In 1981, I landed my first job as a Private Investigator with the “granddaddy” of all PI firms, Pinkerton.  I recall pondering the life of a private investigator which was based solely upon what I had seen on TV.  I speculated that it would be something akin to James Bond in terms of high tech sophistication and intrigue.  Boy, was I ever surprised when I first visited the LA office of Pinkerton and saw absolutely nothing that even resembled a spy gadget or the semblance of mystery and intrigue.  In fact, it was quite the opposite. It was more along the lines of the old “gumshoe” days of Humphrey Bogart, with a very odd mix of characters ranging from former housewives to CIA “wannabes.”

After “paying my dues” as an undercover operative working in warehouses unloading trucks by hand and operating a forklift, while “sniffing” out theft, drugs, and other employee malfeasance, I graduated to the next level, consisting of sifting through public records, conducting employee background checks, and armed courier service.  It was still very far from the fictional idealization of a private investigator.  But, it was hopefully a means to and end, and just maybe the real image of a modern day private investigator would reveal itself one day.

In 1983, I began working for my current company, Specialized Investigations.  It seemed like a definite step forward; as I immediately began working insurance fraud cases for some high profile clients under the supervision of a “real life” PI.  It was now becoming more interesting with even some intrigue mixed in.  I “cut my teeth” on working insurance fraud cases, with a fairly interesting mix of other cases that would come across my desk (industrial sabotage in a fiber optics plant; murder mystery case featured on “America’s Most Wanted, etc.).  It was starting to fulfill the portrayal of what I imagined a “real” PI job to be. 

In 1991, I took over as the Manager of Specialized Investigations (SI) after the sudden departure of the then Manager.  With absolutely no management experience, and the PI business in rapid decline due to the insurance industry forming their own Special Investigation Units (SIU’s), it became a new challenge to virtually re-invent the company.  At that time, the insurance business was the “bread and butter” of most PI firms.  In fact, there were several PI firms that had as many as 100 investigators on staff before literally closing their doors several years later, due to the formation of in-house SIUs by insurance companies. 

That’s when the PI industry became more creative, as did Specialized Investigations (SI).  At that time, we began a marketing campaign that no longer relied upon “word of mouth” referrals as the PI industry had been so accustomed to doing since “Hector was a pup.”  We marketed various attorneys, expanded into labor/employment law investigations, asset searches, and other types of services that were not solely dependent upon the insurance industry.  Eventually, we established a surveillance unit, as insurance companies, particularly workers’ comp firms, seemed to prefer outsourcing that type of work.  That move turned out to be a good one and helped SI “turn the corner”, putting us on the map and enabling SI to expand to provide statewide coverage in California, and subsequently Arizona and Washington.   Since 1991, SI has grown from one remaining investigator (me) to over 60 full and part-time employees today, with expansion on the horizon.  So what else has changed?  Lots!

COMPUTERS AND TECHNOLOGY

As mentioned above, technology was virtually non-existent to many PI’s when I first started in 1981.  That has definitely changed.  Undoubtedly, computers have been a predominant factor in the evolution of the PI business.  Before computers (B.C.), I can recall driving to downtown LA and waiting in line to research public record indexes in large books.  It took hours to search a name or two in the criminal and civil index

books. 

Then along came microfiche, which may have cut the time down but still required the drive (unless you purchased the “fiche” and a machine).  Today, the public record indexes can be conducted “real time” for ALL available counties in ALL available states and includes ALL available public records within minutes on a computer, for a fraction of the cost that it took to conduct ONE search in the past.  Computers have virtually revolutionized the PI industry, as they have in most over industries.

 However, there was also a “downside” to the availability of the public records to anyone having access to a computer.  It became too easy for someone with the wrong motives to retrieve this information.  In addition, attorneys and other PI clients discovered that they did not need to hire a PI to obtain this information any longer as they could do it by simply subscribing to the same public record computer database services.

Consequently, this information was sold by anyone with a profit motive to anyone with a wide variety of motives.  This led to the proliferation of “rogue” database information brokers who were indiscriminately selling someone’s personal information like they would sell any other goods.  Eventually, the PI business suffered both financially and professionally by the rapid increase in unlicensed information providers AND the political interest in privacy issues whose cause became adverse to the interests of the PI industry, whose business depended upon the availability of this information, generally for a moral and ethical purpose.  Currently, the PI business is doing everything they can to address the privacy issues by self regulation and through proactive lobbying with state and federal legislators.

