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Due
Diligence
Due diligence is due professional care. It is the standard by which all auditors, company officers
and accountants are held. Due diligence in the purchase of a business or the hiring of a senior level manager only makes good
sense. Large expense outlays for important equipment, acquisitions, or the outright purchase of an entity should be thoroughly
researched and investigated. It is the best way a logical and intelligent decision can be made.
The care that a prudent person might be expected to exercise in the examination and evaluation
of risks affecting a business transaction b : the process of investigation carried on usually
by a disinterested third party (as an accounting or law firm) on behalf of a party contemplating a business transaction (as
a corporate acquisition or merger, loan of finances, or esp. purchase of securities) for the purpose of providing information
with which to evaluate the advantages and risks involved the greatest exposure…for failure to conduct adequate due
diligence arises in the context of public offerings of securities —G. M. Lawrence c :
the defense (as to a lawsuit) that due diligence was conducted
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Before you make an investment decision
we can provide you with the financial information, licensing, names of corporate officers, credit ratings and essential
facts on a corporation, which may make the difference between success and failure in your investment or business commitments.
We conduct investigations for corporations who suspect
employee embezzlement, internal theft or who are victims of business fraud. We also conduct background and due diligence search
on corporate officers, executives and employees to ensure their integrity. We conduct a comprehensive search for arrests or
other criminal records, any listings as an unindicted co-conspirator in a fraud case, personal bankruptcies, evidence of gambling
or drinking problems, disparities in an executive's lifestyle and salary and any sexual harassment complaints.
| Corporate Fraud |
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| Make Change! |
The Federal Trade Commission releases its 2006 list of top consumer fraud complaints. Fraud losses
top $1.1 billion, as ID theft heads the list for the seventh year in a row.
By Jeanne Sahadi, CNNmoney.com senior writer
February 7 2007: 5:32 PM EST
NEW YORK (CNNMoney.com) -- Of the more than 670,000 consumer fraud complaints made to the Federal Trade Commission in 2006,
identity theft was the biggest category of reported cases, accounting for 36 percent of calls.
Investors in fraudulent funds fight to get their money back, but it can take years, and results can
be spotty.
By Amanda Cantrell, CNNMoney.com staff writer April 3, 2006: 2:20 PM EDT
NEW YORK (CNNMoney.com) - A group of investors including some current and former NFL players believed Kirk Wright when
he told them he was a hedge fund manager who could deliver above-market returns if they invested with him.
Now Wright is on the lam after federal officials charged him with fraud, claiming he sent statements saying that his funds,
managed by Atlanta-based International Management Associates, had over $150 million invested when the accounts in question
held only $150,000 -- about the only money the SEC has been able to find in the funds. At one point, the funds together were
believed to have held up to $180 million, the U.S. Attorney's office in Atlanta said.
In light of such high-profile hedge fund frauds at the Bayou Group in Connecticut, which snared some professional investors,
and KL Financial in Florida, the Wright saga is yet another sobering, cautionary tale about the importance
of doing a thorough check before making an investment.
Ex-FBI agent, trader guilty of fraud
Jury finds Anthony Elgindy and Jeffrey Royer guilty of racketeering
and securities-fraud charges. January 24, 2005: 6:29 PM EST
NEW YORK (CNN/Money) - Stock trader Anthony Elgindy was convicted on Monday of using secret government information to
profit in the market, while former FBI agent Jeffrey Royer was convicted of tipping him off about companies facing criminal
investigations.
Each man faces the possibility of 20 years in prison for their convictions, which came in U.S. District Court in Brooklyn
after a three-month trial, according to Reuters.
The Wall Street Journal said Elgindy, who ran a subscription-based investing Web site, was found guilty of 11 counts,
including five counts of securities fraud, a count of racketeering conspiracy, a count of securities fraud conspiracy, a count
of extortion, a count of extortion conspiracy, and two counts of wire fraud.
Elgindy sobbed and rocked back and forth in his seat as the jury pronounced him guilty of racketeering, including securities
fraud and extortion charges, Reuters reported.
Royer was found guilty of nine of 14 counts against him, including four counts of securities fraud, a count of securities
fraud conspiracy, a count of racketeering conspiracy, a count of obstruction of justice conspiracy, a count of obstruction
of justice and a count of witness tampering, according to the article.
