An Introduction to Internet-Based Financial Investigations

Structuring and Resourcing the Search for Hidden Assets and Information

Kimberly Goetz

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317181712
• Edition: 1
• Topic: Law
• Subtopic: Financial Law
• Index: Law

Increasingly, employees of regulatory bodies, law enforcement agencies and others who are not trained forensic accountants or experienced investigators find themselves responsible for conducting what amount to financial investigations. An engineer who oversees the cleanup of a toxic waste site might need to track down the former owners of the site to find the polluter. Perhaps the applicable licensing agency receives a complaint that an attorney mishandled a client's money. Maybe it's the attorney who needs help finding the assets with which a client's former spouse has absconded. Training in investigation techniques tends to be very limited for many employees. Training on how to find information without incurring significant expense is virtually nonexistent. This book helps fill the void. An Introduction to Internet-Based Financial Investigations will help anyone who conducts financial investigations as part of their job to reduce their dependence on trial and error by showing them where and how to look. Using clear sections describing how to approach an investigation, including the ethical perspective; what to look for and what you find; what free and low cost internet resources are available to support investigations; and how to assemble and present the results of investigations, Kimberly Goetz guides students and beginning investigators through the complex world of financial investigations.

CHAPTER 1
Introduction: Why and Where to Start

Many public sector employees find they need to perform financial investigations even though they have no financial training or expertise. Perhaps you are a new employee who has simply been told, “Here are the program rules and some applications. Figure out which ones are eligible and which ones aren’t.” Alternatively, you might be an engineer who oversees the cleanup of a toxic waste site and you need to track down the companies that contributed to the pollution so they can help to pay for the cleanup. Maybe you’re reading this book because you work for a quasi-governmental agency and you’ve received a complaint about an attorney mishandling a client’s money. Alternatively, maybe you’re an attorney and need help finding the assets absconded by your client’s former spouse.

Training about investigation techniques and resources tends to be very limited, even in law-enforcement agencies. In my experience, training on how to find information without incurring significant expense is virtually nonexistent. Employees who find themselves in these types of situations frequently resort to on-the-job training. This book is intended to help fill the void for those employees. It will provide practical tips on how to conduct a financial investigation—the type of information that new investigators usually have to learn through trial and error. The book is specifically designed for beginning investigators and regulatory employees who conduct financial investigations as a portion of the job. It is not targeted at forensic accountants or others with extensive investigation experience.

If you suspect that you don’t have the full financial picture, how can you go about finding more information? More importantly, how do you find that information in a timely manner for little or no cost? Frequently the answer is the Internet. If you know where to look (or, perhaps more importantly, how to look), you can find considerable information about most companies and individuals in the United States. By starting with some basic information, you can frequently learn more than you ever thought possible. These materials will provide you with a rough guide to finding information on the Internet—both what questions to ask and how to start looking for the answers. If you’re new to investigations or need some help using Internet-based methods, these materials will give you a good start.

For the purposes of this book, I will simply refer to the target of your financial investigation as the “subject.” This may include program applicants, potentially liable parties, companies that may have committed a regulatory infraction, and other related individuals and businesses. The term “subject” is not intended to be limited to the applicant or respondent in an investigation; it is merely a catchall term used for the sake of simplicity.

In addition, it’s important to know that this book is intended primarily for investigators in the United States. The terminology is specific to US companies and subjects (as are date and currency notations). However, other countries should have equivalent documents or similar legal concepts even if they have different names. If you are investigating people or businesses in other countries, you may need to do additional research to find out what those equivalent documents or concepts are called.

Why Use These Techniques?

There are many situations when these techniques may be useful. While some investigators may have access to paid databases such as Dun & Bradstreet, LexisNexis, or Westlaw—expensive subscription products that can provide a vast quantity of data—most of us are not that lucky. The techniques explained in this book are intended to assist employees from federal, state, or local agencies who do not have access to paid database resources and are looking for a free or low-cost alternative. Even if you have access to information from paid databases, you may want to try these techniques when you want (1) to verify information you have obtained from another source, (2) to obtain information not available through paid database sources, or (3) to try to find information that you don’t know to search for in paid resources. The same basic techniques can be used in each of these situations.