Of course, the computer also created a whole new way of doing business in other areas.  I can recall when a typist would have to come by and pick up our dictation every day and everyone kept plenty of “white out” at their desk.  Today, the computer can edit, correct, and email reports to clients (with digital photos and other documents attached) in a matter of seconds, compared with the long process of typing, correcting with white out, addressing envelopes, mounting/pasting photos onto photo sheets, and the client eventually receiving everything via “snail mail.”

 Within the past ten (10) years, SI began using “digital dictation” machines whereby the investigator can email an “audio” report file to a word processor/typist anywhere in the world and get their typed reports returned via email, and then email their reports without having to come into the office.  Assignments are regularly sent electronically by clients and assigned to an investigator electronically within minutes.  There are currently “voice recognition” software programs on the market that are rapidly improving to the point that investigators have begun using them to prepare their reports rather than using a typist.

The internet certainly has added dramatically to the modern day PI’s ability to obtain information on ANY subject and to develop contacts/resources within minutes, compared to hours/days (if ever) in the past.  This is a subject that I could literally spend several newsletter volumes talking about, but maybe that will come in the future.  For example, SI participates in several state and national E-groups for private investigators, whereby we can find resources, experts, information, and firsthand experience on almost any topic known to mankind (private investigators are an extremely resourceful bunch).

I could also talk about voicemails, computer networks, software databases, fax machines, scanners, printers, cell phones, digital cameras, PDA’s, IPhones, and other technological advances but that would probably overwhelm everyone, including me, to think about all the changes that have occurred in the past 20 years.

SURVEILLANCE EQUIPMENT

I recall conducting my first surveillance in 1981 and was equipped with nothing more than a 35 mm camera to take “still” photos of the subject.  Then the company purchased an 8 mm movie camera (the type your grandparents and/or parents used for home movies) which did not have telephoto/zoom features.  You literally had to be across the street from the subject in order to get usable film.

Then along came the “video” cameras, which were the size of a “news” camera, with the VHS tape “self contained” inside the camera.  After ten minutes of filming, I would have to take a break or my shoulder would go numb.  Eventually, the video cameras became smaller and infinitely more sophisticated, where we then began using a mini Digital Video (DV) recorder that can fit in the front pocket without detection; with long distance digital zoom range and night vision capabilities that even I could not imagine when I started my first PI job. Now, the cameras are even smaller, with Hard Drive (HD) components, so that video tapes are no longer needed.

Better yet, every surveillance investigator on staff is now equipped with “pinhole” cameras that are hidden in key chains, blue tooth devices, pens, and anything else that one can devise.  In addition, we also have several wireless units whereby an investigator has to carry only a hidden video cam and a small transmitter, while the recording devise is sitting in a vehicle or other remote location nearby.  Our investigators are also able to download video and photos from the surveillance video onto their computer and email it to anyone, so they can identify the subject, or have for court the next day.  With the rapid rise in “wireless” technology, it’s now even possible for the investigators to stream the video “real-time” or send an identification photo from the field while on surveillance.

I could also go into other technological advances such as wrist watch cameras, GPS tracking systems (not legal in most cases in CA.), long running time lapse digital video recorders, computer key stroke tracking systems, and other high tech spy gadgetry, but that may also be a bit overwhelming. 

CONCLUSION

Needless to say, the modern day private investigator no longer resembles the “Sam Spade” of yesteryear, but has evolved more into the James Bond “007” of movie fiction fame.  I guess by sticking around long enough, my first image of a private investigator as that of James Bond “007” has eventually become reality.  Where it may go in 20 more years is beyond my current imaginative ability.

This newsletter is now available via email.  Please call 1-800-714-3728 or email SI@specialpi.com if you wish to receive the newsletter by email rather than U.S. mail.  Please provide your name and email address.

Due to advances in technology, the availability, reliability, and accessibility of this information has improved dramatically. In most instances, the information can be indexed/obtained “real time”, and can have a major impact on the  outcome of an investigation, compared to the past.

