Therefore, it is important to understand what information falls within the purview of public records, their level of accuracy, proper application, reliability of the data, and necessary verification of the information obtained.  Let’s start with the basic definition of public records in California.

California Public Records Act

The Public Records Act is part of Govt. Code 6250-6276.48, and can be found on the internet under a number of websites (e.g. http://parks.ca.gov/?page_id=1084).  In a nutshell, this act is designed to give the public access to information in the possession of public agencies.  Every person has the right to inspect ANY public record that falls within the Public Record Act.  This includes “all communication related to public business ‘regardless of physical form or characteristics, including any writing, picture, sound, or symbol’…”  This definition allows for access to a pretty comprehensive array of public records including, but not limited to, court records, real property records, vital records, government records, public hearing records, to name only a few.

So, are any records “exempt” from disclosure?  The answer is “yes.” The Act does exempt certain records from disclosure.  It does not mean that the exempt record is not a public record, but that an agency may withhold a public record, “but can allow greater access if it wishes.”  For example, police incident reports, rap sheets, and arrest records are exempt under Penal Code 11075, 11105, and 11105.1, but the information in the “police blotter” (time and circumstances of call to police; name and details of arrests, warrants, charges, hearing dates, etc.) must be disclosed UNLESS disclosure would endanger an investigation or the life of an investigator (this is probably the most commonly used reason for non-disclosure of this information).  Also, law enforcement “investigative files” may be withheld, even after an investigation is over.

Other records that may be withheld include, but is not limited to, 1) Home addresses in DMV, voter registration, gun license, public housing, local agency utility and public employee records, as well as addresses of CERTAIN crime victims (e.g. rape, minors, etc.);  2) Attorney-client discussions;  3) Appointment calendars and applications, phone records, and other records…of government decision makers…if the public interest is better

served by not disclosing the records (guess who gets to make that decision);  3) Records concerning agency litigation, but only until the claim is resolved or settled;  4) Personnel,

medical and similar files…if disclosure would reveal intimate private details;5) Other.

So that’s basically the law in California.  But is that the reality?  Not quite.  There may be many situations where the public agency will withhold “public records” without any clear explanation, and without seemingly complying with the law.  What then?  There are specific instructions on how to submit a request for records that may have been withheld, and I would refer you back to the California Public Records Act website for details, or you can call or email our office, and we will email the Act, along with a “request” letter.  In short, it may take some aggressive action on your part, along with lots of patience and perseverance.  The possible good news is that the agency only has ten (10) days to decide if copies of the records will be provided (an additional 14 days if the records are voluminous). 

Public Record Databases

Many of us have probably accessed, or reviewed the results of, public record database sources.  The availability of pubic record databases is astounding.  Anyone with a computer can obtain access to these sources for little or no money. In fact, many of the public agencies now allow access to this information on their agency website.  Obviously, the “bad guys” also have equal access, as they are also considered the “public.”   There are also “information brokers” who peddle BOTH public AND private data/information over the internet.  Unfortunately, this has resulted in an avalanche of state and federal legislation in recent years to prohibit the release of certain “public” records, or other records commonly used by investigators in their “legal” investigations. 

Accuracy and Reliability

It is important to understand the accuracy and reliability of the information obtained through a public record database source.  Everyone has heard the expression, “garbage in, garbage out.”  All public record databases are compiled by humans hired by public agencies (probably at a lower pay rate) to input the information into a computer.  Any chance the information could be inaccurate (misspellings, misreading, miss everything, etc.)?  It happens. Humans make mistakes.  If you noticed, all public record database companies issue a disclaimer on all information provided (as do many investigative companies who supply the data to their clients).  In short, it is important to verify the accuracy of the data, as diligently as possible, when conducting an investigation.

It is even MORE important to understand the relevancy of the information provided by a public record database source.  For example, let’s say that you requested a civil index search in Los Angeles County on a subject named, Jose Martinez.  Guess what!  You better have a lot of paper in your printer.  You will find hundreds of cases with that common name match, with no clue where to begin.  Therefore, the relevancy of that search is almost nonexistent.  However, all is not lost, IF you have a good investigator who knows public records, AND a big enough case to warrant spending the money to uncover any civil cases involving YOUR Jose Martinez.  For example, let’s start by identifying the subject’s middle name OR initial through existing information or other database sources.  Let’s say that YOUR subject’s middle name is “Antonio”.  The civil index search may have identified ten (10) cases with that middle name, and fifty (50) with the middle initial, “A.”  Let’s say that your subject has resided in Van Nuys for the past ten (10) years.  It is more likely that any civil cases filed in the civil court branch encompassing Van Nuys would have a better probability of involving your subject than cases filed in Long Beach, as most civil cases are either filed in the jurisdiction where the subject resides, or where the incident/accident occurred.  Let’s say that you are able to identify two (2) cases indexed for Jose Antonio Martinez, and ten (10) cases indexed for Jose A. Martinez in the court

covering Van Nuys.  That’s where you need to look first.  Now you have narrowed your civil search down to one court location and twelve (12) civil cases, compared to hundreds. 