The first example of when to use these techniques is if you don’t have access to paid databases. Access to resources like LexisNexis, Westlaw, and Dun & Bradstreet reports is very expensive and as a result, many agencies and organizations do not have routine access to these databases. If you work for a state agency, you may have access to some or all of these paid resources through another part of your agency, a regional association of state agencies, or an organization in which your agency is a member. (If you don’t know whether you have access, check with your agency’s regional contact person or membership coordinator.) If you work for a local government entity, a nonprofit organization, or some other type of company, it is still possible you might have access to paid database resources. If your organization has a fundraising or development office, they may have purchased database access. Your organization may also belong to a group that provides access to paid databases. If none of these opportunities are available to you, you may be able to purchase access to one or more databases on a limited basis. Your organization may also have an existing partnership with another company or organization that has access and may be willing to assist you on a limited basis. However, if none of these situations applies, you may need to look for other methods of finding information.

The second situation when these techniques will be useful is to verify or further explain the information you obtained from the subject or a paid database. Just because a credit bureau reports an outstanding debt or judgment doesn’t mean it really exists. A paid database might report that your subject owns a house in another state—is that true, or did the subject just co-sign the mortgage and is listed on the title as a result? Or does the subject’s tax return show a deduction for mortgage interest paid, but the database report not show a corresponding parcel of real estate? These are the types of situations where paid databases are not as reliable as they might otherwise appear. Independent verification of the information you obtain from a paid database is very important, especially if that information is the basis for a fine, penalty, or legal action.

The third situation is when you want to access information that is not available through paid databases. This includes information in many government databases, including professional licenses and other business information. While it may not seem like information that is typically applicable to a search for assets, a professional license or other certification may give you a clue about who your subject is and possibly even other businesses they may own. You may also obtain information from a subject’s tax return, insurance policy, or similar documentation that is not verifiable through a paid database, such as ownership of an important piece of art or valuable collection.

Finally, you may want to use these techniques to search for other information you don’t know about. Paid databases can be great, but they don’t incorporate the “human” factor that is critical in conducting investigations. Take a hypothetical situation: say you are investigating a firm whose owners say they lease their business location rather than own it. Their monthly lease payments are made to an unrelated property management firm. When you look up the name of the property owner, the county says it belongs to “The Bachbeet Family Trust.” Neither the lease nor the agreement establishing “The Bachbeet Family Trust” has been recorded with the county, so you don’t have a copy of either document. There is no public record except the deed that even mentions “The Bachbeet Family Trust.” A paid database will stop there. It doesn’t have the ability to see the connection between the name “Bachbeet” and the subjects of your investigation: Mr. Bach and Mr. Beethoven. As long as they are careful about how they set up and use the trust, there may never be a clear connection that any paid database will ever find (even on an “associated names” report)—but your human intuition can make enough of a connection to help you find relevant information.

The Skills You Need

Looking for hidden assets is not the purview of any single discipline. You need to know at least a little about accounting, law, finance, banking, business, public records, and investigation techniques. In other words, it requires you to use both your logical left brain and your creative right brain. Because of the diverse skills required, it may take more than one person to investigate a hidden assets case to the fullest extent possible. This book is not intended to be a comprehensive investigation manual; it is intended to give you an idea about what information is available for no or low-cost and how to use that information to tell a story. You may want to use some of these techniques just so you can say you personally reviewed a document before you have to testify about a case in court. You can also use these techniques as a screening tool to do a cursory review of a subject’s finances to figure out whether it is worth contacting a trained investigator for further assistance.

For many investigators the most successful approach to fraud investigation is to place yourself in the subject’s position: if you had a particular asset, how would you hide it? What evidence would you leave behind? (Just don’t be surprised when they manage to think of ways you never would have dreamed up.) You may find inspiration in the most unlikely of places. Financial investigation and forensic accounting texts usually focus on frauds committed by employees against businesses. Corporate fraud texts usually focus on Enron-like deceptions related to hiding losses and financial instability. However, the techniques that can be used to disguise thefts or business losses can probably also be used to hide business profits. Financial schemes that employees can use to steal from their employer can also be used by business owners to covertly divert profits from the company to their personal accounts. So the next time you read a news article or see a television special about financial fraud or identity theft, ask yourself how a subject could use the same technique to hide assets from you.