Over the years, I  have  seen  this   part  of  a  background investigation  evolve to  the  point  where it  is today.  The following are some examples of the sources available today, and how they have evolved to  play a major role in a large variety of investigations:

  INSURANCE CLAIMS

Several  decades  ago, the  property and casualty  insurance industry developed a centralized claims reporting system then referred to as the Central Index Bureau (CIB) for bodily injury claims, and  the Property Insurance Loss Registry (PILR) for property claims. In  addition, another reporting  system was developed for auto theft/claims, then named the National

Auto  Theft      Bureau (NATB).  If  that   wasn’t enough defragmentation, another system was  created and named the Insurance  Crime Prevention Institute (ICPI).  The latter two entities eventually merged  into  what  is  now known as the National Insurance Crime Bureau (NICB). Essentially, the front line adjusters and  investigators were encouraged to fill  out tedious forms and mail the claims information into the respective reporting system. Supposedly within 30 days, the  reporting party would receive a copy of any prior claim reports matching the information of the subject claimant. If no information was received, then  the reporting party would have to assume no matches                 could  be  found.  However, the  return matching information was very slow in coming, and many claims were resolved before  the information could be of any assistance. Consequently, many claims went  unreported due to the time required to submit the reports, await a response, and still  have enough time to utilize the information, if received. Some insurers and most self-insured companies, third party administrators, and public entities were not even subscribers to the systems, so many claims went unreported.

Then along came the computer…and a merger of the information. Now, the database is one of the most sophisticated and reliable sources of information available to the insurance industry. About 9  years ago, the CIB, PILR, and NICB claim databases were merged into one superhighway of claims information, now knows as ISO, which in now available “real time” with searching capabilities beyond comparison by any other insurance industry database. The database is now capable of providing its subscribers with a wealth of information about a subject’s loss history, including, but not limited to,  loss  dates  (going back over 10 years), name of insurer(s)/insured(s), claim/policy #’s, contact person, types ofinjuries/property  claim reported,  identifiers of the claimant, attorney (if represented), and doctor/medical provider (injury claims).

A query  system  for  qualified  SIU   subscribers  was  then developed so investigators can now search a  wide  variety  of fields either individually or in combination to assist in identifying potential   fraudulent activity  and/or fraud  indicators. 

For example, the SIU query system enables the investigator to search by medical provider and attorney to determine whether the two have a history of  working  claims together on a  larger scale. Another example of a query may include checking by address only. This search will may identify aliases used by a  claimant (which can then be searched for a claims history), other family members who may  have  reported similar claims, or provide other important  information concerning the claimant’s loss history.

The value of this database to the insurance investigator is immeasurable as a tool when conducting a loss history investigation. However, the investigator must also know how to use this information in his/her investigation. The investigator must be familiar with the laws and industry protocol in obtaining the underlying claims information from the respective insurers who have reported prior loss information. For example, the investigator must be familiar with California Insurance Code 791.13, which allows the insurer to cooperate with the investigator’s written request to review and/ or obtain copies of the claim file(s), for the purpose of “detecting or preventing criminal activity, fraud, material misrepresentation, or material nondisclosure in connection with an insurance transaction”.

An investigator must also know how to analyze the information obtained so as not to form a prejudicial opinion or conclusion. For example, the fact that a claimant has several  prior “soft tissue” auto accident claims should not be interpreted by the investigator as a strong indicator of fraud.  Many other  facts would need to be developed during an investigation to make that assessment. Needless to say, forming an early conclusion based upon database information, without checking out its reliability, pattern of claim activity, motive, and other important elements is amateurish, and could be costly to the insurer, if the conclusion is

inaccurate.

WORKERS’ COMPENSATION

The   Workers’ Compensation  Appeals Board (WCAB) in California, as well as a comparable Board in many other states, maintains a centralized database of litigated comp claims. Those who have established an authorization code with the WCAB can index this database. Those authorized can then go down to the local  WCAB office and request a statewide index by name/ SSN, which generally goes back at   least ten   years. The information provided will be limited to WCAB case #, injury date, and location. Access to the respective files  requires a written request, which must meet WCAB guidelines. Many workers’ comp insurers and industry   professionals may also subscribe to the EDEX system, which is an online database, containing the index information, and also enables the qualified professionals access to other information regarding work comp claims.

As mentioned  above,  the WCAB  index  only  pertains  to “litigated” claims. There are many claims that are not litigated and will not be included in this index.  However, the majority of workers’ comp insurers  are also subscribers of the centralized insurance  database  (ISO) mentioned  above. Therefore,     many “litigated” and “non-litigated” workers’ comp claims can also be located by accessing the insurance claims database.

Again, an investigator must know the respective laws concerning the use of this information.  For example, investigators must be aware that an employer cannot use  workers’ comp loss history as a basis for denying someone employment or terminating an employee.  If an employer were to conduct a workers’ comp loss history on a prospective applicant and discover a history of prior losses, the employer can only do so with written consent.

