Zweig was advising investors not to look to J.P.Morgan Chase’s CEO Jamie Dimon for guidance about sound investing practices, but the late Nobel physics laureate Richard Feynman: "You must not fool yourself—and you are the easiest person to fool."

For investors, says Zweig, “the bigger the commitment, the more certain they become that they must have been right to make it—and the harder it becomes to let go.” It’s all the more difficult to let go of ideas blessed by experts. Risk valuation used by banks has blown plenty of banks up, but bankers continue put their faith in it. Investors in turn put their faith in banks using this flawed technology.

Zweig advises that if a great investment such as J.P. Morgan Chase (prior to Friday) has paid handsomely, you should seek opinions of people who think you are wrong just to make sure you aren’t. If you love a stock, analyze the arguments of short sellers who hate it.

How does this translate into the world of fact finding? Take the brilliant candidate up for an executive posting: he’s never had a single black mark on his resume, every one of his references loves him, and he’s had great press for the past 10 years. He’s the J.P. Morgan of executive candidates, and he’s the perfect person to have examined by a fact investigator who will look for the following:

• Litigation that hasn’t made the news;
• Ownership of secret companies previously unknown, which could reveal business activity and litigation that also flew under the radar beforehand;
• People this person worked with but were left off his resume because they dislike or distrust him.

Or take the requirement for an asset search either to enforce a judgment or to track down money held by a spouse in the midst of a divorce proceeding. Would we need to do the asset search in Switzerland or the Caribbean, or even across state lines? Clients often say no, but really have no way of knowing where the assets may be.

The only way to find out is to start with all the information we can get from the client (all company names, phone numbers personal and commercial, addresses just for starters). We then take an open-minded approach and follow the leads.

The thing that often throws even experienced investigators off the trail is finding something they don’t expect to see and then figuring they must be wrong. “Our guy has never left New Jersey, so this can’t be his huge house in Pennsylvania that’s owned by a Cayman Islands company” is about the worst thing an investigator could conclude.

Zweig’s kicker is worth remembering for investors and investigators alike: “The smarter you are, the more easily you can fool yourself.”

Recently there have also been a number of good articles inspired by the public acknowledgement that major Internet companies like Google have been less than forthright about their use and abuse of private information, as confirmed by the FCC’s decision to fine Google for its collection of private data during its Street View program.  The best ones, like this article by Kate Murphy in the New York Times, are easy how-to guides for savvy Internet users interested in gaining control over their information.  Devoid of jargon, Murphy clearly details easy steps to take in the defense against online snooping. 

But however empowering it may feel to think we’ve finally mastered the privacy settings of the technologies we use every day, the truth of the matter is that despite all our best efforts, information can and will be leaked.  As computer science Professor Steven Bellovin of Columbia University explained at the Cardozo conference, you can protect your email correspondence from being cross-referenced with your browsing history if you avoid Google or Yahoo email accounts and instead set up your own mail server.  But your messages are still fair game to Google if you email someone with a Gmail account.  Or you can activate your browser’s privacy mode to help wipe clean your browsing history.  But this change will stop short of concealing your computer’s I.P. address, the unique identifier that distinguishes it from all other computers.  And as Murphy points out, deciding to take that extra step and mask your I.P. address means incurring additional costs and possibly severely compromising your Internet speed.

Or you may assume that because you’ve never posted your address or physical whereabouts on Facebook or Twitter that you’ve managed to conceal where you actually live.  But the minute you post a picture, the image’s metadata may pinpoint the coordinates of where you took the shot.  So if you snapped that picture of your new puppy at home, you might be giving out your exact location when you upload it to Facebook. 

And then of course there’s the likelihood that information will be leaked by plain old human error, yours or someone else’s. There are always cautionary tales about someone inadvertently sending an email “Reply All” when it clearly shouldn’t have been.  At the Cardozo conference one computer privacy expert sheepishly admitted to making this rookie mistake himself—a confession that inspired chuckles of recognition from far less computer-literate audience members. 

And the actions of others, even if they were acting innocently, may expose your personal information as well.  For instance, one of our clients asked us to track down the settlor of a trust whose whereabouts had long since been a mystery.  But his family was all over Facebook, constantly updating their information with details about their home life and travels.  Eventually, we were able to locate him through them. 

