DDC was recently engaged by a private equity focused family office to conduct investment due diligence on a person and business that claimed to be in the midst of a geographically focused “roll up” of smaller companies in a very fragmented industry in the eastern USA.
DDC found that the founder had been using a similar name to his actual name, was previously incarcerated for fraud, had been banned from the securities industry, had negligible assets while running large expenses (lease luxury vehicle, luxury rental home, etc.), and misrepresented his employment and education history.
During the course of this assignment DDC found that this person had raised almost $50 million from individuals and family offices who were shown the “opportunity” by two different investment bankers. Both investment bankers claimed to have done due diligence on this person and business.
The best way to avoid scenarios like this one is to (1) do a thorough check on a person or entity everywhere there is a contact or connection to the most original source level possible, and (2) do your own due diligence rather than rely on what someone else says they have done (especially if you are not given a copy of the written report).
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Peter Barakett
President
DDC – Due Diligence Consulting LLC
DDC Investigations LLC