Furthermore, the   employer  cannot  deny  the      applicant employment unless an offer of employment is first made, and the employer  can establish that they cannot  accommodate the worker’s    current  injury  restrictions.  For example, if the prospective applicant has a permanent work-related injury from a previous job   that would restrict him/her from lifting over 20 pounds, and   the present job would require lifting over  20 pounds, the employer may be able  to retract  the offer   of employment.

Any decision to utilize workers’ comp loss claims history as a condition of hiring/employment should be carefully reviewed by an attorney, due to  the  very stringent State and Federal laws/ penalties surrounding hiring/employment practices.

CIVIL INDEX

A civil index on a subject may also identify other personal injury or property loss history, including auto accidents, slip and falls, altercations, construction defects, uninsured homeowner losses, to name only a few. There may be many litigated personal injury claims that were not reported to the insurance claims database for a variety of reasons. There are still a fairly significant number of personal injury cases that are not reported due to claims personnel   work  overload, oversights, laziness/apathy, non- subscribing companies, reporting errors, and uninsured losses.

For example, an  employee may  have been involved in a non work-related accident or incident, such as an altercation at a sporting event. The employee subsequently sues the alleged combatant for “assault  and battery”. This civil case  could obviously be of major significance if that same employee filed a workers’ comp claim for an alleged work-related injury shortly after the altercation, claiming similar injuries.

DRIVING RECORD

A person’s driving record may also be another source to identify auto accidents that are not identified by any of  the  above sources. A driving record will generally identify auto accidents that  were reported to the DMV when damage to property exceeds $500 (that should include about any accident in today’s dollar value). Any involved party to an accident is required by law to report an accident to the DMV as part of their “financial responsibility”. When doing  so, the  driving record lists the accident date, city where accident occurred, and occasionally a traffic  accident report # (coded).  In  many  instances,  the existence of an accident report strongly suggests that injuries were reported to  the appropriate law enforcement agency, as most non-injury   accidents  will  not   be   reported  to  law enforcement.

In non-injury cases, the reporting parties are still required to file a “financial responsibility” report with DMV, identifying their auto insurance carrier, facts of the accident, and other party involved. However, injuries could be claimed on a subsequent date.

The value of  this information  cannot  be  overlooked. For example, an employee may have been involved in a non work- related accident that was reported on his/her driving  record. Perhaps, the employee suffered injuries, but was “at fault” for the accident, so  was unable to collect from  the  other  party’s insurance company. At a result, the employee fakes an injury at work shortly thereafter, in an effort  to collect workers’ comp benefits. The driving record may be crucial in exposing this fraudulent claim scenario.

OTHER SOURCES

The sources available to the experienced investigator are only limited by their imagination. There are many other sources that a “seasoned” investigator may be able to utilize. There are other public records that may identify loss history. For example, a bankruptcy file contains a questionnaire to be completed by the debtor concerning property losses and/or  claims/lawsuits pending. There may also possibly be medical provider creditors listed who treated the  subject for prior injuries. A divorce file may  reveal  information about  the  subject’s loss  history, particularly when  locating and speaking with an ex-spouse. A police  report  index (not public record) may  also  reveal  uninsured burglaries, vandalism, injury-related incidents, and other reported crimes against a person and/or property. This source  may require an authorization or subpoena, depending upon the law enforcement agency involved or the purpose of the request.

Other valuable sources may include informants such as former/ current neighbors, landlords, former/current  employers, creditors, former insurers, to name only a few.

CONCLUSION

Conducting a loss history  may  be  one of the most important aspects of an investigation, particularly involving a claim for injuries or property loss. The loss history may frequently reveal pre-existing    injuries, pre-existing property damage, misrepresentation  of facts concerning the reported injury  or property damage, fraud, or other  mitigating  circumstances. Conducting a loss history background check can frequently result in saving a substantial amount of money, compared to the cost of conducting one. Call Specialized Investigations for a free consultation  concerning costs  and   recommendations  for conducting a loss history that best meets your particular needs.

SAMPLE LOSS HISTORY REPORT

Please contact Specialized Investigations if you would like a sample of what information is contained in a loss history report.  Please   email SI@specialpi.com< or fax to (866)782-3012, a subject  name, SSN, and/or DOB, and/or address and we will provide you with a sample report. Please include your return phone # and email address in case we have any questions about your request.

During the past twenty nine plus years, I have conducted many surveillance assignments and supervised countless investigators/cases. I have learned that the difference between and Pro and a Con is very evident…and the results often speak for themselves. Our firm has expanded its surveillance unit significantly over the past ten years. Surveillance assignments may now represent at least 40% of our work throughout the state of California. With that expansion, many lessons have been learned that have enabled us to separate the Pros from the Cons. The following examples are a few of those experiences.

