Do you ever wonder why some gifted small children play Mozart, but you never see any child prodigy lawyers who can draft a complicated will?

The reason is that the rules of how to play the piano have far fewer permutations and judgment calls than deciding what should go into a will. “Do this, not that” works well with a limited number of keys in each octave. But the permutations of a will are infinite. And by the way, child prodigies can play the notes, but usually not as soulfully as an older pianist with more experience of the range of emotions an adult experiences over a lifetime.

You get to be good at something by doing a lot of it. You can play the Mozart over and over, but how do you know what other human beings may need in a will, covering events that have yet to happen?

Not by drafting the same kind of will over and over, that’s for sure.

Reviewing a lot of translations done by people is the way Google Translate can manage rudimentary translations in a split second. Reviewing a thousand decisions made in document discovery and learning from mistakes picked out by a person is the way e-discovery software looks smarter the longer you use it.

But you would never translate a complex, nuanced document with Google Translate, and you sure wouldn’t produce documents without having a partner look it all over.

The craziness that can result from the mindless following of rules is an issue on the forefront law today, as we debate how much we should rely on artificial intelligence.

Who should bear the cost if AI makes a decision that damages a client? The designers of the software? The lawyers who use it? Or will malpractice insurance evolve enough to spread the risk around so that clients pay in advance in the form of a slightly higher price to offset the premium paid by the lawyer?

Whatever we decide, my view is that human oversite of computer activity is something society will need far into the future. The Mozart line above was given to me by my property professor in law school and appeared in the preface of my book, The Art of Fact Investigation.

The Mozart line is appropriate when thinking about computers, too. And in visual art, I increasingly see parallels between the way artists and lawyers struggle to get at what is true and what is an outcome we find desirable. Take the recent exhibition at the Metropolitan Museum here in New York, called Delirious: Art at the Limits of Reason, 1950 to 1980.

It showed that our struggle with machines is hardly new, even though it would seem so with the flood of scary stories about AI and “The Singularity” that we get daily. The show was filled with the worrying of artists 50 and 60 years ago about what machines would do to the way we see the world, find facts, and how we remain rational. It seems funny to say that: computers seem to be ultra-rational in their production of purely logical “thinking.”

But what seems to be a sensible or logical premise doesn’t mean that you’ll end up with logical conclusions. On a very early AI level, consider the databases we use today that were the wonders of the world 20 years ago. LexisNexis or Westlaw are hugely powerful tools, but what if you don’t supervise them? If I put my name into Westlaw, it thinks I still live in the home I sold in 2011. All other reasoning Westlaw produces based on that “fact” will be wrong. Noise complaints brought against the residents there have nothing to do with me. A newspaper story about disorderly conduct resulting in many police visits to the home two years ago are also irrelevant when talking about me.[1]

The idea of suppositions running amok came home when I looked at a sculpture last month by Sol LeWitt (1928-2007) called 13/3. At first glance, this sculpture would seem to have little relationship to delirium. It sounds from the outset like a simple idea: a 13×13 grid from which three towers arise. What you get when it’s logically put into action is a disorienting building that few would want to occupy.

As the curators commented, LeWitt “did not consider his otherwise systematic work rational. Indeed, he aimed to ‘break out of the whole idea of rationality.’ ‘In a logical sequence,’ LeWitt wrote, in which a predetermined algorithm, not the artist, dictates the work of art, ‘you don’t think about it. It is a way of not thinking. It is irrational.’”

Another wonderful work in the show, Howardena Pindell’s Untitled #2, makes fun of the faith we sometimes have in what superficially looks to be the product of machine-driven logic. A vast array of numbered dots sits uneasily atop a grid, and at first, the dots appear to be the product of an algorithm. In the end, they “amount to nothing but diagrammatic babble.”

Setting a formula in motion is not deep thinking. The thinking comes in deciding whether the vast amount of information we’re processing results in something we like, want or need. Lawyers would do well to remember that.

[1] Imaginary stuff: while Westlaw does say I live there, the problems at the home are made up for illustrative purposes.

We’ve had a great response to an Above the Law op-ed here that outlined the kinds of skills lawyers will need as artificial intelligence increases its foothold in law firms.

