Importance of Executive Background Checks As A Part of Corporate Due Diligence
The backgrounds checks conducted by Corporate Resolutions offer clients the full picture of the fund managers, management team, the executive hires vendors and business partners. As a result, clients can proceed with any business transaction with full confidence. Here are some of the ways they can help a business make the right choice:
Executive Background Checks
In one example of what Corporate Resolutions does, a client wanted to invest in a hedge fund. CRI was requested that they investigate the firm and its founder Murray Huberfeld.
After the private equity due diligence investigation, Corporate Resolutions discovered an array of red flags. They learned that one of the founders had associates that had been convicted of fraud. They had also made stock transactions without following proper regulation and were sanctioned by the SEC.
Besides that, they were also sued for fraud numerous times. The founder himself had been arrested many times for providing forged documents to a person that he hired to take the Series 7 Exams on his behalf.
Because of these red flags, CRI was able to convince their client not to invest in the hedge fund. In the years that followed, the founder of the hedge fund and his associates were sued for corruption and fraud. The scam was all over the new and their client was truly happy to have hired the services of CRI.
CRI is also quite good at carrying out business intelligence. The intelligence can cover a wide array of situations. These include litigation support, counterparty searches, competitive intelligence, and anywhere else, a closer look at the records will offer a clear picture.
In one such example, the owner of a chain of convenience stores wanted to retire. As a result, he was planning to sell a controlling interest of the company to a team of investors. However, he also wanted to ensure that his legacy would be safe. Thus, he came to CRI to have them check out the team.
During the investigations, CRI found that there was a passive investor. This person’s identity had not been disclosed to the owner. The CRI team decided that to find out who he was and the role he would play.
They found out that he had just come out of prison after serving a sentence for money laundering. Further investigations revealed that he probably wanted to use the chain for illegal deals. He was trying to deal in guns also and instead of going for the legitimate route, he wanted to buy AR-10 rifles through a shady supplier. In the most likely scenario, he wanted to continue with his money laundering operation.
Once this information was made known to their client, he quickly pulled out of the deal.
Internal Investigations and Ethics Hotline
When a client is faced with a delicate issue, the CRI investigators can find the underlying cause of it. They have investigators who can look into any project anywhere in the world. To do this, they utilize their connection with former CIA and FBI agents and other experts. They are experienced in conducting interviews, forensic accounting, data retrieval, psychological profiling and much more. They always get their man.
A good case study of their capabilities was when a number of board members at a major company were sent an email. It alleged that the Chief Financial Officer was stealing money from the company. Unclear if it was a genuine or a hoax, the board got in touch with CRI to get to the truth.
CRI carried out a complex and multi-pronged investigation, which helped to verify the claims. They realized that the CFO had created a company that had a name with a single letter difference from the company where he worked.
The investigation found out that the CFO had taken various steps to manipulate financial accounts to avoid being detected. In essence, the CFO had been given the power to revise various internal policies of the company. He wielded this power to hide the digital trail to his shell company. A further review of his background revealed some major red flags. For instance, his references and degrees were wanting.
Besides firing the CFO, the board used the data from the investigation to develop a robust security protocol for the company’s finances. This way, they could prevent a similar episode of fraud from occurring in the future.