Depending upon the magnitude of your case (high dollar exposure vs. low dollar

exposure), you may elect to have the twelve (12) civil files reviewed for possible connection with your subject, which could be quite time consuming and costly.  Or, you

may elect to move on to a criminal search, where there may be a higher probability of determining a positive match.  Why is that?  Unfortunately, civil records do NOT usually contain any of the most common identifiers (SSN, DOB, or CDL).  Instead, the file may only contain the subject’s last known/prior address (not frequently), signature (in many cases), or some other less common identifier (same attorney, wife’s name, etc.). 

Therefore, it is possible that a number of cases reviewed may lack any known connection/identifier involving the subject. 

However, in criminal indexes, the most common identifier is the birth date (DOB), not SSN (as many seem to believe).  All criminal cases contain the birth date of the defendant.  As a result, the indexes will frequently contain a DOB match with the subject DOB (IF provided with the correct DOB.  We will usually confirm the DOB with another source, such as a driving record search).  However, there may still be more than one Jose Martinez with the same DOB, so further verification is necessary by reviewing the criminal case(s) for other possible known identifiers (address, CDL, etc.).  This may not be necessary if you have indexed a less common name. Regardless, the index information may not necessarily be accurate, so further review of the file is still important to verify the index information (e.g. charges, disposition, etc.). 

Proper Verification

Proper verification of the public record database information is most commonly done at the court or applicable agency level.  For example, a database search may not be up-to-date information.  Most database providers purchase the information from the applicable court or agency. Many times, the information is purchased periodically or when updated by the court/agency, which may vary by jurisdiction (e.g. Los Angeles County Superior court may provide updated index information more frequently than Kern County Superior court).  Therefore, it may be important to conduct an on-site index of the applicable court/agency records for up-to-date information.  This is most commonly referred to in investigative terms as the “thru” date.  In other words, the database index information may only be “thru” January 2011, whereas the subject may have been involved in a criminal or civil matter subsequent to that date.  This is particularly important when conducting a civil search on a subject to determine whether they filed a lawsuit prior to the “statute of limitation.” 

Application of Information

The proper application of the public record information is the most essential part of public record searching and investigation.  There may be many instances in which the public record information is not relevant to the case, not cost effective, or not even admissible in court.  For example, you may obtain multiple municipal court criminal files on your subject, only to find out that certain misdemeanors are NOT admissible as evidence in a civil lawsuit.  Furthermore, the existence of a breach of contract lawsuit filed against your subject for non-payment of a loan may not necessarily be applicable to your case involving a minor personal injury accident (unless it relates to financial motive).  Also, a divorce file may not be relevant to many investigations, but may identify a potential witness (ex-wife) who may have reason to reveal the truth (“no greater wrath…”).  Therefore, it is important to separate the “wheat from the chaff” when conducting potentially expensive public record research/investigation.  Seasoned investigators should be able to recommend the best cases to review in these situations.

Conclusion

In summary, the use of public records as an element of your investigation depends on a number of factors, of which only a few are outlined above.  The value of the information will depend heavily upon the person accessing and reviewing the information.  The final analysis of the public record information, as it relates to your case, should rest in the hands of public record experts and seasoned investigators.

Investigative techniques have dramatically changed in the past 15 years with the introduction of computer databases and technology.  However, databases and technology alone cannot take the place of good “old fashioned” investigative techniques that have been utilized for many years.  One example of “old school” investigative techniques is the “cold call.”

“Cold calls” are an important tool now more than at any other time in the past ten years, due primarily to the recent state of the economy.  Foreclosures are at an all-time high in California and across the country.  The unemployment rate is climbing, with no immediate end in sight.  The economy is causing many people to relocate for other job opportunities or to find affordable housing.  The population is much more transient than at any time in the past ten years. 

