The big guys have been going bankrupt, but the real carnage is yet to come:. Among America’s small businesses. Potential creditors need to get organized for the fight which appears to have been kicked off in New York this month with a fascinating case.

We have seen the big names going down including JC Penney, J. Crew, Neiman Marcus. Many were weak anyway but some that just could not survive being shut down completely for months. The list is at

But what about the smaller businesses that seemed to be doing fine before this happened? And what of their landlords that the businesses hope will help absorb the losses?

For those of us who get involved in asset identification before and during litigation, these are important concerns. Now, a case that could set a precedent for businesses looking to get out of their leases is before a federal judge in New York. It was reported in The New York Times.

An art gallery paying $54,000 a month moved out early when New York shut down in March. It claimed the lease was rendered null and void and that it should have its deposit back, on the basis of frustration of purpose or impossibility of performance.

The case is Venus Over Manhattan Art LLC v. 980 Madison Owner LLC, 1:20-cv-03838, U.S. District Court for the Southern District of New York, filed May 18, 2020.

The gallery claims it cannot have the 500-person openings it needs to because of the shutdown – therefore it is impossible to operate its business. Alternatively, it argues that the purpose of the lease has been frustrated by government edicts, and that it should be released from its contract. It also wants its $365,000 deposit back.

There are a number of possible outcomes:

  1. The case could easily settle. If the gallery wants to survive, it could accept a new lease for less money and apply some of the deposit seized by the landlord to a new deposit, with the rest of the money being used as credit for the new lower rent. This seems like the most likely.
  2. Tenant wins. If a government shutdown because of a pandemic means any business that was closed can get out of a lease, it is a crisis for commercial landlords all over the state (a crisis even bigger than the cash flow one they already have, that is). Landlords could follow some of their larger tenants into chapter 11 bankruptcies.
  3. Landlord wins. If the landlord is content to keep the deposit and rent the space out to someone else, that is one thing. If the landlord decides to hold the tenant to the terms of the lease, it will need to be able to seize or garnish assets that the tenant has. What assets does an art gallery have? You need to investigate.

Also at issue in the case is that in addition to the obligation of the tenant, there was a personal  guarantee that the rent would be paid. The lawsuit does not specify who gave the guarantee, but if the landlord wins, he will not only be able to go after the gallery but also that guarantor. What the guarantor has is also something to be investigated.

The time to look for assets is now. Of course, under the concept of fraudulent conveyance, once the tenant sues the landlord, the tenant cannot transfer assets out of his company in the event that he loses and needs to hand them over. If he loses, those assets can be taken back by the court if he transferred them around the time he sued to get out of the lease. This is called a constructive trust.

Still, it is easier to identify assets now, before he can transfer them to a different name.

As for the guarantor, he may be able to plead that he had no notice of the lawsuit and that his assets are freely transferable. That is an argument that could work. But if it does not, a forward-thinking landlord would want to be able to identify the assets now in the event he needs to go after them to collect.


For more on asset searches, check out our firm’s other blog, The Divorce Asset Hunter.

We always like to say that when we find out about a person, we do so without invading their privacy. That can still mean we find out a lot of things about them that they would rather keep secret, but those facts are derived from what we can legally look at: legal records, mortgages and deeds, secured debts, media reports and social media,

There can also be interviews, but not with people who are represented by counsel and talking to whom would violate rules of professional responsibility governing lawyers.

Like everyone else, I have been thinking about how the current worldwide lockdowns will change my business.

In many cases, the answer is not at all. Throughout the current lockdowns, we have continued to do due diligence, profile litigants, find people to interview and search for assets.

One way things may change will be a curiosity about a person’s exposure to the Covid-19 virus. Eight weeks ago any kind of snooping around about a person’s medical history would have sent up a flare for me. I would have been worried about violating strict records about medical secrecy. Hipaa (the Health Insurance Portability and Accountability Act) has been such a ferocious piece of legislation in its protection of medical history that I barely got asked to violate it.

Contrast that with the Gramm Leach Bliley Act that protects the confidentiality of bank records. Lawyers ask for these without a court order all the time, and we of course decline.

