Another EB-5 visa fraud, more burned investors. For people outside the United States trying to pick a reputable investment that will get them permanent residency in the U.S., sorting through hundreds of projects is often the hardest part of the job.

EB-5 due diligence

There is plenty written about what you should do before you invest, one of the latest guides being from the North American Securities Administrators Association, here. You can read up on EB-5 frauds here.

What are the warning signs of fraud? Last year’s revelation of a huge fraud at a Vermont development that had sucked in hundreds of investors led many to wonder, “How could we have known this would blow up?”

There is no guaranteed way to find fraud, but if you see things that would give a prudent investor pause; if the project’s sponsors don’t have a good track record; if you don’t understand the risks of the project (and they all have risks) walk away.

Remember, many reputable immigration lawyers refuse to recommend an EB-5 investment because they don’t want to be sued if the investment encounters problems, whether of a normal business variety or because of fraud. Even if your lawyer recommends an investment, you should still perform due diligence on the project.

Even more surprising to some non-Americans, once the government spots EB-5 fraud, it’s often too late for the investors who have put in their money. Sometimes investors can recover and sometimes not, but the green cards they wanted will not be delivered and they have lost time in addition to money.

Looking at the track record of a developer is much easier than going through the hundreds of pages of documents you and your lawyer will need to examine before you invest your money. You will always need to do both, but as you sort through five or ten possible investments, start with the track records.

The Vermont Fraud Warning Signs

One of the most celebrated of all the projects was the group of investments in the northeastern state of Vermont, near the border with Canada. Jay Peak was an old ski hill that fell into the hands of a Canadian operating company. They began with the EB-5 program by raising money for one project, but then in 2008 the Canadian company sold the business to a man local press described as “mysterious,” Ariel Quiros. He grew up in New York, was of Puerto Rican and Venezuelan background, but had spent years in Korea building unspecified businesses which supposedly gave him the ability to buy Jay Peak for $25 million.

Once Quiros bought the mountain, the EB-5 projects accelerated, with six more projects for hotels and finally, before the scheme was exposed, a bio-technology park that was supposed to flourish among the ski hills and dairy farms of far-northern Vermont.

The main thing an investor should have asked about Jay Peak was, who exactly is Ariel Quiros, the owner? The whole sickening unravelling of the investment project is available at vtdigger.org (going from most recent to oldest story). But anyone investing after January 14, 2014 would have had an easy way to throw this one in the waste basket. A Vermont Digger article available on line described Quiros’ track record this way:

  • He lost his seat on the board of Bioheart Inc. after AnC Bio [Quiros’ company] failed to make the second installment in a $4 million investment.
  • Quiros also survived a Texas lawsuit in which two investors alleged breach of contract after they didn’t get their money back in full in 10 years.
  • And a Florida man claims he never received almost $16,000 worth of equipment from a [Quiros] company called Q Vision, but he appears to have dropped his pursuit of the matter.

Of course, full due diligence could involve verifying the assertions in this article, but if they turned out to be true, who would entrust half a million dollars and a green card to someone with a track record of not following through on investments and unhappy investors alleging breach of contract?

If Quiros occasionally had disputes with investors and partners, you would also ask a more basic question: how did he make his money – the money that bought Jay Peak — in the first place?

The article in January 2014 said,

“Quiros has melded street smarts from New York, military sensibilities from the Korean Demilitarized Zone and a love of adventure into a business empire that spans the globe, starting with international trade from Korea in the early 1980s… GSI Group, where he got his start in Korea, imported and exported goods ranging from shoes to women’s blouses to radios…He specialized in raw materials, much of it for the Korean government, he says.”

In addition, Bloomberg says that “Mr. Quiros serves as a Director and Principal of GSI Group, a raw materials procurement company for the South Korean manufacturing community with offices in Seoul, Beijing, Sydney, Hong Kong and Miami.”

The only problem is, GSI is one difficult company to find. Quiros shows up on open-source databases as a corporate officer of 96 companies, but these are all in Florida, Panama and Vermont. None of the Florida companies are called GSI.

On line, there is www.GSIkoreanet., but this mentions no overseas offices. GSI Australia’s website says it is a company dealing in poultry, swine and grain. There are no Korean links evident. And it is based in Queensland and Victoria, not New South Wales where Sydney is. The Australia companies registry provides no evidence of any Korean trading company registered in New South Wales.

In Hong Kong, a search of directors of all Hong Kong companies shows that nobody named Quiros and no company called GSI directs any Hong Kong company.