How To Conduct an Effective Cold Call

The unofficial definition of a “cold call” is, “an unannounced visit to the last known address (LKA) of an insured, insured driver, witness, (unrepresented) claimant, and/or subject involved in an investigation, in an effort to interview the involved party, or to develop information as to their current whereabouts.”  Generally, the “cold call” occurs after all other efforts to contact the subject have been unsuccessful (e.g. phone calls, letters, etc.).  At some point, it seems evident that the subject is either uncooperative, or is no longer residing at the LKA and is not aware that someone is trying to reach them. 

Key decisions often hinge on whether someone is being uncooperative, or simply not getting the message. For example, most insurance policies require that their insured cooperate with an investigation, or risk the denial of their claim.  Or, in the case of a third party claim, the insured’s statement is essential in determining liability, apportionment, damages, coverage, and/or other issues. For those reasons, the claims handler must exercise “due diligence” in assuring that they have made a “reasonable” effort at making direct contact with their insured or other parties involved. 

Once a certain amount of office-related effort has been made to contact the subject(s), it may then be necessary to conduct a “cold call” to the provided address.  When should the “cold call” be conducted?  Generally speaking, the most effective “cold call” is conducted in the early evening between 6 PM and 9 PM on weekdays, or on weekends between 9 AM to 1 PM, or 5 PM to 8 PM.  These hours/times may provide the highest probability of success, based upon the typical work schedule from 9 AM to 5 PM, with commute time factored in.  Weekend hours are based upon the more likely time that the typical person may be at home, rather than running errands, going out for the evening, attending religious events, and other weekend activities.  Of course, the best time to conduct a cold call also depends upon the information known about the subject (e.g. work schedule, type of job, etc.).  Some of this information may be known or obtainable from other sources. For example, if an insurance application lists the insured’s occupation as “construction,” then it could be deduced that his/her work hours may start earlier in the day, which could affect the time in the evening that the cold call may be most effective. 

There may be occasions where the Investigator can completely “throw out the book” and conduct a “cold call” at a time/day that would NOT be considered “optimal.”  Investigators often find themselves on another case, or returning from another case, that is within a reasonable driving distance to the “cold call” address, but at a time that may not be “optimal.”  In that case, the Investigator may elect to conduct the “cold call” in the afternoon and find the subject home, or speak to a resident or neighbor who provides the Investigator with the best time to return to the subject’s residence.  On many occasions, the Investigator may be successful in obtaining the subject’s work, cell or other contact phone # and then schedule an appointment with the subject. 

However, the above situation should be considered a less optimal “opportunity,” with a lower probability of success.  Therefore, it may not be fair or reasonable for a client or employer to pay for a cold call that was done to “accommodate” the Investigator’s work schedule regarding an “off-peak” cold call, unless there was a valid reason for conducting it (e.g. Investigator may have developed information that the subject worked a “graveyard” shift, was a college student, housewife, etc.).  Without some valid reason provided in the report (or verbally), the client or employer may be justified in disallowing the costs for the “off-peak” cold call.”  Professional and ethical Investigators are aware of “best practices” and may conduct such an “off-peak” cold call on their own time, and only charge the client or employer if it is successful.

It is important to review the Investigator’s report for the day and time that the cold call is conducted.  The report should tell the reader whether the cold call was conducted at an optimal time (e.g. “On Thursday, October 25, 2008 at 7:30 PM, the Investigator traveled to the subject’s address to conduct a cold call…”).  The absence of a reported time may be a “red flag” that the Investigator may have conducted an “off-peak” cold call, since they were in the area and it fit their own schedule.  Also, the investigative report should explain why a cold call was conducted at an “off-peak” time. If not, then the client or employer may want to question the motives of the Investigator further to insure that they are not paying for services that are not consistent with “best practices.” So what should the Investigator do while at the provided address?    If a statement is needed, the Investigator should take the statement if the subject is cooperative.  If not, then the Investigator should properly document the subject’s uncooperativeness.  If the subject is home but unavailable or unable to provide a statement, the Investigator should schedule an appointment with the subject at another time/date, obtain ALL contact numbers (even email address, if possible), and leave a business card with the subject.

What if the subject is NOT home at the time of the cold call?  First, the Investigator should communicate with anyone at the residence and attempt to obtain any contact number(s) for the subject, and best time to reach them.  If possible, the Investigator should attempt to reach the subject while still at the residence, with the assistance of the resident (e.g. call them on their cell phone, work number, etc.).  If NOONE is home, the Investigator should leave a letter (if provided by the client or sent prior to the cold call) briefly outlining the purpose of the call and anything else of importance, along with a business card and best time to call the Investigator.  The letter and/or business card should be left in a conspicuous place on the door or gate, or both.  At that point, the Investigator will then proceed with a neighborhood canvass.