It is only four years since the major controversy over whether the government could force Apple to crack the iPhone of the man who shot 14 people to death in San Bernardino, California. Many Americans took the view that even if cracking the phone could help prevent a co-conspirator from shooting more people, the cost to privacy was too great. The Washington Post reported on two of the polls on the issue. Part of the difference in responses was due to the way the question was asked. But unquestionably, millions of Americans did not want the government going into a terrorist’s phone in case their phones would be next.

Now today, privacy advocates are having second thoughts. Even as The New York Times thundered in an editorial that we shouldn’t have to sacrifice our privacy to fight the corona virus, the paper’s privacy advocate Charlie Warzel is reconsidering his fear of government tracking us through our phones. He hates the idea that private companies can track us (though that is because we let them), but he is not sure about the government tracking us if there is a public health reason for doing so.[i]

My own view is that getting a targeted ad is probably less threatening to my liberty than a permanent government record of where I have been and with whom I have been associating. Advertising clients have anonymized data about us, whereas the government would keep records of our names. Ad blockers can eliminate ads but if phone companies tell the government where we are every second, that is not something we can easily prevent without deciding to give up cell phones.

It is easy to say, “prevent disease and protect privacy,” but how? The Wall Street Journal editorialized:

Planning for the next phase of the pandemic will also heighten concerns and conflict over civil liberties… Testing may be mandatory. Contact tracing may mean government tracking of cellphone data. How much privacy are individuals willing to forfeit for a virus that increasingly appears to pose little danger to a large percentage of the U.S. population? … Ultimately, we may not be able to escape the “immunity passports” that Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, cited as a possibility “under certain circumstances.”

The relaxation of Hippa is underway, although supposedly temporarily, outlined here by Fox Rothschild.

But if enough people decide that more intrusive record keeping is warranted to prevent another outbreak from spreading, will yesterday’s standard of medical privacy ever return?

There is no agreement among even western democracies of what constitutes reasonable privacy. Europeans are aghast at the notion that a couple’s divorce agreement is a matter of public record in some U.S. states. Americans look at you blankly when you tell them that a person’s tax return is a matter of public record in Norway.

We always seek to stay on the right side of the privacy line as we do our work. Even if that line is a bright line, it can still move this way or that. It may be on the move right now.

[i] In researching this blog I also discovered that as much as the New York Times hates data gathering by private companies, its own data gathering controls can be as confusing as some of the companies it bitterly criticizes. Try adjusting the kind of information the Times gathers about you if you read it online. You can opt for “I want to keep my subscription or service but want to delete my personal information that you don’t need in order to provide my subscription or service, unless you have legal reasons for keeping it.” This is as opposed to just ending your subscription. But then if you click the first option to keep your subscription with limited data scraping, you agree that this will terminate your service with the paper. If Facebook had such two such contradictory options, the editorialists would tear it apart.

In honor of President’s Day (still officially known as Washington’s Birthday) a few thoughts about interviewing.

There are so many more facts about ourselves that are in our heads (or the heads of people we know) than there are in databases and court cases. Many times, to get as much as the truth as we need, we are forced to do interviews.

To see this for yourself, Google yourself. How much of what you know about your and your history will you find there? Perhaps one percent, perhaps less. If someone wants to find out where you went to elementary school, who your friends are, who you dated before marrying, where you worked (but didn’t include on your resume), they would have to ask people.

Sharpen Your Axe Before Taking a Swing

An apocryphal quote attributed to Abraham Lincoln was, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” This well summarizes my approach to doing an interview. You will not know the right questions to ask until you have done your research.  My sharp axe is the knowledge that Mr. X had a couple of companies his wife didn’t know about. You can’t ask his former colleagues about these companies if you don’t know they exist and are linked to Mr. X. You can’t know all of this unless you do research before picking up the phone.

While preparation is key, so is humility. The well-known rule among litigators “Never ask a question to which you don’t know the answer” may be fine for court or depositions, but that kind of questioning is not the best course of action for a fact investigator. Because we know so much less than we think, over-preparing to the point of anticipating answers will make an interviewer less alert to any surprises that may emerge. Just as we take a fresh approach to each person when we do a public-records check, we need to keep in mind those public records when we start our interview yet be fully aware that the public record is at best a rough abstraction of someone’s life.