Or take for example the recent news story of the Italian mobster finally arrested after being on the run for nine years.  He didn’t make a mistake, but his girlfriend did.  Police had been monitoring the mobster’s pregnant girlfriend’s social media sites for information about his whereabouts.  They hit the jackpot when the girlfriend decided to use Facebook to share photographs of her growing belly with friends and family.  In one of the photographs she posed in front of a sign for a beach in the Costa del Sol town of Marbella.  Then she uploaded another shot of her outside a well-known Italian restaurant in Marbella.  Soon after she sent the mobster an email predicting that she was going to go into labor sometime soon—an email that, unbeknownst to her, the police were monitoring.  Sure enough, the police apprehended the mobster when he arrived in Marbella shortly thereafter. 

So, despite the feelings of invincibility and invisibility that the Internet seems to inspire, the truth of the matter is that complete privacy or anonymity online are impossible.  

Divorces can be long and painful journeys, and despite the marvel of the internet, so can asset searches – especially when the other side knows you’ll be looking.

Clicking your way to assets becomes a little easier when you get to the stage of electronic discovery, as the article claims. Proper (legal) access to a computer, smartphone or Facebook account can work wonders. But the idea that a spouse or her accountant can dispense with paper records, do a little Googling and come up with major assets a lot of the time is just plain wrong.

Sometimes, you can get lucky. An accountant uncovered real estate owned by a the other side by using Google, according to the article, and the web also yielded information that the husband had sold his supposedly valueless company for millions.

We’ve written before about the limits of Google here, where we point out that if you Google yourself, you will probably find less than one percent of the information that you know about yourself. Why should your spouse’s secrets tumble onto the Google results screen when yours and those of most people you know will not?

Google is also deficient as a main search tool because “good” results for Google may not be good results for you. Google is a business, not a non-profit catalogue of the world’s information. If an obscure financial asset held by a brand new limited liability company controlled by your husband is like gold for you, Google may not get excited enough to tell you about it before page 10 or page 100 because nobody’s linked to it yet and it contains no lucrative terms to sell in Adwords. We went into this and other Google matters here.

The sad truth for people hunting for assets is that it’s often hard work that involves looking through paper. Of course, as the article mentions, there are all kinds of ways to tap into computers, phone lines and bank accounts. The trouble is, a lot of that kind of thing is illegal. Go into court with illegally-obtained evidence, and you often come out a loser.

The main reason electronic searches won’t be enough to uncover assets? Those assets are recorded only on paper. At best, in most of the more than 3,000 counties in this country, you can find abstracts of deeds, mortgages, court documents and security agreements on line, but to read them you need to retrieve paper in physical form.

What kind of thing is on paper that’s not on the web? For starters:

• Co-defendants. Your husband is sued in Pennsylvania, but not on the electronic abstract are the names of his co-defendants. One of those could be his LLC through which he owns property you don’t know about.
• Collateral. When you borrow money in a securitized loan, the collateral gets recorded in writing. Sometimes you can see these UCC Article 9 security agreements on line, and sometimes you can’t.
• Other adversaries who could help you. Looking at other people who have tangled with your spouse can help with information gathering because those people may know more about his business than you do.  

Finally, one critical tool is missing from the article on the electronic tool kit investigators now carry: it saves tremendous time, lets you conduct research from your office the way computers do, and even allows for lightning-quick follow-up. It’s called the telephone.

We don’t recommend using it until you’ve done all your research (lest you tip off your spouse that you’re getting close and give him the chance to move the assets). However, used properly, the phone can be the asset-hunter’s best friend. 

Another big change is that hedge funds, rather than having to collect only really large sums of money from wealthy people, will now be able to raise up to $1 million a year in small amounts from people not previously allowed to invest in such vehicles. Remember all the complaining that only the really rich had access to the elite performance hedge funds were able to provide? That protected a lot of little people from Bernie Madoff, but never mind – now the little people will have the same chance as everyone else to make a lot of money or, if not hand it to a criminal, invest with someone who won’t deserve the huge fees he will be charging.

Now say you are thinking of putting money in a hedge fund, or are given the task of checking out a prospective hedge fund for your client. The hedge fund has been around for three years and has pretty good returns. What else should you look at? We’re written before about the huge red flags Allen Stanford had flying if investors had just cared to look. Bernie Madoff, aside from his tiny auditor, declared with the SEC just a fraction of the stocks under management he was supposed to have had.