Where to Start: Beginning an Investigation

This book is intended to be an introduction to using the Internet to conduct financial investigations. However, searching the Internet for information is neither the first nor the last step. Before you begin an investigation, think about the resources that are available to you through your employer, resources provided by organizations you belong to, and resources that are available to the general public.

The first place many of us overlook is our public library. Not only do librarians have access to vast amounts of information, they have special training on how to access that information. If your local public library does not offer the resources or assistance you need, check with your local university or state library. If you went to school at a local university, you may have alumnus privileges. Even if you can’t borrow from the library, it can still be an excellent source of information.

The second source of information that can be easy to overlook is a personal visit. For many investigations, an on-site visit is a routine part of the investigation or review. Even if it is not required, you may find a visit very helpful for some cases. You may find a business with someone else’s name on the door. You may find the last parcel of vacant land in a newly developed industrial area. Or you may find exactly what you are supposed to find—a legitimate company going about their business just as they claimed.

Finally, remember to take advantage of experts you work with or that you may know though other professional relationships. Does your agency have an economist on staff? Need an expert in accounting? Try your organization’s bookkeeper. Need some legal information? Try contacting the manager down the hall that went to law school (even though they never practiced law). While these experts may not be able to answer all your questions, they may be able to provide answers to some of your most basic questions and help guide the direction of your investigation.

Before you start searching the Internet, it is also important to collect and organize all of the information you already have related to your subject. What is the purpose of your investigation? Who is your subject? What type of investigation are you conducting? What will be the final result of your investigation? Are penalties or sanctions possible? Is your work purely administrative, or could there be criminal charges filed? Each of these questions will affect what steps you take, what resources you use, and how you report your findings.

Filling in the Holes

One way that Internet-based financial investigations differ from other types of investigations is their focus. You can’t use the Internet to audit a company’s books or conduct a credit check. Information you find on the Internet can instead help you fill holes in your investigation. For example, perhaps you’re wondering why a parcel of real estate shows up on a subject’s financial statement one year, but not the next. You can use the Internet to try to find an explanation—like a divorce filing and a deed transferring the property to the subject’s former spouse. Or perhaps you’re wondering why the subject’s company laid off half its workforce. Finding the minutes of the local city council meeting where the council members voted to cancel the company’s city contract might be the answer you’re looking for. While those documents can (and sometimes must) be obtained in person, using the Internet can save time and avoid false starts. You can find more information in less time when you don’t have to leave your desk.

Finding more information in less time also has a significant downside: numerous false leads. You might not think “Kimberly Goetz” is a particularly common name, but I’m not the only one out there (as I periodically have to remind the various credit bureaus). A name is only one piece of the puzzle.

Contrary to what you see on television, there is no “magic” database that will tell you every company a subject has a contract with or every bank where they have a safe deposit box. Regardless of what conspiracy theorists might believe, the government cannot track your every movement or how much money you have in your wallet at any time. There is simply too much information to collect, store, organize, and access for that to be the case. If a “magic” database actually did exist, there wouldn’t be any need for the FBI’s “Most Wanted” list—law enforcement could simply round up criminals at will (just like they do on television).

There are many resources available where you can find extensive information in furtherance of your investigation, but those resources are limited by what information is digital. The odds that a subject’s yearbook photo is available on-line are directly affected by how recently that photo was taken. The chances are extremely slim that a high school or college graduation photo or permanent student record from 1953 has been scanned, indexed, and annotated. No hacker, regardless of skill, can access information that has not been stored digitally. If the information only exists on paper, you’re not going to find it on the Internet (despite what you see on television).

“There’s No Such Thing as a Free Lunch”

Perhaps a better warning is: “you get what you pay for.” Most of the resources discussed in this book are available at no cost, while a few may charge nominal fees of a few dollars. Why aren’t more sites free? The question you should actually ask is, “Why aren’t fewer sites free?” When using free and low-cost Internet sites, it’s a good idea to consider why the information is available for free. Government sites may make information freely available to meet legal obligations under federal and state Sunshine laws; they can save time and labor costs if customers can access documents directly instead of asking a government employee to access it for them. Some companies may also make corporate documents available on-line to enhance customer service or meet financial disclosure obligations.