A search of regulatory filings in the U.S. turns up nothing on Quiros until 2010, after he bought Jay Peak. A news search on Bloomberg turns up only GSI Group Inc., a maker of agricultural equipment.

The earliest mention of Quiros in securities filings in the U.S. is in 2011, as an investor in a U.S. biotech company. His Korean address in this filing was: 10th Floor, H&S Tower, 119-2 Nonhyun-Dong, Gangnam-Gu, Seoul, Korea 135-820. A reverse search of this address turns up nothing on GSI.

Are we therefore stunned to learn today that according to the U.S. Securities and Exchange Commission, Quiros never used his own money to buy Jay Peak in the first place? Instead, according to the judicial complaint filed in 2016, Quiros took money investors had already put into Jay Peak when it was owned by the Canadians, and used that cash to buy the ski resort.

Subsequent cash that came in for new projects funded prior projects, but eventually the game was up when Quiros told investors that their hotel project was cancelled and converted into a loan. They would get their money back, he promised, but green cards would not be forthcoming. Quiros is fighting the SEC, while his President has settled with the agency.

In the Bernard Madoff Ponzi scheme, there were red flags that sent many prudent investors away: a small-time accountant for what was supposed to be a multi-billion-dollar enterprise, and no independent custodian for the investor money.

In the case of Quiros and the Vermont project, a history of unhappy investors and a murky source of funds should have been enough for investors to say, “Not this one.”

 

About the firm:

Charles Griffin Intelligence is an independent consulting firm that performs investor due diligence for hedge funds, corporations and individuals both inside and outside the United States. We never do work for any EB-5 developer or regional center. We do not provide legal advice, but can help investors and their lawyers assess the business risk of an investment.

For more information about the firm, please see the website at www.charlesgriffinllc.com. You can also read our blog, The Ethical Investigator, at www.ethicalinvestigator.com

 

Lawyers need to find witnesses. They look for assets to see if it’s worth suing or if they can collect after they win. They want to profile opponents for weaknesses based on past litigation or business dealings.

Every legal matter turns on facts. Most cases don’t go to trial, fewer still go to appeal, but all need good facts. Without decent facts, they face dismissal or don’t even get to the complaint stage.Better innovation in law firms

Do law schools teach any of these skills? Ninety-nine percent do not.  Good fact-finding requires something not taught at a lot of law schools: innovation and creativity. Of course, good judges can maneuver the law through creative decisions, and good lawyers are rightly praised for creative ways to interpret a regulation or to structure a deal.

But when it comes to fact gathering, the idea for most lawyers seems to be that you can assign uncreative, non-innovative people to plug data into Google, Westlaw or Lexis, and out will come the data you need.

This is incorrect, as anyone with a complex matter who has tried just Googling and Westlaw research will tell you.

The innovative, creative fact finder follows these three rules:

  1. Free Yourself from Database Dependency. If there were a secret trove of legally obtained information, you would be able to buy it because this is America, where good products get packaged and sold if there is sufficient demand for them. And Google won’t do it all. Most documents in the U.S. are not on line, so Google won’t help you. For any given person, there could be documents sitting in one of the more than 3,000 counties in this country, in paper form.
  • If you use a database, do you know how to verify the output? Is your John C. Wong the same John C. Wong who got sued in Los Angeles? How will you tell the difference? You need a battle plan. Can your researcher arrange to have someone go into a courthouse 2,000 miles away from your office?
  • How will you cope with conflicting results when one source says John C. Wong set up three Delaware LLC’s last year, and another says he set up two in Delaware and two in New York?
  1. Fight Confirmation Bias. Ask, “What am I not seeing?” Computers are terrible at the kind of thought that comes naturally to people. No risk management program said about Bernard Madoff, “His auditor can’t be up to the task because his office is in a strip mall in the suburbs.”
  • For your researchers, find people who can put themselves in the shoes of those they are investigating. Not everyone can say, “This report must be wrong. If I were in the high-end jewelry business, I wouldn’t run it out of a tiny ranch house in Idaho. Either this is a small business or Idaho’s not the real HQ.” If someone doesn’t notice a discrepancy as glaring as this, they are the wrong person to be doing an investigation that requires open-mindedness.
  1. Don’t paint by numbers. Begin an investigation on a clean sheet of paper. Don’t base your investigation on what someone’s resume says he did. Verify the whole thing.
  • Look not just at what’s on the resume, but look for what was left off Jobs that didn’t go well, and people who don’t like the person.
  • Despite that your client tells you, they don’t know everything (if they did they wouldn’t hire you). If your client thinks you will never find a subject’s assets outside of Texas, look outside of Texas anyway. You owe it to your client.