The piece makes clear that without the right kinds of skills, many of the benefits of AI will be lost on law firms because you still need an engaged human brain to ask the computer the right questions and to analyze the results.

But too much passivity in the use of AI is not only inefficient. It also carries the risk of ethical violations. Once you deploy anything in the aid of a client, New York legal ethics guru Roy Simon says you need to ask,

“Has your firm designated a person (whether lawyer or nonlawyer) to vet, test or evaluate the AI products (and technology products generally) before using them to serve clients?”

We’ve written before about ABA Model Rule 5.3 that requires lawyers to supervise the investigators they hire (and “supervise” means more than saying “don’t break any rules” and then waiting for the results to roll in). See The Weinstein Saga: Now Featuring Lying Investigators, Duplicitous Journalists, Sloppy Lawyers.

But Rule 5.3 also pertains to supervising your IT department. It’s not enough to have some sales person convince you to buy new software (AI gets called software once we start using it). The lawyer or the firm paying for it should do more than rely on claims by the vendor.

Simon told a recent conference that you don’t have to understand the code or algorithms behind the product (just as you don’t have to know every feature of Word or Excel), but you do need to know what the limits of the product are and what can go wrong (especially how to protect confidential information).

In addition to leaking information it shouldn’t, what kinds of things are there to learn about how a program works that could have an impact on the quality of the work you do with it?

  • AI can be biased: Software works based on the assumptions of those who program it. You can never get a read in advance of what a program’s biases may do to output until you use the program. Far more advanced than the old saying “garbage in-garbage out,” but a related concept: there are thousands of decisions a computer needs to make based on definitions a person inserts either before the thing comes out of the box or during the machine-learning process where people refine results with new, corrective inputs.
  • Competing AI programs can do some things better than others. Which programs are best for Task X and which for Task Y? No salesperson will give you the complete answer. You learn by trying.
  • Control group testing can be very valuable. Ask someone at your firm to do a search for which you know the results and see how easy it is for them to come up with the results you know you should see. If the results they come up with are wrong, you may have a problem with the person, with the program, or both.

The person who should not be leading this portion the training is the sales representative of the software vendor. Someone competent at the law firm needs to do it, and if they are not a lawyer then a lawyer needs to be up on what’s happening.

[For more on our thoughts on AI, see the draft of my paper for the Savannah Law Review, Legal Jobs in the Age of Artificial Intelligence: Moving from Today’s Limited Universe of Data Toward the Great Beyond, available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3085263].

 

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

 

We don’t usually think of the law as the place our most creative people go. Lawyers with a creative bent often drift into business, where a higher risk tolerance is often required to make a success of yourself. Some of our greatest writers and artists have legal training, but most seem to drop out when their artistic calling tells them law school isn’t for them.

Group of Robots and personal computer vector illustration

Still, creativity and innovation are all the rage in law schools today. Northwestern has a concentration in it as does Vanderbilt, and Harvard has a course on Innovation in Legal Education and Practice.

Like it or not, as artificial intelligence takes over an increasing number of dreary legal tasks, there will be less room for dreary, plodding minds in law firms. The creative and innovative will survive.

This doesn’t worry us, because we’ve long talked about the need for creativity in fact finding. It’s even in the subtitle of my book, The Art of Fact Investigation: Creative Thinking in the Age of Information Overload.

The book takes up the message we have long delivered to clients: computers can help speed up searching, but computers have also made searching more complex because of the vast amounts of information we need to sort through.

  • Deadlines are ever tighter, but now we have billions of pages of internet code to search.
  • Information about a person used to be concentrated around where he was born and raised. Today, people are more mobile and without leaving their base, they can incorporate a dozen companies across the country doing business in a variety of jurisdictions around the world.
  • Databases make a ton of mistakes. E.g. Two of them think I live in the house I sold seven years ago.
  • Most legal records are not on line. Computers are of limited use in searching for them, and even less useful if figuring out their relevance to a particular matter.
  • Since you can’t look everywhere, investigation is a matter of making educated guesses and requires a mind that can keep several plausible running theories going at the same time. That’s where the creativity comes in. How do you form a theory of where X has hidden his assets? By putting yourself in his shoes, based on his history and some clues you may uncover through database and public-record research.

