Two Memos
From the Desk of Robert Gardner & Associates - Providing Vital Information
Two memos delivered. One grounded in public‑record findings, the other scrubbed and found clean. Yet both begged the same question: who was the company? Everyone wants to deliver the grand findings. Clients expect that. That guy you asked me to check out. He’s a made member of the Buffalo Crime Family. It is our job, however, in background research, to make sure that what we report all makes sense, starting with the basics.
The Case of the Not My Company
Imagine a company, let's call it Acme, your client wants to invest in Acme. Imagine the person believed to own Acme, we’ll call him Mr. Coyote, what if he does not actually own Acme. Would an array of tax liens and negative Yelp reviews matter?
We found copious lawsuits naming Mr. Coyote and spent a lot of time reviewing them. The more we looked, the more dirt we dug up on him. It turned out that while all of that was very interesting and useful in understanding him, it was one last cases we looked at that meant the most. Unlike the others, there were no allegations of fraud or misconduct. Yet the allegations presented in this case mattered greatly.
Years earlier Mr. Coyote defaulted on millions of dollars in bank loans. It took the bank a while to get its collection efforts going, and in the meantime, Mr. Coyote had set up his new company, Acme. The website of Acme said Mr. Coyote was the founder. Except when the bank asked, he said, “no,” he was not its owner of Acme. He was simply a W-2 employee. Now years later, Mr. Coyote came to our client seeking investment money in Acme, a company he claimed he did not own. This, by the way, came nearly verbatim from the lawsuit documents.
The Case of the Many Companies
Imagine you are given a tip on a certain other company to invest in. Let's call it Company 2. And it turns out the executives of Company 2 own other companies, Company 3 and Company 4.
Searching for litigation records is a key aspect of our background research activities. We also always include searches for business affiliations—what other companies are associated with Company 2’s executives. At times it seems perfunctory, but in a recent case, our search identified some issues that needed further investigation. Not only did we find affiliations by using typical sources like Secretary of State filings and LinkedIn, but on examination of these companies we learned some additional interesting facts. It seemed that based on its website, Company 2 and Company 3 engaged in about the same activities. Company 4, well when we translated its website to English, we saw that it stated it was the parent of Company 2. Neither of these things were known to the investor. Until we found them.
Blocking and Tackling
In my experience during more than 30 years doing background research—and I’m guessing most experienced researchers would agree—roughly 10% of cases contain undisclosed sensitive or adverse information. The rest are clean. The question is: what’s sensitive? Usually what really matters is not the sensational stuff. It happens. We’ve seen arms dealers, international Ponzi schemes, and all sorts of misdeeds in our research. We’ve also seen unexplained gaps in employment, address histories that don’t match resumes, and businesses not owned by those who claim to own them.
Take your time doing research. Cover all your bases. Who knows what will be important?