In the interest of avoiding such disasters in future, here for starters are some of the questions would recommend:

• What funds did the principals run before? Hedge funds can (and often do) close up shop when they don’t do well. They return money to investors and dissolve. But what about the managers of those poorly-performing funds? It’s accepted practice in the world of hedge funds that managers of failed funds get new investors and open new funds under a different name. Is your manager one of those on the rebound?

• What were the circumstances that caused the old fund to close? Was it the retirement of the manager’s partner, or just sub-par returns? If unclear on this, are there any former employees or investors we could talk to in order to find out what really happened?

• Beyond previous fund experience, have the managers ever been subject to regulatory sanctions? Have they ever been sued by investors or anyone else? If the answer to the lawsuit question is “yes, but the legal matter settled,” we would advise that you retrieve the court documents (manually is usually the way we usually do this, not on line) and then read the allegations made against your manager.

• Finally, you want to make sure the fund is registered where it says it is and the principals are really the people as represented. We’ve written before about preventing corporate identity fraud, and now that hedge funds can advertise you want to be especially careful that the address to which you send your money corresponds to the one in official records.

Will all of this take a little bit of time? Sure. But given that some people agonize for a year about which kind of luxury car to buy, it makes no sense to us that cocktail party chatter alone should be the basis for an investment worth several Porsches.

Due diligence isn’t as much as fun as the Porsche showroom, but failure to do it right could mean a downshift to a Hyundai when you least expect it.

But investigations are lots of things, and tidy is not one of them.  Investigations are filled with loads of information which could be put into more than one category or, maddeningly, into no category at all.  Investigators have to patiently wade through all that data, perhaps indulge in categorizing at first to help keep track of data, but then get rid of the categories and start to put things together.  Only then can the dots be connected.  Finally, a full picture emerges.    

But how to connect the dots?  How to avoid being overwhelmed when you feel like you’re drowning in data?  We’ve sang the praises of chronologies as a good way to see the big picture. But this is especially true when a time line is built using facts from all sorts of different categories.  Exploding those categories, taking those facts and putting them into a new context, may be the best way to make sense of information that might otherwise appear irrelevant or unrelated. 

For example, we recently investigated an executive who a few years ago gave quit claim to his wife of their family home in Pennsylvania.  At first this transaction didn’t seem to fit into the narrative we were uncovering about his personal life.  So we made a note of it and when it happened, figuring for the time being that it was nothing more than a savvy financial decision done for personal tax purposes. 

But this turned out not to be the case once we analyzed what was going on around the same time at one of the companies the executive headed.  Within weeks of the quit claim transaction, one of the companies was sued for several million dollars by another corporation.  The plaintiff corporation alleged that it had been defrauded and accused the defendants of negligence.  Although the executive was not named in the suit, he was implicated because he directly oversaw the transactions at the center of the plaintiff company’s claims. 

Suddenly that quit claim, which initially seemed to be separate and apart from the executive’s professional life, made sense in the context of what was going on at his corporation.  Given the timing, the transfer of this very expensive home to his wife suggested the executive was attempting to shed his assets in anticipation of being held personally liable in the lawsuit. 

Then throw in the fact that the case was settled a mere 20 days after the suit was filed.  Although the terms of the settlement were kept confidential, the timing suggests that the defendant corporation was happy to make the concessions necessary to settle the litigation rather than risk having the case proceed.  While we don't know for sure if this is the case, initial analyses suggest that these three facts combined—the quit claim, the lawsuit, and the settlement—are as close to an admission of liability as a savvy, well-represented executive is likely to make.  But the full picture emerged only after we were willing to set aside the categories we’d created and place all the facts into new and different contexts.  

A client once approached us to see whether we could run a quick background check on domestic helper he was thinking of employing. She cheerfully offered references, photocopies of a foreign passport and green card, plus a social security number. Our conclusion after about an hour? Her SSN was probably faked, and her green card probably was too.

How did we know without picking up a phone or looking at the document? Anyone with a SSN issued after June 25 of last year got a randomized number. There’s no way for us to tell on our own whether it’s valid or where it was issued. Employers who want to find out if a prospective worker has a real SSN need to use the Social Security Number Verification Service here. You need to register, and there’s a time lag.