Humility Gets Results

George Washington said that “honesty is always the best policy,” and this blog has written for years about the ethical strictures the allow lawyers to “dissemble” but not to tell lies. You can’t pretend to be a police officer (by statute), but the rules of professional responsibility mean you can’t pretend to be a New York Times reporter when you are not.

Still, it is not dishonest if you fail to interrupt someone who is telling something you already know. Listening to something you think you already know is useful for two reasons:

  1. When you let people speak, they become comfortable talking to you. Cut them off and they will let may wait for you to lead them.
  2. They may be about to tell you something you didn’t know. They could start out talking about Mr. Jones, and you think you know all there is to know about Mr. Jones, who is not even the person you are investigating. You care more about Mr. Smith. But then, 30 seconds later the person you’re interviewing tells you that Mr. Jones and Mr. Smith had a terrible disagreement, almost came to blows, and sued one another in small claims court three years ago. If you had interrupted too early, you would have missed all that. You also now get to find Mr. Jones and interview him too.

Checking your ego at the door is therefore to be recommended not just during interviews, but in general. Ronald Reagan said, “There is no limit to the amount of good you can do if you don’t care who gets the credit.”

But the best presidential remark relating to interviewing came from Lyndon Johnson: “You aren’t learning anything when you’re talking.”


There is a widespread belief among lawyers and other professionals that investigators, armed only with special proprietary databases, can solve all kinds of problems other professionals cannot.

While certain databases are a help, we often tell our clients that even if we gave them the output of all the databases our firm uses, they would probably still not be able to come to most of the conclusions we do. That is because databases have incomplete, conflicting outputs. You need a knowledgeable person to weigh those outputs and come up with a “right” answer that is always, at first, a best guess that requires verification.

Commercial databases are also hobbled by legal and commercial restrictions that other large information resources are not. This is one of the reasons I have argued for several years now that increases in of artificial intelligence will increase – not diminishjobs for humans.

The full argument is in Legal Jobs in the Age of Artificial Intelligence: Moving from Today’s Limited Universe of Data Toward the Great Beyond, Savannah Law Review Vol. 5:1, 2018.

Forget what you know about SQL and relational databases. Forget about the large universes of even millions of documents put into various artificial intelligence engines for expedited document review. When users populate and control a database, they can alter the content. They can control the programming to make the databases talk to each other.

Even in hospitals, with more than a dozen different information systems struggling to interconnect, it’s possible to imagine a smoothly-running network of networks given enough computing power and programming time.

The commercial databases that depend on credit-header information, utility bills, commercial mailing lists and more are different. Commercial databases used in investigations do not play nicely with other databases for two main reasons:

  1. Competitive Barriers

 There is only one New York Secretary of State, or one recorder of deeds in a county. They are presumed to be correct as a matter of law as long as you get a certified copy of their documents.

The commercial databases are different in that they compete with one another. Databases do not share results so that we may sort out conflicts automatically. They do not suggest, for example, that if a John R. Smith of Houston  is this John R. Smith on Walnut Avenue, then this John R. Smith owns the following companies in Nevada.

Instead, one database will tell you about the man on Walnut Avenue, and a different database may give you the Nevada company information and suggest that its owner lives not on Walnut Avenue but at another address in San Diego. A third database may tell you the same person who lived on Walnut Avenue in 2014 now lives in San Diego.

You will have to stitch it all together yourself. By you, I mean you a human being and not you, using some kind of databases version of that assembles travel sites and hands you results in one convenient place.

Note that for someone searching for completeness, Kayak’s no model either. If you assume that every airline and hotel in the world is listed on Kayak, you are wrong. That is because Kayak is a business that makes money from the places it lists (it’s part of a profit-making company called If you go to another for-profit site,,  and enter flights leaving from New York for Dallas, you do not get all possible options. You can fly on Southwest between those two cities, but the other day Travelocity didn’t give you that choice. Tomorrow may be different if the market for airline pricing changes.

Commercial databases are like airlines and hotels: they too are profit-making enterprises. Just as American won’t let you board with a Delta ticket, databases don’t like to share either.

  1. Legal Impediments to Sharing

Even if databases wanted to share information, doing so would be fraught with legal difficulty. That is because the information they offer is accessible to licensees only. These users need a permissible purpose under federal law that governs credit reports, and the varying permissible purposes yield varying amounts of information.