The idea that technological change threatens jobs is hardly new, as pointed out in a sweeping essay by former world chess champion Gary Kasparov in the Wall Street Journal.

Twenty years after losing a chess match to a computer, Kasparov writes: “Machines have been displacing people since the industrial revolution. The difference today is that machines threaten to replace the livelihoods of the class of people who read and write articles about them,” i.e. the writer of this blog and just about anyone reading it.

Kasparov argues that to bemoan technological progress is “little better than complaining that antibiotics put too many gravediggers out of work. The transfer of labor from humans to our inventions is nothing less than the history of civilization … Machines that replace physical labor have allowed us to focus more on what makes us human: our minds.”

The great challenge in artificial intelligence is to use our minds to manage the machines we create. That challenge extends to law firms. We may have e-discovery, powerful computers and databases stuffed with information, but it still requires a human mind to sort good results from bad and to craft those results into persuasive arguments.

After all, until machines replace judges and juries, it will take human minds to persuade other human minds of the value of our arguments.

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 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.

When your defense is that the law allows you to publish garbage without fear of prosecution, one takeaway is simple: the internet is filled with garbage that needs to be well verified before you rely on it.Internet searching

This blog thinks the Ninth Circuit got it right in exonerating Yelp this week from the lawsuit by a small business that was incorrectly identified in a negative Yelp ad. The decision is here.

While we feel terribly for the locksmith whose business was tarred with a brutally negative review that Yelp erroneously attached to his business, it seems clear that the court was right in deciding that Yelp was protected from prosecution by the federal Communications Decency Act.

The reasoning in Congress for this and other laws that grant safe harbor to internet facilitators of exchanges (of opinions, goods or anything else) is that if the internet sites were to be held liable for the contents of what they were portraying, the industry would shut down or need to charge a lot of money to compensate them for the risk.

As fact finders, we think the Yelp case is a handy example of why just about anything on line should be verified if you intend to make any kind of important decision based on what you read.

We recently had a case in which a negative review of a doctor became relevant in a malpractice case. Question one to us was: is this reviewer a real person and if so who is she? Based on her Yelp handle and city we managed to find her and to take a statement from her that turned out to be even more valuable than what she had posted on Yelp.

But what if “she” had turned out to be a competitor, an embittered but deranged former patient, or just a crank?

This is the not the first time we’ve written about this. In The Spokeo Lawsuit: Databases are Riddled with Errors we discussed a database that spits out some free information but then asks you to pay for more (often inaccurate) information.

As we tell our clients all the time (and as I’ve written in my book, The Art of Fact Investigation), even the most expensive databases confuse people with similar names, leave out key information such as where a person really lives or works, and are mostly hopeless with linking people and their shell companies.

The internet is a wonderful, useful and time-saving place, but there is no substitute for a good critical mind to sort investigative gold from the masses of garbage you find there.

 

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.

 

Due diligence is all about following up on red flags, but if you don’t find them, there’s nothing on which to follow up.

Thus, our tireless refrain: turn over every piece of public record information you can about a person, and don’t leave it to others.finra DUE DILIGENCE.jpg

We were reminded of this by the story this weekend in the Wall Street Journal, which found that the brokerage industry regulator, FINRA, leaves a lot of red flags concerning members off its BrokerCheck website. While it’s laudable that FINRA recommends that investors check to see if brokers have ever been subjected to disciplinary action, that check is of limited use if bankruptcies, state-level actions and litigation are left off of BrokerCheck.

We have been writing for years about the need to do thorough searches when conducting due diligence on anyone – pre-employment, pre-deal, or during litigation. In Avoiding Due Diligence Failure: Following Up on Red Flags, we dealt with the problem of the Semmelweis reflex in due diligence.

This is when you want to confirm that someone who is supposed to be squeaky clean really is, and so you write off what looks like a problem in his past to database error. You can also see confirmation bias, in which people rely too heavily on bad or incomplete evidence that leads them to their desired conclusion.

But, before you even get to battling Semmelweis and bias in mishandling red flags, you have to see the flags in the first place. For that, we provide a non-exhaustive checklist to our clients of the kinds of sources we will check. We wrote about it here.  

