Public Records in Financial Investigations

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The internet is an important source of information in financial investigations. It has become so important, that I wonder what I ever did without access to all of this information! Even though my work is focused on digging into the details of financial records – – and many of those are private and not available online – – I still acquire a lot of information helpful to my investigations on the internet.

In Chapter 5 of my book Expert Fraud Investigation: A Step-by-Step Guide, I discuss sources of information for fraud investigations. There are entire books devoted to the process of finding and using public records and public information to aid in investigations, so naturally a chapter of a book can only scratch the surface. However, in that chapter and in this article, I’m going to begin to show you how you can find valuable information.

When I am retained to do a financial investigation, often one of my first steps is to do a background investigation on the person or company involved. I often look at not only the target of the investigation, but also those who are making allegations against the person or company. I want to know how clean everyone’s hands are, and what undisclosed relationships may exist. It is important to know what we’re dealing with at the outset.

This is not an in-depth background investigation like the one that may done prior to hiring an employee or giving someone security clearance. It is a much broader search using commonly available tools. I often use the following tools in these high level background checks:

Search Engines – Knowing how to search the internet is the key to making this successful. It is not enough to simply search for the name of the person or the company. Based on my knowledge of fraud allegations, prior legal activity, or other information, I will craft searches that are designed to dig deeper into the activities of the person or the company. I am looking for less commonly found information. For example, if I am researching a public company, there are many documents filed with the SEC that are publicly available. That is obvious. Something not so obvious might be a presentation that a company executive made at a conference.  Less obvious sources of information might include old lawsuits, old promotional or advertising materials, or old newspaper articles.

Social Networking Sites – Many people are not careful about what they publish about themselves on social networking sites. Take a look at Facebook, Twitter, Instagram, and other social networking sites to see what you may be able to find out about the target of your investigation. On the business side, LinkedIn can be a wealth of information about companies and employees. Overall, you may be surprised the pictures, status updates, and friends that may be revealed through a search of the various social media sites.

Court Records – Searching state and federal courts can yield valuable information on individuals and companies. Federal court records are available on PACER at a nominal cost.  Bankruptcy, probate, civil, and criminal case documents are all available. Many states have searchable databases, although many provide only information about court activity and not the actual documents themselves. It is relatively inexpensive, however, to hire someone to go to a courthouse and get the actual records if you need them. Court records can show you the following important things:

  • Bankruptcy court records give you an idea of the financial history (troubles) of a person or business. They help identify property that may have been owned, owners of a company, debts that were owed, creditors, and potential related parties. Operating reports may give you information on a company’s business and the economics of the company.
  • Probate court records will not only provide information about the division and distribution of assets. They may also point to potential motives behind dispute between people, as well as relationships between people and business entities.
  • Civil court records not only offer a look into the legal history (troubles) of a person or business. They also may have clues about the financial condition of the person or business, and may help identify related parties or assets owned.
  • Criminal court records obviously provide insight into the criminal history of individuals. To the extent that the cases include financial or business matters, they may shed light on the finances of a person. Be cautious in interpreting the outcome of a criminal case, and consider looking at the actual court documents before drawing any conclusion about a guilty plea or the offense charged.

Arrest Records – The information provided in arrest records can be valuable, because it can point to problems a person is having. It may also give information about addresses, family, associates, vehicles, or other people, places, and things involved in a situation. Arrest records are freely available in person at police stations, but their availability online is very limited. Some local newspapers publish arrest records, so that can be a secondary source either in print or online. Remember, however, that records like police reports can contain errors and inaccuracies.

Offender Databases – Databases of incarceration records or sex offender registries can provide information on the whereabouts of people during certain time periods. Because these records are sensitive, it is important to verify the information before relying on it in a fraud investigation.

Vital Records – Included in vital records are birth certificates, death certificates, marriage certificates, and divorce records. Not all states allow these records to be completely public, so some access is restricted. If an investigator can get access to them, she or he can find a wealth of information inside.

  • Birth records can provide information about parents, their addresses, their employment, the place of birth, and the delivering doctor.
  • Death certificates contain the cause of death, place of death, and next of kin, and can point an investigator to probate filings, which may have a lot of financial and other information in them. Death can be confirmed via the Social Security Death Index, which includes the name, date of birth, place of issuance of Social Security Number, date of death, and last residence.
  • Marriage records offer a bride’s maiden name, addresses of both spouses, and information on witnesses.
  • Divorce records may be maintained with vital records, or may be kept with civil court records. In either case, they provide much information about the parties, children, jobs, assets, liabilities, and possibly detailed histories about all of these. Financial records are often sealed, so access to them may be limited.

Voter Records – Voter registration records can help you find someone, as voting records are almost always public. States each have an agency that oversees voting, and most also have a central point for voter data. Accessibility of the records varies by state, but it is important to know that it is possible to get the records in many places.