EXPERIENCE:

Nothing can take the place of experience!! Some people may believe that anyone can do surveillance. Although that may be partially true, not everyone can conduct a SUCCESSFUL surveillance. The difference between an experienced SURVEILLANCE investigator (one who specialized in surveillance) and an experienced investigator is monumental (trust me on this one). A Pro takes his/her surveillance job very seriously. They would rather be on surveillance than do anything else. A Pro will be there when they say they were… and be able to back it up. If the job requires a 4:00 a.m. start time, the Pro will be there at, or before. 4:00 a.m. The Pro will record their arrival time, intermittent times throughout the surveillance, and departure time. The real Pros will often conduct additional surveillance on their own time if they did not get the desired results. On the other hand, the con will show up late and occasionally miss golden opportunities (i.e. claimant leaving for work when they are not supposed to be working, etc.). The Cons will often leave early to beat the traffic or boredom… and miss other golden opportunities. I once hired an independent contractor who even manipulated the time on his recorder to document that he was there several hours earlier than he was. Fortunately, a Pro was on a nearby surveillance that ended early and went by (on his own time) to check up on the claimant (who he had worked earlier in the week), and made the sad discovery. Needless to say, that independent contractor never saw another surveillance from our firm.

The Pro is an expert at “tailing a subject” without losing them in traffic or being detected. However, even the best Pros lose the subject, or are detected, on occasion. There is no way to avoid this reality. If an investigator tries to tell you otherwise, or oversells their success ratio, you are definitely with a Con. Also, if an investigator/firm tries to sell you the idea of having two-person surveillance teams on the majority of cases, you may be dealing with a Con. In my experience, most cases only require one EXPERIENCED surveillance investigator. However, there are exceptions which include situations where there are more than one visible exit, “take-aways” from commercial buildings on medical/legal appointments, and/or if the subject has acted suspicious on a prior occasion.

EQUIPMENT

The second most important distinctions between the Pro and the Con is the type of equipment used. The Pro knows his/her equipment better than they know their significant ones. After all, the Pro spends more time with their equipment than anyone or anything else. A Pro can tell you the video camera manufacturer, the zoom range, along with many other less commonly known features. Ask a Con and they may know a few basic details about their equipment, and may not even know the brand name.

A Pro will usually have at least two different SURVEILLANCE vehicles that he/she has available in order to mix it up on an ongoing case. The Pro will have a very discreet vehicle (with tinted windows) that will blend in well with the surroundings. The con may use their luxury car, an outdated full sized van (with all the bells and whistles), or their ill-equipped family vehicle (I always laughed when watching the Miami Vice characters on TV conducting their surveillance in a Ferrari). The Pro is well prepared to spend the full day/evening inside the vehicle so as not to miss a moment when the claimant can slip out. He/she will have toilet facilities (bottle, etc.), a change of clothes, food/water, and other supplies stored in the vehicle at all times.  On the other hand, the Con will leave the post occasionally to visit the local McDonald’s for toilet and food breaks. The Con may spend much of their time reading, talking on a cell phone, writing reports, and/or even sleeping while on a surveillance.

OTHER SKILLS

There is a major difference when comparing the Pro’s other skills with the Con’s. For example, the Pro will produce videotape of the subject much more frequently than the Con (my rough estimate would be 8 out of 10 times for the Pro compared to 4 out of 10 times for the Con, depending upon their level). The videotape quality of the Pro will be far superior, with at least some close-up footage of the subject for identification purposes. The footage will be clear with little, if any, blurring or “shake”. The subject’s activities or lack thereof will be well documented. The quantity of footage will be much greater than that of the Con who may choose to stop recording out of fatigue or disinterest. The Con may even run out of batteries occasionally. The Con may have forgotten to fuel up his/her vehicle before starting the surveillance, and runs too low to continue. The Con may try to shoot video from a distant location and through dirty windows. The Con may have inadequate equipment (shorter zoom range, no stabilizer, etc.), compared with the Pro, who may have invested lots of money in getting the very best.

The Pro is also an expert at developing information about the subject before, during and after the surveillance. The real Pros are some of the best pretext artists in the business.

The Pro goes out on the assignment with as much information about the subject as the client can/will provide. In addition he/she will obtain additional information from other sources (driving records, vehicle registration neighbors, etc.). The Con will often go out on an assignment with nothing more than the name and (last known) address of the subject. The Con may surveil a vacant house the entire day without making any discreet inquiries. The Con may not even have a DMV source to check out license plates at the location, whereas the Pro will have “real time” access to this information.