Each database has to review the permissible uses you enter, and each has to make sure you are a paying customer. Databases could theoretically subcontract that job to a central entity that handles its competitors as well, but with just a handful of big competitors, there’s less incentive to outsource.

The other, larger problem an information “Kayak” would have is that the real travel Kayak just gives you a small number of  data points: price, when you leave and when you arrive. Database output about a person, his known residences, phone numbers, associates and more is voluminous. How would you sort the differing outputs of different competitors? “Rank by accuracy” is a laughable non-starter.

All in all, if you make your living sorting through database output and then use that to check against public filings, litigation, licenses, news stories, blogs, videos and social media, be of good cheer.

The robots haven’t even come close to usurping your duties.

The New York Times published in interesting piece this week that was among its most popular: I Shared My Phone Number. I Learned I Shouldn’t Have.

In it, the paper’s personal tech columnist Brian X. Chen explained how much information people can get about you with just your phone number. This includes “my current home address, its square footage, the cost of the property and the taxes I pay on it,” as well as past addresses, relatives’ names and past phone numbers.

He is right, but that kind of information is out there for many of us, with or without a phone number. If you have an unusual name, all of it is easy to find without any cell phone number. Even a pretty common name can be isolated on, and the information vacuumed up. It’s even easier if you are the only person with your name in your entire state, which happens a lot.

The Times says Brian X. Chen lives in San Francisco. There may be more than 100 Brian Chens in the U.S., but in California there appear to be a few Brian X. Chens, one of whom is listed in San Francisco. With or without a phone number, your property ownership is an open book if you own the property in your own name.

If you are interested in keeping your address secret, some steps you could take are:

  • Own the property in trust or in the name of a limited liability company. If your name is Joseph L. Sullivan, it would help not to name the trust the Joseph L. Sullivan 2019 Trust. You can name it just about anything you want, and the same goes for LLC’s, as long as the name isn’t already in use.
  • Don’t get utility bills sent to the house. Use a PO box or a UPS Store. Be aware that if you use your cell phone to order a pizza to your house, the number will be linked to your home address in commercial databases. Some of that information may make it into web-based services such as the one Chen writes about, but some may be limited to more expensive databases available only by license.
  • Use a made-up number when you get discount cards for groceries and pharmacy purchases.
  • Don’t say your address in a loud voice into a telephone while talking in public, to be followed by a slow, clear recitation of your phone number. I hear these all the time and not being a criminal, do not act on the information. Others will.

As Chen says, there is no easy answer to counter the trend that we are increasingly identified with our mobile phone numbers, especially if we have given up land lines. His major example of when not to give your number cites Facebook, and I couldn’t agree more.

But what if you want to reserve a table at a restaurant? They often need a phone number, which is then available to a large number of restaurant employees. Here in New York, many of us get our dry cleaning delivered home, with a cell phone number to pull up our account. If I don’t  trust these people with a phone number, does it make sense to give them a credit card number?

It’s true that hackers can do a lot of damage with the public records available in the U.S., but one thing Chen didn’t suggest that I have been doing for a long time is: make the answers to your password-recovery security question something that is not easily found on the internet. If mother’s maiden name is something easily found on line (don’t forget about on-line obituaries), don’t make it what someone needs to reset your banking password.

Try something like the name of your first school, or (unless you put it all over social media), the city where you honeymooned. If you’re not married, pick the city where you would like to have a honeymoon.

I wrote in my book The Art of Fact Investigation We often say that a Google search is not enough to do a good investigation because only a small amount of what you know about yourself is on Google. Everywhere you’ve ever lived? The names of best friends for third grade? All you old bosses?

Use that information to your benefit and the crooks will have a harder time hacking into your electronic life today.

Not for the first time, the most compelling piece of information in an investigation is what isn’t there.

We’ve written often before about the failure of databases and artificial intelligence to knit together output from various databases and I discussed the idea of what isn’t there in my book, The Art of Fact Investigation. Remember, two of the biggest red flags for those suspicious of Bernard Madoff were the absence of a Big Four auditor for a fund the size he claimed to have, as well as the absence of an independent custodian.

The most famous example of missing evidence is from Sherlock Holmes: the dog that didn’t bark when the horse was removed from its stall during the night. No barking meant the dog knew the person who took the horse. It’s discussed by an evidence professor here.