Corporate/Business Records – States track registrations of corporations, partnerships, and limited liability companies (LLCs), usually in the Secretary of State’s office. Most states collect registration information, including the name of the business, the registered agent, and the address. Most states do not keep track of details like owners or board of directors members, although a few may gather this information and make it available either on paper or over the Internet. Businesses that are not organized as corporations, partnerships, or LLCs may still need to register with a state or local government so that there is a record of the business and its owners. These records can be referred to as “doing business as” (DBA), assumed names, or fictitious names filings.

Real Estate Records – Property ownership and tax records can provide a wealth of information about people, assets, and relationships. The records are typically divided into two groups: property ownership records found at the recorder’s office (also called register of deeds) and property tax records found at the assessor’s office. Information contained in these records will include ownership (past and present), sales price, legal description, buildings on the property, value of the property, tax bills, and tax payment information. There will also be information on mortgages on properties, as the holder of a mortgage must file legal documents to protect its interest in the property for which the mortgage is given. There are many sites online which offer information on real estate for sale listings, but the accuracy of the data on these sites is often questionable. Use the information on sites such as Zillow or Realtor.com as a starting point, and then verify the information you find with other more reliable sources.

Uniform Commercial Code (UCC) Filings – UCC filings are recorded when businesses receive financing that is secured by assets such as equipment, inventory, accounts receivable, furniture, or fixtures. A mortgage is filed for financing related to real estate, and a UCC filing is for financing linked to personal property. UCC filings are publicly available and are important to determine a company’s lenders and who has rights to the company’s assets. These filings are recorded at a county or state level (or possibly both), depending on the state in which the filing occurred. UCC records are widely available online.

Tax Liens – Although tax records are generally of a private nature, unpaid state and federal taxes can become public. More states have been publishing databases of tax “deadbeats,” often citing the individuals and businesses who owe the most in overdue taxes. Liens against personal property or real estate for unpaid taxes are public filings, and a lien can be filed for unpaid sales, income, withholding, unemployment, or personal property taxes. When a tax lien is placed on property, the owner generally is not legally able to sell or refinance the property without first satisfying the lien. Tax liens provide valuable information about the financial health of a business or individual. Clearly, significant unpaid taxes are a sign of financial troubles. The severity of the troubles may also be judged by the type of taxes that are unpaid. Sales taxes and withholding taxes represent money collected from others on behalf of the government, and are required to be remitted fairly quickly. Nonpayment of those taxes sometimes signals the most serious financial troubles because they are pursued very aggressively by the government and carry with them significant penalties and interest when unpaid.

Driver and Motor Vehicle Records – The availability of driver and motor vehicle records varies by state. Some limit what can be accessed and who accesses it, and the keepers of the records are becoming more selective about access. If an investigator is able to access driver records, she or he will get information like name, address, date of birth, driving history, license type, and restrictions. Motor vehicle records will include name, address, vehicle identification number, and titleholder.

Academic Records – Colleges and universities regularly verify information about degrees earned, both over the telephone and in writing. Typically, definitive proof of a degree must be requested in writing. Alumni directories or websites can provide more information about an individual, including an address and employer. Some sites even allow alumni to provide additional biographical data that can be informative to the investigator. You may be surprised to see how much information people are willing to provide to their alumni association, because they want their schoolmates to be aware of their life changes and career accomplishments.

Professional Licensing – States require licensing for all kinds of professionals, including doctors, hairstylists, private detectives, physical therapists, accountants, lawyers, and many more. From these records, you can find information about a person’s credentials and certifications, as well as possibly their employers, address, and disciplinary history.

Stock Ownership – The SEC maintains buy and sell information for stockholders with more than a 10% interest in public companies. Stock ownership records are also maintained for officers and directors of public companies. These records are maintained in searchable databases, which might help the investigator find out about significant ownership interests in any public company. This is another tool used to link individuals and businesses to one another.

Intellectual Property – The U.S. Patent and Trademark Office maintains a wealth of information on copyrights, patents, and trademarks for which companies apply. This information can give clues about a business and its operations, and may also hint to some sort of value that the company has by way of intellectual property.

Business & Industry Databases – Companies like Dun & Bradstreet have made a business out of selling information about companies and the industries in which they operate. Websites like theirs will often offer “teaser” information about companies in an attempt to get a consumer to buy a full report on a company. The databases can contain information about a company, its owners and officers, compensation of executives, financial statements, key ratios and metrics, and creditors. Do not avoid these resources just because of the cost involved in getting the records. The amount of information they have about companies is sometimes astounding, and even if there is a fee involved in accessing the information, it is often well worth the money. It would take an investigator hours to pull together what one simple search and a reasonable fee on a site like this provides.

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