There may be some occasions in which the Investigator may NOT want the subject to be alerted to the fact that they are trying to reach him/her, or that they are involved in an investigation.  In these situations, the Investigator will have to be discreet or vague when speaking to residents or neighbors, so as not to alert the subject to the investigation.  However, the Investigator must still attempt to obtain whatever information they can about the subject’s schedule or best time to reach them, and then return at that time.

There will also be occasions where it is determined that the subject no longer resides at the provided address. In those cases, the Investigator should attempt to obtain any information they can from the current resident(s) as to the subject’s whereabouts, when they moved out, if they have any further information about why they moved, where they may have moved to and, if a rental property, the name and contact number of the landlord or property manager.  The Investigator can then call the landlord or apartment manager in an effort to develop further information about the subject/whereabouts, or follow up on leads from the information provided by the current residents. 

How many cold calls should an Investigator conduct in an effort to make contact with the subject or determine his/her whereabouts?  That will largely depend upon the nature of the case, the seriousness of the matter, and the costs.  For example, if the case is a “high profile” matter, then the client may wish to have the Investigator return numerous times, or even stake-out the residence until someone comes home (or leaves). In a less serious incident, the client may consider several cold calls as sufficient “due diligence” in satisfying the “reasonable” effort threshold.

Conclusion

Not all cold calls are going to result in contacting or locating the subject.  In those cases, further skip tracing/locate efforts may be necessary. It is important to utilize the services of an investigative firm/Investigator that is experienced in conducting cold calls and skip tracing to insure that you have conducted a “reasonable” due diligence investigation or obtained the desired result and resolved the case.  Please contact Richard Harer at 1-800-714-3728, ex. 177, , if you have any questions about conducting a cold call or skip trace/locate investigation, or wish to refer an assignment. 

By Richard Harer, CFE, WCCA, CPI, CFS 

Video Camcorders

When first getting into the PI business in 1981, I watched TV detective shows that glamorized (i.e. fictionalized) the industry. I was very surprised, and somewhat disappointed, about the lack of sophisticated equipment available to me when conducting my first surveillance. The surveillance cameras were nothing short of the type used by our parents for home movies—movie cameras with no long range capabilities or any other redeeming features. In short, one had to be within 50 feet of the subject if any useful film was to be obtained. Then in the mid 1980’s, along came the “video” camera, with units about the size of news crew cameras that would house a standard sized VHS (or Beta) tape. In my excitement, I went out and purchased the first “Beta” model, which cost roughly 2-3 times the current video camera models available (of course, the “Beta format” became obsolete in less than two years after I purchased it). It was a vast improvement, but still lacked the “stealth” needed when conducting surveillance (e.g. too large and with short range capabilities). Then along came the smaller, sleeker, video cameras with smaller “8 mm” tapes that could later be converted to a VHS tape. The new cameras eventually included night vision (limited), longer range capabilities, improved stabilization (less “shake”), and other features useful to the surveillance investigator. These cameras were the “standard” in the industry for a 5-7 year stretch…until digital recorders were introduced in the past 3-5 years. Since then, the technology has advanced rapidly to include even smaller cameras with many advanced features. The “mini-DV (digital video) cameras/tapes were introduced, followed shortly thereafter by the current HD (hard drive) video cameras that require NO tape, but store the video on the hard drive of the camera, and then downloadable onto a DVD. The newest cameras fit into the palm of your hand, have all the “bells and whistles” available, and are still more affordable than most cameras when they were first introduced. Needless to say, surveillance cameras have “come a long way, baby.”

Hidden Cameras

The use of “hidden cameras” has increased significantly over the past 10 years. When I first started in the PI business in 1981, there was no such device. Recently, I watched a “Mission Impossible” (1970s) episode in which they installed a “hidden camera” in a wall lamp. It was comical to say the least, particularly since the lens of the camera was about 2 inches in diameter, and could be seen by anyone who was the least bit observant. In the mid 1990’s, “pinhole” (the lens was nearly the size of a pinhead) cameras were introduced to the PI industry and were hidden in baseball caps, pagers and other items.