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

Step one: don’t have a manual. That’s the message in an information-packed new book about the inner workings of the SEC just after the Madoff and now largely forgotten (but just as egregious) Allen Stanford frauds.

Step 1

In his memoir of five years at the agency, former SEC Director of Investment Management Norm Champ (now back in private practice) writes that he was stunned to arrive into public service in 2010 to find that examiners had no set procedures both when looking at regulated entities or in following up on their findings.

“If SEC inspectors ever arrived at a financial firm for an examination and discovered that the firm had no manual about how to comply with federal securities laws, that firm would immediately be cited for deficiencies and most likely subject to enforcement action,” he writes in Going Public (My Adventures Inside the SEC and How to Prevent the Next Devastating Crisis).

Among his proudest achievements were instituting such procedures at the SEC, and holding accountable anyone at the SEC who begins to follow up on a whistle-blower’s report – the kind that the Commission ignored in relation to Madoff and Stanford.

We’ve written and spoken lots about our methodology for due diligence. You start from scratch and look not just to verify what you’ve been handed, but for information the person or company don’t want you to see. You don’t close investigative doors prematurely even though human nature makes you want to do just that.

Starting from scratch means that you assume nothing. You don’t assume Madoff has all those assets under management unless you check. It would have been easy to do but nobody asked. Anyone who was suspicious of the absence of an independent custodian or a major auditor similarly let it slide.

This is what we refer to as a Paint-by-Numbers investigation: the forms and relationships are all taken as givens, and all you get to do is decide on color. In Madoff’s case, the “forms” (the existence of invested money) were illusory. Who cares about the color (say, the risk profile of the “securities”) of something that doesn’t exist?

In Stanford’s case, there was lots of information he wouldn’t have been proud of. An April 2007 FINRA report on the Stanford Group Company said the firm had been found to be operating a securities business while failing to maintain its required minimum net capital.  A former employee of Stanford’s alleged in an April 2006 complaint in Florida state court that Stanford was operating a Ponzi scheme.

Without internal accountability procedures in place, did all of the people at the SEC just sit there? No. Champ (who arrived post-Madoff and Stanford) describes an agency packed with a lot of dedicated professionals but with a good bit of deadwood immune to the disciplines of the private-sector job market. As we read about the federal budget proposals that seek to cut funding at a variety of agencies, this book contains two other pertinent messages:

  1. If you could fire people in government the way you can in the private sector, it would be easier for the government to save money.
  2. That battle is so tough that most people (including Champ) just try to work with the good people they can find and leave personnel reform for someone else.

Champ makes no promises that there won’t be more Ponzi schemes, but hopes that his organizational reforms will reduce the chances. As in any due diligence, you can’t promise that you will always catch everything – only that if there are repeated indications of a problem staring you in the face (complete with former employees blowing whistles), you will follow up.

Among Champ’s recommendations for blunting the damage of the next crisis, one is especially welcome: eliminate the scandalous government sponsorship of lotteries. Lotteries are the world’s worst investment, and yet the poorest members of society spend like crazy on them, all prompted by a lot of misleading and predatory government advertising “far beyond what private businesses are allowed.”

Champ asks us to imagine what could be done with all that money people waste if it were properly invested and devoted to investor education.

We agree. The millionaires who lost with Madoff could at least have afforded $2,000 of due diligence on their investment. The poor who play the lottery and who should be saving their money are the ones who need help the most help from the SEC and from state governments that need to find a less repugnant way to raise revenue.

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

 

What to do when the databases you rely on start stripping out the very data you are paying for?Due diligence databases

Word in today’s Wall Street Journal that the main credit reporting firms will be removing many civil judgments and tax liens from credit reports prompts us to restate one our core beliefs:

Not only do databases routinely mix people up, they are far from complete in the information they contain.

Now, they will be even farther away from complete, because in order to list adverse information the credit reporting companies want several identifiers on each piece of information before they include it in a credit report. Even if there is only one person in the United States with a particular name, if his address and Social Security number are not included in a court filing against him, that filing may never make it onto his report. From what we’ve seen, there are almost no SSN’s in most of the filings we review.

As a result of this new policy, the credit scores of a lot of people are about to go up, says the Journal.