What’s nice for anyone else looking at SSN’s issued before June 25 of last year (as our subject’s supposedly was) is that there used to be a system employed in issuing the numbers that could be helpful in figuring out where a person may have lived and when the number was issued.

The first three numbers related to which state the number was issued in. We often find it helpful to know that if someone we’re investigating claims to have lived his entire professional life in New York, his SSN issued in Michigan or Texas gives us a clue that for a time, anyway, he was outside of New York. For someone born in the U.S. that may just mean that he was with his family for a year when he was 12.

But for a person who grew up abroad and got a SSN when he was 35, it’s nice to know where he was when he got that number. For one thing, when checking for a criminal record you get a second state to look at since there is no such thing as a single, national criminal records check available to people outside of law enforcement.

The second two numbers of the SSN are called the series number, and we use these to figure out when the card issued. This was also how we figured our domestic helper was probably faking. The series numbers were not issued sequentially, but were issued according to a known system. If you know the system and when someone’s number was issued you can see whether the number matches the real SSN series issued in that month for that state prefix. Just check the “high number” list).

In the case of our domestic helper, she had a number that should have been issued several years earlier than her arrival in the U.S. Our theory was that she copied part of the legitimate number of a relative who had a good SSN, but that relative had been in the U.S. a lot longer.

 And it’s also about having enough humility to recognize that you are beholden to the client to help set you on the right track.  As a recent article by attorneys Olivier Taillieu and Mark Wolf in the ABA Journal “Litigation” points out, a law client’s most valuable assets are their knowledge and experience.  The same holds true for corporate investigation clients.  A successful investigation starts with a successful client interview. 

Interviews need to be approached the same way a database search is approached—with an open mind and a lot of patience.  At the start of an investigation, clients know more about their finances than you do. They have greater insight about who in their company or among their business or social acquaintances may be able to provide useful information.  They know who they’ve sued or been sued by in the past, and can provide information about the parties involved in these past cases and claims.  They can help jumpstart an investigation by granting leave to speak with other investigators or attorneys they’ve worked with whom might have information relevant to the current situation.  They may know other people who have sued their current adversary and may have insight that could prove crucial to researching an issue.  As Taillieu and Wolf candidly point out, attorneys are often “eager to help put the screws to their former adversaries. Never underestimate the power of grudges.”

Of course, this doesn’t mean that an investigator is just passively listening while a client tells their story.  It’s crucial to be engaged and ready to ask the right questions at the right time.  Clients have a fountain of information but that doesn’t mean they know what to tell you.  Even the most sophisticated client may not know what it is you need to know to do your job.  A good investigator patiently asks questions to help access that information. 

And what are the right questions?  Well, they may be the most basic ones, the ones that seem obvious if we’re not making any assumptions or guesses about the case.  It’s always a challenge to shut off that voice in our head that starts taking shortcuts and generating assumptions.  But you know what they say about assumptions, right?  Well, it’s true.  So give yourself permission to ask even the most obvious questions to help ensure that you have all the information you need.  It might be helpful to have a checklist of all the basic information that you’ve found helpful to have in previous cases to help steer client on the right path.  See the list we have for divorce clients here. 

And of course, make sure to keep the lines of communication with the client open.  Some clients may think that after the initial interview, they get to just sit back and wait for you to work your magic.  They may need to be reminded that investigations are often collaborative efforts, and their job is to keep providing you with information, be it something they forgot to tell you the first time around or something new, that comes up afterwards.  They need to know that you won’t be bothered or annoyed if two hours, two days or two weeks from that initial appointment they call or email with just “One more thing….” 

But there is a difference between a thorough social media check and an unabashed privacy violation.  Recent news reports note that some companies and public agencies have gone so far as to request that prospective hires turn over their user names and passwords for their email, Facebook and/or Twitter accounts.  That way, the potential employer can log in and take a good look around all their online activities. 

Some companies or public agencies have heeded warnings from privacy advocates and social media sites arguing that such measures may be too invasive. But sometimes their tactics are also questionable.  For instance, they may ask applicants to friend someone in the company’s human resources department so that person can have a look around.  Or, they might request that the job applicant please log into their accounts during an interview so their postings can be scrutinized on the spot. 