This week, another excellent example: The Center for Advanced Defense Studies (C4ADS) provided an advance copy of its report to the New York Times and Wall Street Journal, detailing the way Kim Jong Un evades international sanctions. The report, Lux & Loaded is an example of superior investigation.

Using public records that track ship movements, commercial databases that record the movement of goods, and publicly available photos on the internet, C4ADS makes the case that Kim was able to get his hands on two armored Mercedes-Maybach S600 cars worth more than $500,000 each.

The report details the movement of the cars from a port in the Netherlands through several transshipment points, but the key finding is that the ship last seen with the cars “vanished” for 17 days last October, while the cars were in transit off the coast of Korea. While unable to say conclusively that the cars moved from Rotterdam to North Korea, the evidence is persuasive.

Most interesting is not the evidence that they could not find because it does not exist in open sources, but the evidence that was removed because a Togo-flagged ship called DN5505 turned off its transponders. It’s as if the ship just disappeared from the high seas.

Maybe we should not expect to be able to track every cargo shipment in the world every moment it’s at sea, but ships going dark for weeks at a time is something that should arouse suspicions.

That’s why, among the organization’s recommendations is that insurance companies should require that ships keep their transponders on in order to acquire and maintain insurance.

That won’t catch sanctions busters every time, but it’s a very sensible start.

If you haven’t seen the amusing and disturbing piece in the Wall Street Journal this week about Black Cube, the band of former Mossad (Israeli secret service) agents, it’s worth a look.

The article explains that Black Cube’s people run around the world pretending to be people they are not, in order to investigate private, commercial or legal matters for high-paying clients. It recounts a series of foul-ups, blown cover identities, arrests and other problems with Black Cube’s operations, which make for interesting reading.

For this blog’s purposes, the most interesting part was the question of whether lawyers ought to use Black Cube. On this question, the article is not of much help:

Private investigators have long resorted to a form of deception known as “pretexting” to gather information in corporate or personal disputes. Most developed countries prohibit impersonating people to obtain private information such as phone, bank or medical records, but using assumed identities can be legal in other contexts. Such deceptions are critical to how Black Cube operates.

What struck us about the article is that while it explored what investigator conduct is legal, the issue of what is ethical was left for another day. For lawyers, that is just as important as the question of legality, but the words “ethics” or “ethical” don’t even make it into the story. That is a pity for any lawyer hoping to learn from the article whether Black Cube is a good candidate for any job.

Black Cube has been in trouble before, and we’ve written about them in connection with what they did on behalf of Harvey Weinstein, in The Weinstein Saga: Now Featuring Lying Investigators, Duplicitous Journalists, Sloppy Lawyers.

There, we argued that lawyers are bound by professional rules that require not just behaving legally, but ethically as well. Not only that, but agents of those lawyers – anybody the lawyer hires to do work for the lawyer – need to follow the rules too. Lawyers have an ethical duty to supervise their agents.

When it comes to pretexting, we take the position that no agent of a lawyer in the U.S. should be lying about his identity. Courts have carved out narrow exceptions for criminal defense and intellectual property work, but for background checks, commercial disputes and anything else a lawyer needs help with, pretexting should be out.

What happens if you get caught? You risk professional discipline, but there’s more: In the past two years, two federal judges in the Southern District of New York have thrown out evidence gathered unethically by investigators.

We often give thanks for robust government intelligence services that do the dirty work on behalf of their countries. U.S. spies in World War II gathered invaluable information about the Nazis and Japan, and later on the Soviet Union. Anyone who likes the idea of a strong Israel should understand that the Mossad is vital to that country’s survival.

A former CIA operative once said to me, “If I wasn’t breaking the law of the countries I was posted to while I was working for the CIA, I wasn’t doing my job.”

Breaking laws is not what lawyers in the U.S. (and their agents) are supposed to do. If you want to be a spy, take the entrance exam at Langley.

Get ready for college admissions scandals phase II, and maybe III, IV and V.

The reason I think so? Because of the way it was discovered.

Prosecutors didn’t break up the ring of bribing college coaches and exam proctors by using vast computing power, databases and algorithms, but by interviewing somebody. According to multiple reports, a suspect in a securities fraud case had heard about the admissions scamming going on and used it to bargain with federal authorities for more lenient treatment.