It wasn’t long before “hidden” cameras were used by many surveillance investigators as “standard” equipment. Initially, the camera (actually a pinhole lens) was attached to a recording devise (video camera/recorder) by a wire/cable which required the investigator to carry the video recording devise in a “fanny pack” or other means of concealment. Then, along came the wireless “hidden” cameras that enabled the investigator to keep the video recording devise in another location (vehicle, etc.) while going into a store with a “hidden” camera that would transmit the video to the recording devise through a “transmitter/receiver.” More recently, the “hidden” cameras have become single unit cameras/recorders that are small enough to fit in a keychain or other concealable item.

Video Viewing

In the past, surveillance films required the appropriate “viewing” equipment by the individual(s) viewing it. Many individuals did not have the necessary equipment at the office so would have to take the VHS tapes home to view them after work. Then along came CDs and DVDs. As a result, individuals who needed to view the video were able to do so on their computers. In the past 3-5 years, more advanced options of viewing the video online or via email have evolved. For example, our Investigators can now go to a website within minutes of obtaining the video, upload the video onto a website, which can then be emailed to anyone interested in viewing the video. Anyone with standard “Windows Media Player” software can simply click on a link received in an email and view as much of the video as they wish to, enabling them to make much quicker decisions about whether to authorize additional surveillance, or forward the video to an attorney, doctor, or other involved party, for quicker decision making. As in advanced cameras, the method of delivery has “come a long way, baby.”

GPS Units

In the late 1990’s, Global Positioning System (GPS) units were installed in automobiles, and would enable law enforcement to track down stolen vehicles. Since then, GPS units have become readily available to anyone interested in purchasing one. The unit is now small enough to fit in your pocket and can be attached anywhere on or in a vehicle, and allows the tracking of that vehicle, via an internet site, anywhere it goes. However, the use of a GPS unit is unlawful in California UNLESS the person using it is the registered owner of the vehicle that it is being contained in. In other words, if an Investigator intimates or suggests to you that he/she is using such a devise, BOTH you and the Investigator are most likely in violation of the law, and is not something to be involved in, regardless of its potential benefits.

Cell (Radio) Phones

In the past, communicating with another Investigator on a two-person surveillance case was very ineffective, and limited to short range “line of sight” two-way radios. The radios were very unreliable, especially when around tall buildings or underground parking lots. Then, along came cell phones, both with and without two-way radio capabilities. Now Investigators can keep in constant contact with each other AND with the client, office, and/or any other source necessary, increasing the likelihood of a successful surveillance. In the past, the Investigator would have to leave his/her post to find a nearby pay phone if they needed to run a license plate, request additional assistance/information, update the client/office, and/or make any other necessary calls, often risking the subject leaving or doing something relevant in the interim.

Conclusion

These are only some of the significant technological advances that have “revolutionized” the surveillance industry in the past 25 years. Obviously, these advances have significantly improved the likelihood of a successful surveillance. However, technology alone cannot produce a successful surveillance. It still requires the skills of a surveillance “specialist” who has the experience in conducting surveillance, knows how to utilize the new equipment, how to “tail” a subject, how to apply investigative skills, and how to effectively communicate the results to others. Having both the expertise and the latest “tools” is a winning combination…that would make even Dick Tracy proud!!

by Richard Harer
Manager

In reading the papers and following the news, it seems that real estate is a hot topic right now.  Real estate prices have fallen sharply in many parts of the country, particularly in California and Nevada.  Foreclosures are at an all-time high, and projected to continue climbing. Many home buyers in the past five years have seen their property values fall below the amount borrowed, leaving them with “negative equity” in the home. In other words, they are “upside down.”

What does this all have to do with fraud and investigations?  Simply stated, as financial struggles increase, fraud increases.  There are already signs of it in the homeowners/property insurance business. One well established homeowner’s carrier that we work for has expressed concerns that the homeowner’s insurance market in California will not be as profitable in the future, due to rising fraud, and may result in homeowner’s carriers leaving the state.

However, other industries will also be adversely affected by the real estate woes.  For example, many homeowners who are at risk of losing their homes, may resort to “torching their ride” due to increased costs of gas for their SUVs or other gas guzzling vehicles, and use the insurance proceeds to “downsize” to a less expensive more fuel efficient vehicle—saving their home in the process.

In order to better understand how real estate impacts fraud, it is important to understand real estate, and the investigative sources available to the public.

