THE CRIMINAL BACKGROUND CHECK

On June 15, 2010, in Blog, by sieditor

Cost vs. Return.

 

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?”

 

 

2 Responses to THE CRIMINAL BACKGROUND CHECK

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