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Even in their most basic form, nearly all background investigations will include some form of identity verification, some criminal history (the depths of which may vary), and watch list research, but there are varying levels of background investigations where you can find information, from a $19.95 online service to a several-hundred-thousand-dollar background investigation such as one done by the FBI.

And there are quite a few in between.

In general, however, background investigations are designed to reveal information in a person’s history that may call their character into question.

On one end of the spectrum is the basic online background investigation. In most cases, online background checks should be able to do a good job of verifying a person’s identity, finding any serious criminal offenses, exposing significant jail time, and identifying registered sex offenders and international terrorists.

In the simplest terms, these types of background investigations should be used to identify the terrorist, the ax-murderer, or the sex offender you wouldn’t allow within three miles of your residence.

While this has been completely oversimplified, this end of the spectrum is what you would typically find in an employment background check, where the main focus is identify verification, criminal records, terrorist watch lists, and sex offender registries. These checks may also confirm the individual’s reported degree and employment history.

What Can Be Revealed in a Background Investigation?

At the other end of the spectrum is the FBI background investigation, where every moment from the time a person is born is scrutinized, vetted, examined, cross-checked, and investigated.

While this kind of deep vetting is saved for extraordinary circumstances like investigating people in high-ranking political positions or people involved in extremely high-stakes litigation, it is between these two extremes that background investigations can be really revealing.

This is where you can identify much more nuanced information that can call a person’s character into question, like connections to unscrupulous organizations, a history of failed businesses, or questionable or inappropriate comments hidden deep in social media accounts.

This is also where financial issues, factual misrepresentations, lies, falsehoods, exaggerations, controversial remarks, contentious behavior, accusations, troublesome conduct, and problematic connections can be revealed; those revelations provide a broad-based picture of a person to help the client make a more informed decision.

For example, attorneys involved in high-stakes litigation may want to know more about a so-called expert or star witness; a private equity firm making a major acquisition may want to dive deep into their new president; the board of a public company may want to closely scrutinize the activities and representations of the incoming CEO/chairman of the board; a corporation may want to examine a competitor who has mysteriously come out of nowhere to steal some high-stakes accounts.

So, can a background investigation reveal whether or not you stole lunch money in the fourth grade, or whether you were jaywalking across Main Street or have a secret tattoo that nobody has ever seen?

Maybe, but I can promise you it’s going to be extraordinarily challenging, time-consuming, resource-intense, expensive, and not easy to find … unless you have some close friends in the FBI. ;)

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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.

Enjoyed What You Read?

Sign up for our newsletter and stay up to date with what Hal Humphreys, from Pursuit Magazine, believes to be one of the absolute best blogs in the investigative industry!

Enjoyed What You Read?

Sign up for our newsletter and stay up to date with what Hal Humphreys, from Pursuit Magazine, believes to be one of the absolute best blogs in the investigative industry!