Best Reference Ever…

“[Jim’s] the man. [Jim] is the best board member I have ever had. He flew out to the west coast the day before every board meeting, and joined me for dinner the night before. He had always read the board package in detail, and had many comments, questions, and helpful suggestions, including contacts who he followed up on. [Jim] did cave in to the other VCs on the board in the end, which ended up destroying our company and losing his entire investment (and ours), but while things were working, before the other VCs pulled out their [Bain] play books, he was great – I just wish he’d stuck to his principles.”

Peter Barakett, President

Due Diligence Consulting LLC

DDC Investigations LLC

Director arrested for domestic violence

DDC was engaged to conduct a thorough review of the directors of a company targeted by a hedge fund client.  DDC found a director was arrested for domestic violence in 2008 in a state that he was not easily connected to.  DDC believes other firms may have missed this arrest by focusing on the current and most recent jurisdictions for employment and residence, rather than all jurisdictions he has ever had a contact or connection with.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

DDC Investigations LLC

Director – Sexual Assault and more

DDC was engaged to conduct due diligence research on a company’s senior executives as part of our client’s investment due diligence regime.

DDC found that one executive was recently arrested for sexual assault, assault and public intoxication, all three incidents occurring on separate dates within the same year.  In addition, this person’s probation / parole was modified and they were required to undergo counseling.

The executive had told our client that he had a prior assault charge but that it was dropped and the case was sealed because while he did assault his wife, it was only because he had found out that she was cheating on him.

What’s interesting about this assignment is that in various federated database reports, information on the three arrests were incomplete or potentially misleading (for example, none showed an entry for sexual assault, but some showed 2 assaults, and others only one).  DDC acquired the arrest warrants for each and found that the subject did in fact assault his wife after finding out that she cheated on him and her admission that she did so.  The next day he assaulted her again, including rape, which he immediately admitted when confronted by the arresting officers.  He was arrested much later for public intoxication. DDC did not find any indication that any of the three cases were sealed.  DDC believes that the only way these incidents would be fully discovered would be if a party searched directly in every jurisdiction where the subject has a contact or connection, like DDC does in every instance, rather than relying solely on one or more federated databases (most investigators typically rely on one main federated database).

Peter Barakett

DDC Investigations LLC

DDC – Due Diligence Consulting LLC

Director – False Statement

DDC was engaged to review the Directors of a company supported by several prominent investors / investor groups.  DDC found that one Director had claimed in writing that he had no convictions other than for traffic offenses.  After thorough research, DDC found this person had a DUI approximately 7 years ago in a state other than that which they currently live in.  This record was found outside of the commonly used federated databases.  DDC verified that this was alcohol, not drug, related.

Peter Barakett, President

DDC Investigations LLC

DDC – Due Diligence Consulting LLC

 

lawyers

DDC just found another lawyer who claimed to be admitted or licensed to practice in a jurisdiction that he/she was not.  While this may often occur where a nominal annual fee has not been paid in a timely manner in order to remain in status, DDC has found many instances where the person in question was never registered in the country or state claimed.

DDC checks everywhere a person has a contact or connection, ensuring the most comprehensive reporting possible.  We think the person in question today was never checked abroad and thus was able to make this false claim without ramifications for almost a decade.

Peter Barakett, President

DDC Investigations LLC

DDC – Due Diligence Consulting LLC

A sample week

Last week was an interesting one for DDC where we found:

– 3 CEOs of public companies that lied in their bios, and in their most recent company filings;

– a Director of a public company who lied about his bio;

– a CEO of a public company that has 2 investment firms that are not properly registered with the applicable states, despite one of those companies previously being properly registered;

– a CFO of a hedge fund who claimed to have a CPA but did not;

– a Director of a public company who claimed to have a current CPA license and did not;

– a private school security guard who did not disclose that he was terminated from his previous school position, and where he was found to be a “danger to children”, despite the current school’s completing a background check that included finger printing;

– a security supervisor for a wealthy family who had falsified almost 90% of his security related credentials, including references;

– a debtor who had been evading service of process for over two years by using different names and addresses in multiple states which he had no previous connection with;

– a fraudulent auto financing scheme;

amongst other assignments for our valued clients.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

Another CEO with issues

Finished a report yesterday on the CEO of a public company who has been operating a separate regulated business in violation of state and federal laws.  What’s interesting is that at one time he did comply, then inexplicably stopped.  In addition, there are material misstatements on historical proxy statements filed relating to his other principal employment.

Peter Barakett, President

DDC – Due Diligence Consulting LLC

If it sounds too good to be true…

DDC briefly looked into an alleged “fund” that “guarantees an annual 20% return” this month.  When asked how it’s possible to make such a guarantee, the promoter said he “makes 10% a month” and that “it’s been three years and it’s always been the same.” When pressed about how such returns are generated, we were told a vague story about commissions on oil & gas leases. Our request for detailed answers to our questions were met with laughter (literally) and we were told that we “didn’t get the opportunity here.” We encouraged our client to run, not walk, away.

If it sounds too good to be true, then it usually is.

Peter Barakett, President

DDC – Due Diligence Consulting LLC