Real Property Sources

Over the years, I have developed a number of valuable real property sources.  In my opinion, the “mother” of all real property sources is a source called “Data Tree” who has a database called DocEdge.  This is a nationwide database that can search all available real property records nationwide (by name, county or state).  They can also provide “involuntary lien” searches (notices of default, abstract judgments, mechanics liens, tax liens, and others) on nearly any property in the U.S. The BEST part is that you can also obtain copies of the documents associated with the property (e.g. involuntary liens, loans, deeds, transfers, etc.) directly from the database.  No more running down to the County Recorder’s office and spending hours doing the research, then standing in line and purchasing the documents.  The down side is that they require a minimum monthly fee of $100. Their website address is: http://www.datatree.com

For those looking for something less expensive and/or free, try the following websites:

http://www.Merlindata.com which is a fee based database company that has excellent real property search capabilities (especially in California);

http://www.zillow.com allows you to determine the worth of a property using a special home value calculator;

http://www.foreclosurefreesearch.com allows you to find foreclosures anywhere in the U.S.;

http://www.netronline.com is a fee based real property public records online database with some “freebies” for those who don’t have the volume to do the monthly fee (buyers beware: I have never used this one);

http://assessor.lacounty.gov/extranet/Datamaps/Pais.aspx the County Assessor’s office in Los Angeles has a very good database involving real property records.  Many counties in other states may have a similar website.

However, all the real property sources in the world will NOT compensate for the lack of understanding basic real property documents and lingo.  The following is a quick  “home” study guide to assist in understanding a small part of that world:

Real Property Records:

Real property transactions are probably the most paper laden of all industries-from realtors, appraisers, lenders, home inspections, escrows, title companies, to sales.  However, the most essential real property public records are stored at the respective county level where the property is located.  In California, the real property records are stored at the County Recorder’s office and are available to the public.  All “legal” real property transactions are “recorded” in the form of “documents” that are identified by a specific name and document number.  The following are the most common documents recorded:

Grant Deed: This document is the official property deed, which shows the name of the seller (grantor) who sells (grants) the property to the buyer (grantee).  This document will contain a legal description of the property and other basic data;

Trust Deed: This document is the official mortgage deed, which shows the name of the lender (trustor) and the borrower (beneficiary).  The document generally provides the loan terms, amount borrowed, property description, and other data;

Quitclaim Deed: This document is the official property deed in which the property is generally transferred from the owner to another party without an actual sales transaction (e.g. husband transferring property to wife during a divorce, etc.)

Reconveyance: This document is recorded when a mortgage is paid in full.

There are too many other “recorded” real property documents to mention. For example, the County Recorder’s office also stores Notices of Default, Trustees Deeds, Trustees Deeds Upon Sale, Abstract Judgments, Tax Liens, mortgage transfers, and other transactions affecting real property.  However, they do NOT record loan applications/documents, home inspection reports, escrow documents, and other relevant real property records. Those records may only be available from the property seller, buyer, lender, escrow company, realtor, and so forth.

Adverse Real Property Transactions

As mentioned above, the County Recorder’s office also records “derogatory” document transactions.  The most common are:

Notice of Default: This document is the official record of a lender’s “notice” to the borrower that they are delinquent in their mortgage payments (usually recorded after 60-90 days).  The delinquent amount and length of delinquency is generally listed.  The borrower is then given up to 90 days to remedy the delinquency;

Trustees Sale: This document is the official record of a lenders “notice” to the borrower that they intend to foreclose upon the property if the borrower does not remedy the delinquency (usually recorded after 5-6 months of delinquency).

Trustees Deed Upon Sale: This document is the official foreclosure “notice”, with details of the foreclosure sale.

Abstract Judgment/Lien: These documents are recorded after a judgment is obtained in civil court, or tax lien is filed by the respective government agency (e.g. Federal, State, County, and/or City).  These recordings would affect the property owner’s ability to sell the property UNTIL the judgment(s)/lien(s) are paid in full. It is possible that other judgments have been obtained against an individual property owner, but not recorded.  In that case, the judgment would NOT affect the property owner’s ability to sell the property BEFORE the judgment is “satisfied” (paid off).

Credit History

So other than the above “official records,” how could one determine whether the property owner is, or has been, delinquent on his/her mortgage payments?  The BEST way to determine this is by running a credit report on the subject (must have legal reason for doing so). Every mortgage transaction is reported to the credit bureaus and shows a monthly payment history, amount of monthly mortgage payment, and amount remaining on the loan.  If an individual is, or was, behind on payments, the credit report will clearly show the delinquency (past and present).

