Unlike personal assets, business assets offer so many opportunities for locating property, accounts, sub-contracts, and maybe even off-shore dollars. Few companies are too small or unsophisticated to figure out how to move money outside the U.S. or how to hide money in unspecified columns in their own accounting paperwork. Keeping money in-country but hidden isn’t that complicated either.
In this 7-part series, we get into the nitty gritty of how Hg conducts business asset investigations for our clients. This week, we highlight six reasons clients come to us for an investigation. In future blog posts, we will explore each investigative focus in-depth with a case study.
“If a rich man is proud of his wealth, he should not be praised until it is known how he employs it.”
Locating the assets of a business can be incredibly difficult, because assets can be held in many, many ways. Among the many creative money management methods available, business assets can be legally held in a foreign country, as a corporate shell, or a personal trust. Some are liquid—cash or easily converted into cash. While some are intangible—lacking a physical presence and may be hard to place a value upon. And still others may be hidden—cleverly by choice to hide wealth or hard to find because of government financial protection laws.
Hiding business assets is so much easier than hiding personal assets, because one can create new umbrella accounts and shell companies to hide money. The only way to locate business assets is to start finding the ‘dots’ and then begin to connect them. As I explain in my books on business research and in my seminars, an investigator starts with the formation document and goes from there. With a methodical eye, we look for discrepancies in addresses, new board members, and updated websites. As we inspect, nuances often begin to appear. They don’t necessarily shout “Look! Fraudulent!” with a burning red flag, but minor discrepancies can steer the perceptive investigator down the right path to uncover fraudulent practices.
Six Reasons for a Business Asset Search
Understanding the reasons why my client wants me to search for business assets is vital to my work. Knowing the specific intent helps focus the investigation and ensures I comply with all legal statutes and regulations.
- Pre-assess Before Filing a Lawsuit—A client has not been paid and wants to know whether the party has the assets required to pay the debt.
- Collecting on a Judgment—A client has won a lawsuit and a judgment has been issued and the assets of the debtor party need to be identified for collection.
- Locating a Project’s Funding Party or Mysterious New Investor—A client needs money behind the mission tracked down, the silent partner identified, or the real owner of a company revealed.
- Finding Prior Ownership—A new investor needs to allocate a liability claim against a former owner of an old asset such as a product or property.
- Employment Purposes—An employer needs to understand the financial strength of a candidate for an upper management position or a high-level accounting and financial position.
- Investment Opportunity or New Business Venture—An entity is considering a business relationship with another entity and needs to establish the strengths of that particular company or individual.
A Few Words on “Other” Assets
Assets are something that can be taken, possessed, sold, and bartered over. But while an investigator may be investigating such assets, a keen analyst must continue to look for a bigger picture to emerge: What the assets mean to the individual or the company.
Walk into any old, established bar and look above the cash register. You will most likely see the first currency the bar received in a frame and signed. That first dollar carries more emotional weight to the owner than the entire register. Ask a woman who has been married for 30+ years what her favorite piece of jewelry is. She will most likely say it’s a piece her children gave her, an anniversary piece, or her wedding ring.
Companies do not have the same sense of loyalty or emotional attachment to their assets, unless the asset is their brand name or patented technology. In some cases, companies realize their greatest asset is in the intellectual capacity of their employees. Years ago, large firms like IBM used to refer to their employees as “family” and would never consider reducing staff in order to maintain profitability. Today, companies are now faced with foreign markets and improved technology from competitors. Holding onto a dinosaur staff is no longer an option. The expression “family” was changed to “team.” As in: You make the cut, or you don’t. But the fact remains, the team can still be a company asset.
In other words: Not all assets are materials or property-based. When researching a company for an investment opportunity, for example, an investigator needs to check the staff size to see if it has risen or shrunk in the last few years. Massive hiring and firing will indicate the company’s strengths and weaknesses. A smart investor wants to see a steady stream of progressive growth, not erratic ups and downs. Such rollercoaster performance can be indicators of market trouble, poor management and leadership, or both.
Cynthia Hetherington, MLS, MSM, CFE, CII is the founder and president of Hetherington Group, a consulting, publishing, and training firm that leads in due diligence, corporate intelligence, and cyber investigations by keeping pace with the latest security threats and assessments. She has authored three books on how to conduct investigations, is the publisher of the newsletter, Data2know: Internet and Online Intelligence, and annually trains thousands of investigators, security professionals, attorneys, accountants, auditors, military intelligence professionals, and federal, state, and local agencies on best practices in the public and private sectors.