Of course, we advocate that anyone wanting to know more about an individual needs to invest some time and energy to tracking down their online persona.  After all, federal laws permit employers to use information that is publicly available on social media sites during background checks.  And we recognize that, as that never-ending stream of horror show news stories proves, businesses and public agencies are right to be concerned that new hires may say or do something online that could reflect badly on their employers. 

But we agree that asking potential hires to “consent” to having their privacy invaded in the name of due diligence is going too far.  As law Professor Lori Andrews argues, “[v]olunteering is coercion if you need a job.”  If there is a fear that an employee’s comments online could tarnish a company’s reputation, then employers are much better off counseling potential hires about the need to maintain strict privacy settings on their Facebook and Twitter accounts.  That way, efforts have been made to ensure that an employee’s online complaints or questionable comments are shared only among his online friends, and not the public at large.  

Smith reminds us that if you want to really know how a company or an organization functions from the inside, it’s worth taking the time to track down and carefully interview former employees.  Sure, a current insider would be preferable, but with any mole, the odds of convincing them to tell you all they know are slim.  After all, they still work there, and they have to make sure to protect their identity while guarding their interests.  Former employees have fewer such fears.  Like Smith, former employees can be outspoken because they are no longer beholden to the organization, or because they no longer fear being fired for their candor. 

And senior-level former employees are not the only ones worth tracking down.  The day the op-ed was published, some in the business press alleged that Smith was just a disgruntled low-level employee, resentful perhaps about how little he’d moved up during his tenure at Goldman, here and here. 

Certainly it’s always important to assess whether an employee has genuine information or just an axe to grind, but just because an employee is low on the totem pole doesn't mean that their insight into the company is any less valuable. 

Lower-level employees may still know the key players in an organization and how decisions are made.  They also have personal insight on a company’s corporate culture and how former co-workers were perceived.  And while they may not have been leading the meetings or writing the emails that conveyed sensitive information, they may still have been in attendance, or received copies of those messages. 

An employee's low stature in the company food chain is not a reason to discredit what they say altogether—it is just something to factor in when weighing how much credence to give the information or opinion they offer.  

While businesses guarding against ID theft are in the same position as people afraid of having their credit ratings ruined, there is an extra consumer angle to business ID theft: How can you be sure you’re dealing with the company you think you are?

a) Check the Secretary of State on line for the company you’re dealing with. We don’t mean Hillary Clinton. Companies in the U.S. are formed at the state level, and the government department that regulates corporate formation is usually headed up by the the Secretary of State.

 At the Secretary of State, check the following:

• Is the corporation in good standing? If not, back off. Even if it is, was it recently revived after a long period of inactivity? If so, beware and look elsewhere because scammers sometimes slip into the shoes of long-dormant companies in order to give themselves a cloak of legitimacy.
• Who is the owner of the corporation? Ask on the phone when you’re making your deal, and then check to see if the records match. If not, ask why not.
• Is the address for the company one where you would expect to see this kind of business? Does it operate out of a vacant lot or a gas station? Google the address and see what pops up. If your business doesn’t, you may have an ID theft.

b) Google the telephone number you’re calling. Even businesses without a website tend to be listed by other services. If you’re calling someone’s throwaway cell phone, that number probably won’t come up on the web as being associated with the business.

c) If the business you’re dealing with is subject to a professional or occupational license, you’ll usually be able to look that up too.

How would all of this work with the business that was impersonated in the NPR story, AAA Termite and Pest Control in Memphis, Tennessee?

There is only one such business listed on the Tennessee government site here. You find that it’s based at an address on Macon Road and that it was established in 1975. Except for a four-year hiatus in the 1980s, it has been in business ever since. Someone from the Burnett family at the registered address is the company’s registered agent.

What about licenses? While license checks are possible on line in some states, rules vary by state and even within states. Sometimes licenses are handed out at the municipal level. You can look up nurses and chiropractors in Tennessee, but not licensed pesticide dispensers. To check on AAA Termite’s license status, you have to use a telephone.

That may seem labor intensive, but if you’re not hiring new contractors every day, taking a few minutes out to make sure you’re dealing with the right person can save you a world of trouble.