THE REPORT

The verbal and written reports will obviously distinguish the Pro from the Con. The Pro’s report will be detailed, yet concise. The report will include physical description of the surroundings, the vehicles, and (most importantly) of the subject. The report will document the subject’s activities, or lack thereof. It will include a time/date sequence of events, a summary of the activity, video summary, and recommendations. The real Pro will usually attach a photo snapshot (from the video) of the subject for identification purposes. The surveillance videotape will include all activity, not just a “highlight film”. The Con’s report will often lack much of the key information, will often read like a police report (with military times, etc.), and will contain a great deal of superfluous (fluff) information (opinions, speculations, etc.).

MOST IMPORTANTLY, the Pro knows the laws concerning invasion of privacy, trespassing, stalking, and others governing surveillance. The Pro also has experience testifying in depositions and/or court and will bring the necessary equipment to view the videotape evidence. The testimony of the Pro, including their experience level, personal appearance, and ability to articulate the facts, will definitely separate the Pro from the Con when it counts the most.

CHOOSING A PRO

There are a number of things you can do to improve your chances of selecting a Pro when in a situation, or location, where you may not have a surveillance investigator/firm that you’ve used before… and gotten good results (keep in mind that “good results” may be subjective, and may not always produce results that help your particular case). The following are some steps to take before hiring a surveillance investigator/firm:

1)       Require that the investigator/firm provide you with a copy of their current license, insurance (including workers’ comp), and any other materials which indicate that surveillance is one of their areas of expertise (the word “surveillance” in their brochure, along with numerous other specialties, may not be sufficient). Some may even have a “highlight” film that they can give you to demonstrate their skills (call Specialized Investigations for a copy of our videotape, which is quite entertaining);

2)       Ask the potential investigator/firm for personal references of other clients who have used them for surveillance on more than one occasion, and call at least one of them. Ask the investigator/firm for copies of any external/internal checklists they may use for surveillance purposes (the Pros will also have an Assignment Form they will gladly provide). Ask for the name and personal Bio of the investigator who will be assigned the case. Remember, the outcome will depend solely upon the investigator, not the past reputation of the company hired. Many firms may not have a personal Bio on each surveillance investigator, but should be able to tell you who will be assigned the case, and their level of experience;

3)       Ask for an investigator that would best fit a particular area or situation. For example, if the subject is located in an ethnic community, it may be best to use an investigator who will blend in better. This is especially important in some communities where language may also be a barrier;

4)       If you’ve had a good experience with a specific investigator at a firm, don’t hesitate to ask for that particular investigator again. They may not always be available, but it’s the old adage that “if you don’t ask, you may not get”. If you’ve had a bad experience with a specific investigator at a firm, you should ask to use another investigator, rather than going out on a shopping expedition for another firm whose reputation is unknown. The truth is, even the best investigators and firms have bad days. It’s when the bad days start to outnumber the good days when it may be time to start looking for a replacement. Try to avoid judging an investigator or firm on the basis of one case that didn’t turn out the way you wanted, as you can’t always “make a silk purse out of a sow’s ear” if the subject doesn’t leave the house, or their activities didn’t meet your hopeful expectations. There are also many unavoidable circumstances that can occur on a surveillance, which may have nothing to do with the investigator’s performance. And occasionally, even the best make mistakes;

5)       Set specific criteria to be followed, along with specific deadlines and reporting requirements. Too often, clients will say they need the surveillance done ASAP, without providing a due date, or any specific reason for the “rush”. If your company/state has strict rules/laws about doing a pretext, be sure to advise the investigator/firm about it in writing, along with other guidelines;

6)       Give the investigator/firm every bit of information you have available on the subject.. Too often, the client will fail to provide key information on the subject, such as a recent change of address/phone number, limitations/restrictions, physical description, photos, and/or work schedules, even though the information may be available in a file or through another contact. This alone will often insure the success of many surveillance assignments;

7)       Ask others for the name(s) of successful surveillance investigators/firms. Try not to rely on yellow page ads, internet sources, and/or flashy advertisements to select a Pro. Many companies have “been there, done that,” and have done the screening for you (sometimes the hard way).

We have all “kissed a lot of frogs” in the hiring process, and will occasionally do so again in our collective lives. However, a little more forethought, knowledge and experience will empower each of us to make better choices when the need arises. So when the need arises, who ya gonna call?

By Richard Harer, Vice President

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?”