Equity Evaluation

So let’s assume that the subject of an investigation is NOT behind on their mortgage payments, but is most likely “upside down” on their mortgage to the point that he/she has “negative equity.”  Simply put, the property is worth less than the subject owes.  This is a pretty common circumstance in today’s real estate market, particularly with homes purchased in the past five years.  For example, the subject purchases a home for $500,000 two years ago (we’re talking California), and pays 10 percent down ($50,000).  At the time of purchase, the property was “appraised” at $500,000, leaving the subject with $50,000 equity in the property.  Two years later, the property value has now declined substantially, and now is estimated to be valued at $400,000. With MOST of the first two year’s payments going toward interest, that leaves the subject with “negative” equity of around $50,000, meaning that they would still owe money to the lender(s) if they sold the property.  This same situation could occur with longer time property owners who took out home equity loan(s), and the total amount borrowed vs. the current equity is a “negative” value. In either case, the subject may be in a “nothing to lose” situation and is at financial risk in the near future, particularly if any other financial hardship occurs.

CONCLUSION

In summary, the importance of accessing and reviewing real property records will take on an increased importance when investigating suspicious insurance claims, criminal activity, civil litigation, and other financially motivated questionable activities. It may well be the “real” (property) motivation for the next case that crosses your desk.

Richard Harer
Manager

There have been countless cases during my career where criminal background checks have produced some very significant results.  Whether it be a background check on a suspicious insurance claim, current employee, prospective employee, prospective tenant, claimant, to name only a few, a simple criminal background check has saved clients a substantial amount of money—especially when comparing the “cost vs. return.  In this article, I will demonstrate this point with a handful of cases that I can recall in recent memory where the savings far exceeded the costs.  Here they are:

 Insurance claims:

About a year ago, we were hired by an insurance company to investigate a stolen race car claim reported by their insured.  The claim, valued at over $75,000, had several “red flags”, including several suspicious receipts submitted by the insured for the replacement of the car’s engine and transmission.  During the investigation, we conducted a background check on the insured, who came out “squeaky clean.”  However, we decided to run a criminal background check on the auto shop owner who allegedly replaced the engine and transmission.  We discovered that the owner was previously convicted of “insurance fraud” and was currently on probation.  Long story short, we then visited the body shop owner and confronted him about the questionable receipts—and his prior fraud conviction.  Within one week, the insured notified the insurance company (in writing) that he was withdrawing his claim as he had miraculously recovered his own vehicle.  Cost of criminal background check–$200;  savings–$75,000.

Last year, an insured filed a burglary claim with her insurer, in which jewelry valued at $35,000 was allegedly stolen from her residence.  Once again, there were “red flags”, but the burglary appeared fairly legitimate, and the insured came up “clean” on a preliminary background check (thanks to her new alias).  After further investigation, we discovered the insured’s true identity and the name of her husband.  We then conducted a criminal background check on the husband and discovered that he had an extensive criminal history…including several convictions for burglary (no wonder the burglary appeared legitimate).  Although we were unable to determine that the insured jewelry had been the spoils of the insured husband’s efforts, we were able to use the information in negotiating a very reasonable settlement.  Cost of criminal background check–$200;  savings—over $20,000.

Several years ago, we were hired to investigate a suspicious auto accident involving three claimants.  The statements did not produce anything solid enough to deny the claim.  However, the adjuster authorized us to do a limited background check on the claimants to include a criminal history.  One of the claimants had a prior felony conviction and was on probation.  However, in reviewing the criminal file, it was discovered that he had recently been picked up on a probation violation and spent 10 days in jail.  The 10 days in jail happened to coincide with dates that the claimant allegedly received medical treatment at a clinic…and signed the therapy chart.  After confirming with the jail that the claimant was not transported from the jail to the clinic for treatment, we visited the clinic and obtained further documentation.  Once obtained, the information was successfully utilized in obtaining withdrawals from all three claimants.  Cost of criminal background check(on all three claimants plus follow-up)–$400;  savings—over $35,000.

Employee/tenant screening:

Recently, we were hired by a medical suppy distributing company, who discovered that their in-house security officer was offering to sell medical supplies to one of their customers.  We set up an undercover “buy” and the security officer sold some expensive equipment (belonging to the client) to the undercover investigator.  We then turned the investigation over to the police who arrested the security officer for grand theft.  During their investigation, they discovered that the security officer was using a false identity and had a prior criminal history for theft.  They also discovered that he had other criminal enterprises at the time of his arrest…and had a substantial amount of the client’s property in his home.  The security officer pled guilty to theft and sentenced to jail.  Cost to conduct criminal background check—zero, as one was not conducted beforing hiring the officer.  Cost to client for not doing one—undetermined, but substantial, as the officer had been working there for over two years.

