As certified fraud examiners (CFE), we all know
nuts and bolts of our respective areas of specialty, and hopefully, we are all growing professionally at an astounding pace. Crime does, unfortunately, pay – just not for
criminal.After conducting asset research for over 14 years for such demanding institutions as FDIC, FSLIC, and RTC, as well as major hotels and casinos in
gaming industry, property management firms, and many of
nation’s larger law firms, one thing that has emerged is a distinct lack of information – not about
type of items searched, but
depth and quality of other searches. In cutting to
chase,
following is
result of
compilation of asset search guidelines, and should serve to assist in setting at least a baseline standard for developing a viable domestic asset search strategy.
Subject Identification
Prior to beginning
acquisition of information on any subject of an asset search,
subject should be properly identified. Studies have shown that as much as 30% of
American population uses undisclosed aliases and/or “akas” to conduct and transact various levels of personal and professional business. This statistic does not take into account
existence of corporate, DBA and/or partnership entity names, which are created to transact
various forms of business on behalf of
principals of said entity. To properly identify a non-corporate subject,
following minimum recommendations are made for non-law enforcement environments: Obtain credit reports from
three major credit bureaus, per Fair Credit Reporting Act (FCRA) requirements.
However, make sure that obtaining
reports is in compliance with permissible purposes as defined in Public Law 91- 508, Title VI (FCRA), to avoid tainting your pursuit should
matter ever be litigated. Remember, in
context of this discussion, we are focused on asset searches as recovery medium, and
basic assumption is that
asset search has already been determined to be sanctionable. This could be determined, for example, by a loan in default, a judgment that has been rendered, or a court order obtained for
release of
credit information in cases that are not clearly defined under
FCRA.
Remember this simple guideline: credit reports are legal post-judgment, for purposes of collection, and/or where consent has been given somewhere in
stream of
creditor/debtor relationship. In
case of a receivership institution (i.e., where a director is being scrutinized for alleged conversion of assets), consent may also have been given for a credit history during pre-employment evaluation or as a policy-based condition of employment.
This is referred to as “extended consent,” and constitutes valid use, especially in matters where a criminal investigation is under way, and where
conversion of assets is factually alleged as
result of a forensic audit or proven by admission. Be careful, though, as “extended consent” from
employment perspective is still a gray area under
law. The following two items are available from credit bureaus and their sub-vendors but have less coverage extended to them under
FCRA, yet
“FCRA compliance attitude” should be used when accessing them:
•Obtain social security traces from
three major credit bureaus. •Obtain address update/credit report header information from
three major credit bureaus. •Obtain voter registration information for
applicable jurisdiction germane to
primary, or most recent, residence of
subject. Some states have compiled voter data through private repositories, which should be checked for movement.
Match
information obtained through
independent sources to
information presented by
candidate in
form of
credit application with
institution, and/or
information developed independently by
institution in
initial credit qualification process.
Many other methods of identification exist, but
above represents
very least that should be done. The reason for obtaining
information from all three bureaus, instead of only one, is to develop any alias and/or aka data, as well as current addresses (not specified), and/or any additional addresses that may provide venue data. This will assist
asset searcher in determining whether to advise
client to proceed with asset discovery in additional areas unknown to
client at
time
asset search was requested.
Address verifications are usually difficult without a physical inspection of
address in question, including a visual identification of
subject entering and/or leaving
address. Address information that is cross-referenced and verifiable through
major credit bureau repositories is usually presented in an asset search, and in most cases is very reliable.
To discover
current telephone number of
subject, methods available to
fraud examiner include nationwide telephone directories, criss-cross directories, directory assistance contact, and attempts at contact existing telephone numbers known by
client. There are other methods of telephone number development available. However, these methods should not be utilized by a CFE in order to avoid tainting
legality of
pursuit, in
even that litigation is ultimate undertaken.
Assets Determination
Assets determination usually constitutes an integration of certain liability data to offset
assets “worth” in order to arrive at a net equity position. This is especially true in identifying and analyzing real property assets. There are multiple forms of asset determination, which are described as follows: Real
Property Ownership: A search should be conducted of
applicable county jurisdiction. The exception is in California where a statewide assessor’s index is available, usually through
“lien date” of
prior year. This repository is made available through a private company, and is in no way sanctioned by any public jurisdiction. For traditional searches throughout
rest of
U.S., per jurisdiction research is conducted at
assessor’s office to determine if
name exists on
assessor’s roll, and/or if
known property (address) crosses-verifies to
suspect owner.
A search of
applicable jurisdiction’s Recorder’s Grantee/Grantor index (or general index as it may also be known) is then undertaken to determine if
property is still vested to
subject, and if any open Deeds of Trust and other liens exist which identify liabilities against
property. The search in
recorder’s venue should also identify (in jurisdictions where this is possible)
Documentary Transfer Tax Stamp amount, which should be divided by
applicable factor.
This yields a sales price for
property, which should then be scrutinized by contacting a local realtor to verify
current market value. This “thumbnail” market value determination would then be subtracted from
outstanding Deeds of Trust (encumbrances) for a net equity value of
property.