To answer the question posed at the top of this posting: what you do is you go after the information yourself. You (or a competent pro you hire) looks at databases and courthouse records for liens, litigation and other information people use every day to evaluate prospective associates, counterparties and debtors. If there’s enough money at stake, you may want to conduct interviews, not only with references but with people not on the resume.

The idea that databases are missing a lot is old news to anyone who stops to take a careful look.

The next time you are searching in a paid database, you may notice a little question mark somewhere around the box where you enter your search terms. Click on that and prepare to be shocked.

“Nationwide” coverage of marriage licenses may include only a handful of states, because such licenses are not public information in many jurisdictions. In other cases, the information is public but the database doesn’t include it because it’s too expensive to gather data that has not been scanned and stored electronically.

Of course, sending someone to a courthouse costs more than a few clicks performed while sitting at your desk. But does it cost more than lending to the wrong person who defaulted on a big loan six months ago?

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

What will it take for artificial intelligence to surpass us humans? After the Oscars fiasco last night, it doesn’t look like much.

As a person who thinks a lot about the power of human thought versus that of machines, what is striking is not that the mix-up of the Best Picture award was the product of one person’s error, but rather the screw-ups of four people who flubbed what is about the easiest job there is to imagine in show business.

Not one, but two PwC partners messed up with the envelope. You would think that if they had duplicates, it would be pretty clear whose job it was to give out the envelopes to the presenters. Something like, “you give them out and my set will be the backup.” But that didn’t seem to be what happened.

Then you have the compounded errors of Warren Beatty and Faye Dunaway, both of whom can read and simply read off what was obviously the wrong card.

The line we always hear about not being afraid that computers are taking over the world is that human beings will always be there to turn them off if necessary. Afraid of driverless cars? Don’t worry; you can always take over if the car is getting ready to carry you off a cliff.

An asset search for Bill Johnson that reveals he’s worth $200 million, when he emerged from Chapter 7 bankruptcy just 15 months ago? A human being can look at the results and conclude the computer mixed up our Bill Johnson with the tycoon of the same name.

But what if the person who wants to override the driverless car is drunk? What if the person on the Bill Johnson case is a dimwit who just passes on these improbable findings without further inquiry? Then, the best computer programming we have is only as good as the dumbest person overseeing it.

We’ve written extensively here about the value of the human brain in doing investigations. It’s the theme of my book, The Art of Fact Investigation.

As the Oscars demonstrated last night, not just any human brain will do.

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

There is a huge branch of the “fake news” business that gets no attention at all: the fake news consumed each day by corporate America that has nothing to do with politics, but everything to do with business – the bulk of the $18 trillion U.S. economy.Fake news investigation

We’ve been sorting through this kind of thing for years — It’s often why our clients hire us. I’ve also been talking on the subject recently in a speech called Fighting Fake News (see an excerpt here).

The everyday expression for figuring out what’s fake and what isn’t is: Due diligence. Good businesses are good at it, bad ones aren’t.

Six months ago, the term “fake news” meant false political information that the originator or spreader of the “news” knew was false. It’s hardly a new phenomenon, as the Wall Street Journal helpfully pointed out this week with Vladimir Putin’s Political Meddling Revives Old KGB Tactics.

By now, the term has been expanded to mean anything that’s partly or wholly untrue in the eye of the beholder, whether or not it was intentionally misstated.

What is corporate fake news? The massive amount of company, financial and personal information reported but never checked. Plenty of what’s put out is accurate, but a lot isn’t. Ask any public relations professional you know who will give you a frank appraisal of his business. If you issue a news release that’s well written, with nice quotes from your client, what happens to it?

In many cases, it will be printed word for word as a news story. There will be a news byline over it, but the body of the release will be all but unchanged. The “story” will be on dozens of television news department websites, in local newspapers, and then reproduced again based on that “reporting.”

Do “quality journalists” do this? Not that way.

Off the Beaten Track

But consider a company that is not sexy and attractive to Wall Street bankers or a lot of investors – perhaps a mid-sized printing company in Ohio or a private auto-parts manufacturer in Indiana. If that company issues a dull news release, the New York Times or the Chicago Tribune will almost certainly devote zero hours to verifying what’s in that news release. They may not report on the company at all.

If the company is public, you may get a couple of lines with earnings, usually in the context of “beating” or “missing” what analysts had predicted the earnings would be. Good luck relying on that. You would need to ask, are those the analysts who missed the dot-com bubble, the housing crisis, last year’s plunge in oil prices?

What are you to do then, when you are considering hiring someone who worked at one of these thinly covered companies? Or if you may want to enter into a long-term contract with one of them, or perhaps acquire one? Of what use will the “news” about the company be when you start looking?