On a more positive note, several years ago a new client called and requested a pre-employment criminal background check on a prospective employee whom they wanted to hire as their bookkeeper.  This client had never conducted a pre-employment check in the past but decided to due to the nature of the position.  Turned out that the prospective employee had a recent conviction for embezzlement involving her former employer.  Needless to say, the client found someone else for the position.  Cost–$75;  savings—undetermined, but the client did not have to calculate one.

This week, an acquaintance of mine asked for a limited background check on a prospective tenant, who would rent a room in his home.  Once again, the tenant seemed to be very pleasant and working as a nurse.  However, the acquaintance had a past bad experience with a former tenant so decided to check this one out.  Our limited check revealed that the applicant has a current outstanding misdemeanor warrant for a “failure to appear” on an alcohol related arrest, with bail set at $10,000.  This, combined with several tax liens and a past bankruptcy, was enough information to pass on the prospective tenant.  Cost–$50 (acquaintance discount);  savings—undetermined, but could have been substantial if future unpaid rent and eviction proceedings were involved.

Civil litigation:

There have been countless cases where we have conducted criminal background checks for clients who were involved in civil lawsuits.  Whether plaintiff, witness, defendant or other, the criminal background checks have frequently resulted in the discovery of felony convictions that were extremely useful for impeachment—especially when the subject denied any convictions during discovery proceedings.

However, there are rules of evidence that must be followed in order to effectively use the criminal history results.  Here are some of the rules:

1)    According to the Evidence Code, the prior “bad act(s)” must have resulted in a felony conviction;

2)    Not all felony convictions will be admissible.  It must involve crime(s) of “moral turpitude.”  The criminal conviction must have some relevancy to the underlying case.  For example, a plaintiff seeking damages for personal injuries resulting from an auto accident may have a prior conviction for domestic violence.  The prior criminal conviction may have no relevancy to the allegations in the civil case, unless there is a “loss of consortium(love)” claim.  In that case, it could be argued that the loss of consortium was due to domestic violence, rather than the injuries sustained in the auto accident;

3)            The only admissible evidence of a criminal conviction is the fact of the

conviction(s) and the nature of the crime.  The specific details of the crime(s) and the victim’s account(s) are not admissible;

4)    If the witness/party does not admit to the prior conviction, then a

certified copy of the criminal record must be produced, but no further cross-examination can occur after the record is presented;

5)    Some misdemeanor convictions can be introduced under the “doctrine of

collateral estoppel.”   The prior conviction(s) can be introduced not to impeach the witness/party, but to introduce evidence that relates directly to the “heart of the case”.  For example, if an insured was suing their insurance company for “bad faith”, and a prior misdemeanor case was introduced wherein the insured was convicted of perjury in a prior court proceeding related to an insurance claim, and one of the key issues in the underlying case was false swearing, the case may be admissible (if allowed by the presiding judge).

This is only a very brief summary of the various rules of evidence as it relates to the admissibility of criminal convictions in a civil proceeding.  Needless to say, it is wise to seek legal advise about the rules of evidence before denying a claim, or making other important decisions, based solely upon the past criminal history of a witness/subject.  However, the benefits of the criminal history still far outweigh the costs, regardless of the rules of evidence, when considering the value of determining the subject’s credibility, character, motive, to name only a few.

Other benefits:

There are many other benefits in conducting a criminal background check aside from those mentioned above.  The following are several others:

1)    Key witnesses, and occasionally subjects, are located in jail/prison.  On many occasions, we have been able to interview the witnesses in jail(without too much concern about where to find them later, if necessary).  Locating an insured/claimant or adverse party in jail will often be helpful in resolving/negotiating a case more quickly, often with a more positive outcome;

2)    The criminal background check will often result in valuable witnesses who may have been victimized by the subject, and may be willing to tell you everything they know about them;

3)    Important business/personal decisions can be made knowing that the person(s) you are dealing with are, or are not, trustworthy.  Example:  we were recently hired to locate a client’s CPA, who was no longer at the last know address/phone #.  The CPA was located in jail, and the client obviously changed CPA’s.;

4)    The witness/subject may have a “clean” record, and can then be considered as a more credible witness…or opponent.

Conclusion:

There are many reasons to conduct a criminal background check on a subject, witness, insured, claimant, prospective employee/tenant, and/or others…and very few reasons not too.  The old adage, “penny wise and pound foolish,” comes to mind when considering past experiences in this business.  Some clients may say, “we can’t afford to”, when the point to ponder is, “can we afford not to?”