more databases and passing the raw data along to the end user.

Typically the information in a background check is not vetted or verified. Information in these databases can be incomplete, incorrect or stale. More troubling, the databases are usually not what they say they are, especially with regard to key areas such as criminal records.

Dig Deeper: Warning: Online Background Check Services Are Not What You Think

A background investigation is much more thorough and complete, and it includes scouring various public and proprietary databases, and analyzing and vetting the information for misrepresentations, inconsistencies, omissions, sanctions and false statements.

How Much Are You Willing to Pay?

I am sure you have seen various online services offering free or low-cost background checks. The reality is that most of the online criminal check databases and online background checks provide little more than a false sense of security.

A background investigation provides a much more thorough and accurate picture of an individual. Of course, with thoroughness, accuracy and depth, you are going to pay more.

This post is part of a series of posts titled Background Investigations 101 – What You Need To Know

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Background investigations and background checks are all the rage now.

You can read news almost every day about background checks for gun purchases, background checks for employment purposes, federal government background checks for security clearance purposes, and nanny background checks.

There is even a school in the Chicago suburbs that conducts a “criminal background” check via a “national database” for every visitor to the school.

The confusing part is that each one of the “background checks” described above is something completely different!

What’s even more confusing is that a background check and a background investigation, although technically similar, are really completely different.

Needless to say, it’s a confusing mess.

Have no fear … we are here to help.

We have created a series of posts to explain some of the areas of background investigation and background checks.

Among the topics we will explore in this series include:

Sound interesting?

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Guide to Hiring a Private Investigator

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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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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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In high stakes litigation, an expert witness background investigation may uncover information that could potentially discredit the expert witness and ultimately lead to a favorable outcome.

Pretrial discovery provided you with the opposing expert’s CV and details about his compensation for testimony. You may have Googled the expert witness or pulled up a few of his articles on Google Scholar. But what does this really tell you about your adversary’s expert? What do you truly know about your own expert, for that matter?

It’s easy for anyone to do some basic searches and get a “snapshot” of the expert that will be on the stand. It’s even easier to rely on the information provided by the expert. But what are you missing? Unless you find a glaring discrepancy or a front page scandal, basic research won’t provide you with the ammunition to discredit or disqualify your adversary’s expert.

In a comprehensive expert witness background investigation, an experienced investigator can dig deeper into the background of an opposing expert witness to help you on cross examination. In high stakes litigation, you should assume that your opponent is doing the same thing – what will they find? Investigating your own expert may prevent potential problems at trial and you will be better able to anticipate the other side’s attack.

Below are some areas that could be uncovered in a expert witness background investigation that could potentially discredit the witness:

The CV

Verifying the veracity of the information in the expert witness’s CV is a good, basic starting point. It is critical to know that the information contained in the CV is complete and accurate.  In addition to verifying “directory information” of former affiliations, organizations and educational institutions, investigators can also speak with former colleagues or associates, learning additional details about the expert.

Affiliations and Conflicts of Interest

In the past, attorneys have tried to obtain information about experts’ affiliations and monetary arrangements through discovery. As judges begin to limit the scope of discovery motions this tool may not always yield useful information. Having an investigator dig into an expert’s affiliations (e.g., organizations, educational institutions, employers, business partners etc.) may reveal conflicts of interests or other information useful for discrediting the witness.

Prior Statements

Pulling testimony in cases is time consuming, and frequently requires personnel to go to the court in question, but it can be a goldmine of information. Contradictory testimony in prior cases is, of course, a fantastic way to discredit a witness. Attorneys should also consider using other statements by the expert made in the media, scholarly articles, and other sources.

Past Acts

In the past there have been notable examples of discredited experts throughout the United States and the world. Prior criminal records and a history of work issues have come to light both in the United Kingdom and in the San Francisco forensic crime lab. In Florida, psychologist George Rekers’ testimony in numerous parental rights cases, was called into question.

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An attorney may think that they do not have any need for an experienced private investigator because of the variety of skills and resources that they employ.  But have you ever found yourself staring at a computer screen and asking:

I know the answer is out there…Where do we go from here?

Although law school and career experience provide an attorney with a number of useful research techniques and litigation skill, they do have limits.

Consulting with a professional private investigator can help attorney’s to leverage your position and find creative and efficient ways to come out ahead of your adversary.

Here are 10 ways that an attorney can use a professional private investigator:

1 Locate People

It may be a witness or an heir. Perhaps it’s a former employee who can shed light on corporate misconduct. Or maybe you need to locate a witness in possession of the proverbial “smoking gun.” Whether you would like to interview, serve, or investigate someone, an investigator can help you to identify and locate the individual.

2 Locate Assets

Investigators are skilled at locating assets such as real estate, valuable property (artwork, antiques, collectibles, etc.), and vehicles (motor vehicles, aircraft, vessels, etc.). An investigator can also help attorneys to identify the location both domestic and offshore bank accounts (though the details of these assets may not necessarily be disclosed by banking institutions without court order or permission from the account holder – see our post 5 Myths: What a Private Investigator Cannot (Legally) Get.

3 Leverage for Negotiations

An investigator can pull together key sources and intelligence to inform your side during litigation, an M &A deal, internal investigation, or any other adversarial situation that can make the difference between a favorable settlement.

4 Enforce Judgments

A judgment is only useful if you are able to enforce it. An investigator can help attorneys to identify current assets and any efforts to hide or misrepresent them through the transfer to family members, friends or other parties.

5 Connect the Dots

Investigators can help you to know who is actually sitting on the other side of the table during litigation or a potential business deal. You can gain immeasurable negotiation power by identifying who is actually behind a faceless corporation or tying together undisclosed connections.

6 Predict Your Opponent’s Next Move

Through an investigation, you can learn your opponent’s history and patterns of behaviors so as to best predict how they will react under pressure. This will help you to be successful in litigation strategizing, during cross examination, or at the deal table.

7 Prep For Cross Examination

During preparation for a deposition or courtroom testimony, an investigator’s report detailing your witnesses’ weaknesses, background, and behavioral tendencies may be one of your most valuable tools. This can also be useful in identifying information against your client, so you can be prepared for what may come up during the course of the litigation.

8 Collect and review electronic evidence

Whether it is an adversarial matter or an internal investigation, investigators may be used to efficiently recover electronic files – including those that a subject believes he or she has successfully deleted. Investigators are frequently used to identify and analyze a subject’s emails, documents, or other files.

9 Trademark and Intellectual Property Monitoring

Investigators can be used to successfully police a company’s products throughout the world. Counterfeiting and improper diversion of products onto the grey market are just two of the most common areas where an investigator can provide intelligence and assistance.

10 Reconstruction

A historical reconstruction may be helpful in a number of different areas. Perhaps you need to review the history of a family to locate heirs. It could be a corporate history or a chain of title issue in a real estate matter. Whatever the issue, an investigator can help to identify and piece together long lost documents, facts and witnesses.

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