It’s critically important to note that these sources are not checked on line much of the time, but on site. That’s because a lot of information at the county or state level is not available on the internet. You need a good network of on-site retrievers to go pull it at the courthouse and send it back to you. You then need to double check to make sure your retriever didn’t miss anything. While not everything is on line, abstracts of some matters may be. When you get your pile of documents back, it’s always good to make sure that everything you found on line is represented in the results.

 

The next time an investigator tells you he can legally “ping” someone’s cell phone to figure out where they are going, run away fast.cell phone pinging.jpg

We’ve written before about the illegality of getting a friendly phone company employee to help out with cell phone tower signal data that helps to locate people. As we wrote in Ping a Cell Phone, Cross a Line, the federal circuits have taken varying views of how much permission law enforcement needs before it can demand the data from phone companies.

What hasn’t changed in the two years since we wrote about this is that pinging by anyone who isn’t law enforcement, without a court order, is against the law. You still can’t pretext and pretend to be the cell phone’s owner to trick the phone company.

  • The Telecommunications Act of 1996 (amending the Communication Act of 1934) Section 222 imposes a duty on carriers to keep customer information confidential
  • The Telephone Records and Privacy Protection Act of 2006 specifically applies to cell phone location information

What changed this week was that another court, this time the Court of Appeals for the 11th Circuit, decided that not only does law enforcement need a warrant to ping cell phones, but as with other searches protected by the Fourth Amendment, the police need to show probable cause in order to obtain their warrant. The opinion is here.

The Supreme Court has yet to rule on pinging, but that day can’t be far off. With some one third of Americans using only a cell phone and no home telephone, this is an area of the law that will only become more closely watched and contested.

Before the Supreme Court right now is a case on whether police need a warrant to search the contents of a suspect’s cell phone. If it turns out that they do, how would the Court decide that pinging without a warrant is OK while searching the phone isn’t? Maybe by equating pinging with following someone, which is not held to be as intrusive as searching them. Then again, we’ve never had the ability to follow that many people at once, because following people is expensive and time consuming.

What is clear beyond doubt is that evidence gathered from unauthorized pinging stands to get excluded from trial, and lawyers who supervise such evidence gathering could lose their license or even be convicted of violating the statutes mentioned above.

Now that 60 Minutes has apologized for airing a false eyewitness account of the 2012 attack on the U.S. consulate in Benghazi, what can investigators, journalists and others who deal in facts learn from the incident, well summarized by the Columbia Journalism Review here?60 minutes benghazi logan.jpg

  1. If something is as easily disprovable as the now-discredited claims CBS aired, some kind of robust fact checking should have turned up the same holes in the story discovered by The Washington Post four days after the story aired. The incident report by the discredited subject of the interview, Dylan Davis, has now appeared on the internet (here), and while it’s unclear how long the document has been publicly available, if it was available to the Washington Post it should have been gettable by a CBS News team that had been working on the story for a year.

We take the position at our firm that if we are about to report something shocking, explosive, case-changing or even just interesting to a client, we like to do as complete a job as we can in finding out everything there is to find out about that issue.

The worst thing that can happen is that a competitor or the client himself will easily contradict a finding in a way we should have been able to handle ourselves. Having an interview contradicted by another person can be bad enough, but having an interview subject’s credibility impeached by an easily discovered fact is a disaster. CBS had more robust internal fact checking, but dismantled it several years ago, according to the Huffington Post. Too bad.

2. Conflicts of interest should put an organization or red alert, and be disclosed. Davies   wasn’t just any source. He had written a memoir for a publishing company owned by CBS. This book was scheduled for release two days after the 60 Minutes story, according to the Columbia Journalism Review.  

While both the book and the 60 Minutes story obviously would have had more than one set of eyes on the manuscript and story, a conflict of interest (killing the source for the TV story would have cost the publishing company money) demands even more rigorous scrutiny than an ordinary source. It’s just human nature: you want a fact to be genuine so you may let your guard down when material contradicts it. If the fact is going to make you or your company a lot of money, your guard drops even lower.

As lawyers we are governed by strict ethical rules that deal in conflicts. Not only do we have to disclose a financial interest in subcontractors we may use, our clients need to consent to those conflicts. As careful lawyers try to be in all walks of professional life, dealing with a consentable conflict is an especially touchy matter that would require more care than what CBS expended in evaluating Dylan Davies.