There is another dimension to the problem aside from what the company says about itself. Company valuation is always relative to the health of its competitors, and they too have not only the same interest in promoting themselves, but also in reflecting negative news on their competitors.

If there is good news about fake news in politics today, it’s that people have heard a lot about made-up “news” sites, and reputable news outlets have devoted resources to reporting on them. Whatever your political viewpoint, there are plenty of places to go that will scrutinize the other side’s speeches and writings.

But where do you go if you need to scrutinize a thinly-traded or private company in refrigerated freight? Printing? A company that imports socks from Italy or manganese from Africa?

If you care enough, if the issue is valuable to you, you do your own research. Just as in the political realm, you read widely from a variety of sources and make your own decision.

Gray Matter

The problem with any kind of fake news detection comes when what is said is partially true. Neither black nor white, but gray. Evaluating gray takes the kind of gray matter a computer does not offer.

In politics, we see this all the time. President Obama’s promise “If you like your doctor, you can keep your doctor” has been given evolving degrees of truthfulness ratings since the time he said it. Many people have been able to keep their doctors; many have not (absent paying several times what they used to pay).

In business, things are almost always a shade of gray. During due diligence, an interview with a person who has posted an enthusiastic recommendation of a person on LinkedIn can reveal notes of hesitancy or qualification. You can ask questions that relate to matters not covered in the recommendation.

If a company has posted wonderful earnings, in depth analysis of the figures can show you that “wonderful” can mean “better than expected, but not sustainable because the company keeps selling assets to make its numbers.” Interviews can tell you it’s a lousy place to work, which could mean something if it’s a service business and may reflect poorly on the CEO and board.

As we tell our clients all the time, if you are about to hand the keys to a $30 million business to someone, doesn’t it make sense to make a few calls about that person to people not listed as references, and to see if there are jobs not listed on the person’s resume you’re holding?

In the world of due diligence, the most damaging fake news can come from omission — the information that is never written. Our challenge is to find it.

 

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

A wonderful piece in the Wall Street Journal here called “The Logic of Our Fear of Flying” does a great job explaining our irrational fear of flying using concepts from math. We all know that our chances of dying in a plane crash are much lower than dying in a car accident, and yet many of us get highly stressed when our plane takes off but think nothing of getting into the car and driving at 60 miles an hour on a crowded freeway. Why?

Mathematician Eugenia Cheng explains this irrationality in three ways.

  1. Conditional probability. Our chances of being in a plane crash are low, but our chances of dying IF we are in a plane crash are high. If our car has an accident it could be a fender bender from which we emerge unharmed thanks to seatbelts and airbags.
  2. Expected values. If you may win a $300 million lottery but there are 300 million tickets sold, your expected value is $1. If you attribute the value of your life as infinity or close to it, loss of that life (despite low chances of it happening aboard your aircraft) still looks like a nearly infinite potential loss.
  3. Rate of change. On a plane you go from feeling very safe (on the ground) to very unsafe (during takeoff, one of two most dangerous times to be on a plane) in the space of a few seconds. The faster the rate of change of the chance of disaster, the more anxious Cheng becomes.

I read this article and thought about another risk assessment problem I talk about when I speak to lawyers and lenders around the country about my book, The Art of Fact Investigation.

It’s the paradox that companies are happy to risk handing millions of dollars a year to a relatively unknown new hire who will run a part of their business worth hundreds of millions of dollars, and that they do this while insisting that to spend more than $2,000 on a background check of that person is too expensive.

Why do people take a chance (that they will lose their company millions) when for a thousand or two they could reduce the chances of disaster?

  1. Conditional probability. As with car accidents, there is low conditional probability that an employee who doesn’t work out is so awful that he takes down the entire company. Hiring an MBA to run your company is not the same thing as hiring a convicted murderer on probation to do any kind of job.
  2. Expected values. If you characterize the downside of a bad hire as a “bad fit” at the job that can be remedied, then you as the hiring decision-maker won’t get as much blame as if you had hired the next Nick Leeson who ruins you and everyone you work with.
  3. Rate of change. When an employee officially “doesn’t work out” it’s usually not a surprise event but a combination of factors that have built over time. Perhaps there has been high turnover of people under that person or a string of underperforming quarters, until the company decides that person doesn’t work. The Nick Leeson rate of change (from hero to zero overnight) is rare.

In mathematical terms, then, skimping on due diligence is explainable.