Private websites, however, are likely not under any obligation to provide any information to the public of any kind. So why do they? A nonprofit entity may receive grants and donations to fund website maintenance, but a business needs to make money. How do they make money while providing you free information? Depending on their business model, the company might rely on advertising or sponsored links. They can require a free registration and subsequently sell the personal information they obtain. Or they could provide you with limited free information in order to get you to purchase more complete records. Regardless of which method these sites use, remember that you are helping them to make money even if you don’t pay them with a check or credit card.

If you have found a link to important information from a private website, especially one that requires a subscription or payment, stop and consider where they get their information. Many commercial websites earn their money by creating their own paid version of free information. Some of these for-profit companies are doing exactly the same type of thing you are doing—they’re just doing it bigger and faster. Always consider the ultimate source of the information you are accessing. If you are looking at recorded documents from the local county office, consider how the paid service obtained those records. Did they pay the county to obtain copies of the documents, spend employee time scanning those copies, and create their own database of all the scanned documents? Or does their database merely search a database you can search yourself for free?

It is very important to understand the source of documents you access on the Internet. This information can help you judge the credibility of the documents and evaluate whether payment for those documents is appropriate. Understanding the source of documents will also be important as part of authenticating those documents if you use them as part of the basis for your final determination or recommendation.

Case in Point

I routinely check my credit report and I strongly recommend everyone else does as well. Mistakes happen: a payment might not be posted correctly or the wrong account might be referred to collections. Identity thieves may apply for (and be granted) extensive credit in someone else’s name. Unfortunately, identity thieves can also steal your good credit (and burden you with their bad credit) with amazing ease. I know because it happened to me.

While I’m not going to describe the method used, I will say that the woman who stole my credit did so with relative ease. She didn’t have to rifle through my garbage or steal my mail. As far as I know, to this day she doesn’t have my Social Security Number. And yet her bad credit, collections, and judgments periodically show up on my credit report—presumably, my good credit shows up on hers as well (otherwise I doubt she ever would have qualified for the mortgage or car loan that recently appeared).

Information from the credit bureaus is commonly included in many paid database reports. In my case, that information may be wildly incorrect and completely unreliable. That is why it is a good practice to verify the information you obtain from paid databases. Otherwise, you could be embarrassed when your subject publicly corrects you in front of your boss or a judge.

CHAPTER 2
Before You Start: Ethical Considerations

All of the advice and website resources discussed in this book are available to anyone, mostly for free or for a negligible cost through the Internet, the local library, or a local government office. Does that mean you should collect any and all information you can, or are there limits on what you can and should do? There may not be a universal answer to that question, but there are some important points to keep in mind when conducting an investigation.

Types of Ethical Issues

Ethical concerns in financial investigations generally fall into three categories: legal issues, privacy issues, and disclosure issues. It is important to remember that with our society’s constantly changing technologies, issues related to privacy and disclosure are in a constant state of flux. However, as a government employee, you have a fiduciary responsibility to the citizens of your jurisdiction. You work for them, and your actions must be for their benefit—not your benefit, not your manager’s benefit, and not your agency’s benefit. ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Abbreviations
• About the Author
• Preface
• Chapter 1 Introduction: Why and Where to Start
• Chapter 2 Before You Start: Ethical Considerations
• Chapter 3 Thinking About Financial Fraud and Investigations
• Chapter 4 What Can You Do With Money?
• Chapter 5 Legal Structures
• Chapter 6 Legal Documents
• Chapter 7 Starting the Search
• Chapter 8 Real Estate Records
• Chapter 9 Search Engines and Web Portals
• Chapter 10 Government and Law Related Websites
• Chapter 11 Commercial and Business-Related Websites
• Chapter 12 Websites from Nonprofits and Other Organizations
• Chapter 13 Additional Websites and Resources
• Chapter 14 Requesting Additional Information and Understanding What You Receive
• Chapter 15 Getting Help from the Numbers
• Chapter 16 Dealing with People Problems
• Chapter 17 Telling the Story
• Chapter 18 Final Thoughts and Considerations
• Appendix A: Practical Suggestions for Organizing Your Investigation
• Appendix B: 100 Questions to Answer When Telling the Story
• Appendix C: Writing Internet-Based Investigation Plans and Reports
• Appendix D: Quick Answers to Common Questions
• References
• Index