The government argued the two men were part of an effort to dig up negative news about corporations and then use that news
to drive down share prices and profit by short-selling the stocks.
Prosecutors said Elgindy would use information from Royer to sell companies' stock short and advise subscribers to his
Web site to do the same. Access to information about government investigations that could cause a stock price to fall would
be an unfair trading advantage.
They said Elgindy portrayed himself as a crusader against companies that were defrauding investors and said he made millions
of dollars from subscribers, who paid up to $600 a month to access his Web site, anthonypacific.com.
"Under the guise of protecting investors from fraud, Royer and Elgindy used the FBI's crime fighting tools and resources
actually to defraud the public and to insulate themselves from detection and prosecution," said Roslynn Mauskopf, U.S. Attorney
for the Eastern District of New York, in a statement.
"Royer violated the trust of the FBI by brazenly partnering with Elgindy to commit a laundry-list of crimes."
A sentencing date was not set.
Other defendants in the case included Lynn Wingate, Troy Peters and Jonathan Daws. They will be tried separately, according
to the Journal, and three other defendants, Derrick Cleveland, Robert Hansen and Kent Terrell, have pleaded guilty
and are cooperating with the government.
The Times Herald Record
Wally Ward is a soft-spoken, 74-year-old retired Army officer and aeronautical engineer. He and his wife, Josephine, left
the Hudson Valley more than 30 years ago, after Wally graduated from West Point and Josephine left her teaching job in Pine
Bush and became a military wife. The Wards traveled the world, had two children, and finally settled in Gainesville, Va.
Their hearts are still in the Hudson Valley, so they read the Times Herald-Record online, which is where they found me.
They had lost their life savings.
U.S. Department of Justice
Office of the Deputy Attorney General
Federal Prosecution of Business Organizations
Corporations are "legal persons," capable of suing and being sued, and capable of committing crimes. Under the doctrine
of respondeat superior, a corporation may be held criminally liable for the illegal acts of its directors, officers,
employees, and agents. To hold a corporation liable for these actions, the government must establish that the corporate agent's
actions (i) were within the scope of his duties and (ii) were intended, at least in part, to benefit the corporation. In all
cases involving wrongdoing by corporate agents, prosecutors should consider the corporation, as well as the responsible individuals,
as potential criminal targets.
The Federal False Claims Act
The federal False Claims Act is a remarkable law.
It says to citizens of the U.S. – if you have information
about corporations that are defrauding the federal government, come forward,
tell federal prosecutors about it, and if federal prosecutors can verify
your claim, they will join with you and sue the corporation to recover the amount
of money that the corporation defrauded from the United States.
If you can prove your case, and the government recovers the defrauded
money, then you, ordinary citizen, will get a cut of the recovery –
anywhere from 15 to 30 percent.
March 15, 2005
Private investigator lures scam suspect across border
SEATTLE - There's no such thing as a free lunch, a fugitive wanted in a Florida investment scam discovered
when a private investigator lured him across the Canadian border with the promise of a two-for-one lunch deal.
Federal prosecutors say Frederick Gilliland, 53, defrauded investors of more than $8 million. He had been living in the
Vancouver, B.C., area when he was arrested Saturday on his way to Kiniski's Reef Tavern in nearby Point Roberts, Wash.
The private investigator who nabbed him had fallen for the investment scam, Assistant U.S. Attorney Michelle Heldmyer of
Pensacola, Fla., said Monday. It wasn't immediately known how much money the investigator lost.
A Florida grand jury indicted Gilliland and four other men in 2001 on charges of conspiracy to commit wire fraud and securities
fraud, as well as conspiracy to launder money. They were accused of cheating victims across the country by promising to invest
their money in high-yield banking transactions with little or no risk from 1996 through mid-2000.
The men used some of the money received from new investors to pay profits to older ones to keep the fraud going while laundering
remaining funds through domestic and offshore entities, prosecutors said.
In all, the biggest of the scams - a company called Hammersmith Trust LLC, of Tennessee - collected $70 million from investors.
Many investors got money back, but those who didn't lost $23 million, Heldmyer said.