Still, imagine that for some reason the air crash statistics of individual airlines were not easily available, but for $2,000 every three years you could subscribe to a service that would tell you that Aeroflot crashes a lot more per mile travelled than Qantas.

Flying on Aeroflot is still safer than driving on July 4, but many of us would probably renew our subscriptions.

Any traveler challenged on paying this kind of money for such information would tell you, “I’m just doing my due diligence.”

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

This blog may be one of the few publications in the Western world that has never written the word “Kardashian,” but that has now changed. In the stories about the robbery in Paris of Kim Kardashian we found numerous issues that touch on the work we do.Kardashian Paris Investigation

After my recent book The Art of Fact Investigation came out in May, a number of people wrote to me and suggested another chapter in the next edition about what people could do to maintain privacy in the face some who may want to dig up facts on them.

The easy advice for Kim Kardashian-West: if you are on social media a lot with information about valuable possessions and your whereabouts, criminals will easily learn about your valuable possessions and your whereabouts. Big rings on Instagram? Not a good idea. The super-secret apartment hotel in Paris? With paparazzi following you everywhere, how secret is any place you go?

The harder advice both to accept and to act on relates to some speculation in the media that the crime was an inside job, because the thieves knew that Kardashian’s security guard was not on duty that night.

When we let others into our homes and into our lives, there is always the chance that one of those people may feed information to the outside. This is why many people like a preliminary background check of the electrician or plumber they are about to admit into their home. They like a more thorough look at someone who will watch their children. But Kardashian-West isn’t just dealing with plumbers and babysitters.

How many photographs are there of her bringing home groceries, for example? She eats therefore food is delivered by people. When she buys something large, that too is delivered. It is unlikely that she drives her car to Jiffy Lube when it’s time for an oil change. People drive for her.

We have written before about the value of talking to workers who have been in someone’s home. Movers, gardeners, handymen – all get to know the home to an extent and the people who work there. If one of them becomes estranged because they are fired or are not paid, they have every incentive to talk about the person they used to serve.

We are not saying that Kardashian-West has been betrayed by any of her staff. Only that when police found out that the bodyguard was off duty that night, they surely wanted to know: who else knew that? And they would have started the questioning close to home.

 

Want to know more?

  • Visit charlesgriffinllc.com and see our two blogs, The Ethical Investigator and the Divorce Asset Hunter;
  • Look at my book, The Art of Fact Investigation (available in free preview for Kindle at Amazon);
  • Watch me speak about Helping Lawyers with Fact Finding, here.

 

We pretty regularly find ourselves blogging about small business owners that draw people into scams.  We’ve seen the would-be movie executive, the sweet-talking investment solicitor, the landscaper and the produce company owner. Too often, we find that defrauded consumers and investors could have avoided their losses by doing some basic due diligence.  Sometimes the diligeCollapsed Roof.jpgnce can be as simple as a Google search, while other times it might pay to get an investigator involved.

Not surprisingly, we came across two stories this week and now add a roofing contractor and appliance repair store to our list of alleged (and some convicted) fraudsters.

Michigan roofer Kenneth Bird’s scheme was nothing out of the ordinary.  According to media reports, he took deposits for roofing work from potential clients and then never showed up to actually do the work.  He pleaded guilty to defrauding one couple of $6,125 for a $12, 250 roofing job he never completed at their home.  Colorado appliance repair store, AAAA TV Electronics Vacuum Appliance, allegedly over-charged customers for parts that they did not need, did not receive and some that did not even exist.

So how do you avoid losing money to these kinds of businesses?  In both of these cases, a quick Google search might have done the trick.  The Better Business Bureau had received numerous complaints about each of these companies, a tally of which was readily available on the internet.  In addition, a “Ripoff Report” was posted online about the appliance store and both businesses had some fairly negative reviews on yelp.com.  We tend to be very cautious when relying on internet information.  Most of the time, you don’t know who is behind a Yelp review, Ripoff Report or Better Business Bureau complaint, and not everything you read online is true.  That said, when there are a large number of complaints and/or troublesome reviews online about one company, it should at least give you pause before choosing them for your vacuum repair or roofing needs.

Beyond basic Google searching, it can pay to hire an investigator to go further than what’s available online.  We’ve blogged here about why Google should not be a substitute for thinking and we know from experience that most public records are not available on the internet.  As investigators, we use a whole range of ethical techniques to gather balanced information about people and companies.  This puts our clients in the position of feeling protected against the many fraudsters and scam artists that are out there.