One interview led to one new suspect, a college coach, who gave the FBI other suspects, which gave them approval by judges to tap phones, and that brings us to up to today.

There will be more accused because all of those arrested coaches will have lawyers, and all of those arrested will be looking for reduce the chance that they will have to spend years in prison.

Do we really believe that Rick Singer’s ring of bribery of college coaches and exam proctors is the only one of its kind in America? If not, who else would know about the other Rick Singers still in business? Perhaps the coaches who have lost their jobs and are facing charges of accepting bribes.

We wrote in Real Due Diligence Can Never be Mass Produced that proper due diligence about a person, especially someone who will receive security clearance to handle sensitive information, requires interviews. “Think about how much information you can find about yourself on the internet: everyone you’ve ever worked with? Dated? Had an argument with? Those things are gathered not by looking at databases, the web and social media exclusively, but by interviewing.”

In Talk Isn’t Cheap Even When Offline we said, “to find out about people, you nearly always have to talk to others about them. Of course, a lot of what you may hear could turn out to be gossip. But being gossip doesn’t always mean something isn’t true. It can also mean that it’s factual information someone doesn’t want you to know about.”

Interview the coaches, find out who the other Rick singers are, and get to the parents offering bribes through them. Charge, arrest, repeat.

Have you ever noticed that artificial intelligence always seems much more frightening when people write about what it will become, but then how it can seem like imperfect, bumbling software when writing about AI in the present tense?

You get one of each in this morning’s Wall Street Journal. The paper paints a horrific picture of what the ruthless secret police of the world’s dictatorships will be able to do with AI in The Autocrat’s New Tool Kit, including facial recognition to track behavior more efficiently and to target specific groups with propaganda.

But then see Social-media companies have struggled to block violent content about this week’s terrorist attack on two mosques in New Zealand. With all of their computing power and some of the world’s smartest programmers and mathematicians, Facebook and YouTube allowed the killings to be streamed live on the internet. It took an old-fashioned phone call from the New Zealand police to tell them to take the live evildoing down. Just as the New York Times or CNBC would never put such a thing on their websites, neither should Facebook or YouTube.

Wouldn’t you think that technology that could precisely target where to send the most effective propaganda could distinguish between an extremely violent film and extremely violent reality? I would. After all, it’s like nothing for these sites to have indexed the code of all the movie clips already uploaded onto their systems. If facial recognition works on a billion Chinese people, why not on the thousands of known film actors floating up there on the YouTube cloud? If it’s not a film you already know and there are lots of gunshots, the video should be flagged for review.

Why is this so hard? For one thing, the computing power the companies need doesn’t exist yet. “The sheer volume of material posted by [YouTube’s] billions of users, along with the difficulty in evaluating which videos cross the line, has created a minefield for the companies,” the Journal said.

It’s that minefield that disturbs me. A minefield dotted with difficulties about whether or not to show mass murder in real time? What would be the harm of having a person look at any video that features mass killing before it’s cleared to air? If the computers can’t figure out what to do with such material, let a person look at it.

What is so frightening about AI is not the computing power and the uses the world can find for it, but the abdication of self-control and ethical considerations of the people using the AI.

I want the police in my country to have guns and to use them on criminals who are about to kill innocent people. I don’t want police states shooting peaceful demonstrators. I’m happy to have police in the U.S. use facial recognition if it will help stop a person from blowing up the stadium where the Super Bowl is being held. I would not want cameras on every intersection automatically tracking my every movement.

Guns are neither smart nor stupid. They are artificial power that increases the harm an unarmed person can affect. Guns are essential in maintaining freedom but can suppress freedom too.

Same for AI. There are lots of wonderful applications for it. Every bit of software in use today was called AI before it began to be used, when we then called it software.

What sets off the good AI from the bad is the way people use it. Streaming on YouTube can be a wonderful thing. But just as we need political accountability to make sure the guns our armies and police have aren’t abused, we need the people at YouTube to control their technology in a responsible way.

The AI at Facebook and YouTube isn’t dumb: Dumb are the people who trusted too readily that the tool could decide for itself what the right call would be when the horrors from Christchurch began to be uploaded.