Gilliland was free on bail while awaiting the start of his Canadian extradition hearing when he was tricked across the
border. He was taken into custody by U.S. Immigration and Customs Enforcement agents along with Whatcom County sheriff's deputies.
When he appeared Monday in U.S. District Court in Seattle, he did not fight his return to Florida.
Top investment scams
Investor protection group releases survey
of most common scams being used to fleece investors.
March 24, 2005: 2:10 PM EST
NEW YORK (CNN/Money) - In investing, as in life, if it sounds too good to be true, it probably is.
Nowhere is that more clear than with the latest list of scams used to fleece investors, released Thursday by the North
American Securities Administrators Association (NASAA).
Ponzi schemes were No. 1 on the list, which was ranked by prevalence and seriousness.
Named for swindler Charles Ponzi, the plans are pyramid schemes that promise to use money from later investors to pay early
ones. After the plans collapse, the people who make most of the money are the promoters who set the plan in motion.
Rounding out the top five were investments pushed by unlicensed securities dealers; unregistered investment products; promissory
notes; and investment scams that target senior citizens and their life savings.
Internet fraud appeared in the top 10, as well as oil and gas scams.
With oil prices at record highs, regulators warn that con artists will probably dust off old oil ventures, and sell shares
in non-existent oil fields and unproven technologies designed to convert common substances into fuel.
While not technically scams, penny stocks, so-called private placements and investment seminars were given "dishonorable"
mention.
Investors should contact state regulators with any questions about an investment product, broker or adviser before making
an investment, Franklin Widmann, NASAA president and chief of the New Jersey Bureau of Securities, said in a statement.
"One phone call can save a lot of money and heartache," he said.
For more information on how to regulators from NASAA's Web site, click here.
For more on personal finance, click here.
REPORT FRAUD ON LINE
ATTORNEY'S ADVICE --- NO CHARGE
Read this and make a copy for your files in case you need to refer
to it someday. Maybe we should all take some of his advice! A corporate attorney sent the following out to the
employees in his company.
1.
The next time you order checks have only your initials (instead of first name) and last name put on them. If someone
takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but
your bank will know how you sign your checks.
2. Do not sign the back of your credit cards. Instead, put "PHOTO
ID REQUIRED".
3. When you are writing checks to pay on your credit card accounts, DO NOT put the complete
account number on the "For" line. Instead, just put the last four numbers. The credit card company knows the rest
of the number, and anyone handling your check as it passes through all the check processing channels won't have access
to it.
4. Never have your SS# printed on your checks. (DUH!) You can add
it if it is necessary. But if you have it printed, anyone can get it.
5. Place the contents of your wallet
on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet
and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe
place. I also carry a photocopy of my passport when I travel either here or abroad.
We've all heard horror stories about fraud that's committed on us in stealing a name, address, Social Security
number, credit cards.
Unfortunately, I, an attorney, have firsthand knowledge because my wallet was stolen last
month. Within a week, the thieve(s) ordered an expensive monthly cell phone package, applied for a VISA credit card,
had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record
information online, and more. But here's some critical information to limit the damage in case this happens to you or
someone
you know:
1. We have been told we should cancel our credit cards immediately. But the key is having the toll
free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.
2.
File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to
credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).
But
here's what is perhaps most important of all : (I never even thought to do this.)
3. Call the 3 national
credit reporting organizations immediately to place a fraud alert on your name and Social Security number. I had
never heard of doing that until advised by a bank that called to tell me an application for credit was made over the
Internet in my name. The alert means any company that checks your credit knows your information was stolen, and
they have to contact you by phone to authorize new credit.
By the time I was advised to do this, almost
two weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the
thieves' purchases, none of which I knew about before placing the alert. Since then, no additional damage has been
done, and the thieves threw my wallet away This weekend (someone turned it in). It seems to have stopped them dead
in their tracks.
Now, here are the numbers you always need to contact about your wallet, etc., has been stolen:
1.) Equifax: 1-800-525-6285
2.) Experian (formerly TRW): 1-888-397-3742
3.) Trans Union:
1-800-680-7289
4.) Social Security Administration (fraud line): 1-800-269-0271
We pass along jokes on the Internet;
we pass along just about everything. But if you are willing to pass this information along, it could really help
someone that you care about.
vIVISMO Search for Business Fraud
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