Top post: Six myths about asset investigations
The following was originally posted in May 2019. Every one of these still holds true.
When I talk with clients about conducting an asset search, whether it’s for due diligence purposes, litigation, or identifying fraud, I frequently come across several misconceptions about how these types of investigations work. Over time, I’ve noticed that these myths tend to fall into six general categories:
1. I need to be an accountant – Analyzing the numbers is certainly one way to locate assets, but what about the items that don’t show up in the financials? The property in the shell company’s name, an art collection at a second home, the antique Bentley hidden in the garage. Then there are the assets that were recently, and possibly illegally, transferred to the children.
2. I can order bank records online – Anytime someone offers to obtain financial information without consent or a court order is breaking the law, and, if you get involved, you could be breaking the law as well. You know all the privacy statements you get from your bank? There’s a reason for those.
3. I found lots of assets, so we can collect what’s owed – But what if your subject owes more than they own? Checking assets is just one piece of the puzzle. You also need to research liabilities, including bankruptcies, judgments and liens, civil litigation, or property used as collateral for a loan. If there’s anything left after that, maybe you have a chance.
4. I can do a quick asset search – While we try to meet client deadlines, we also manage their expectations. Asset searching involves a tedious process of searching hundreds of sources, verifying results, connecting the dots, finding the gaps, and reporting our findings to the client in a way that makes sense to them. In some cases, though, a preliminary search can tell us if it makes sense to go further.
5. I can do it all online – Like everything else, sometimes assets lurk just in the real world, not online. Online records contain lots of gaps, too. So, sometimes it pays to see where someone lives, pay a visit to company headquarters, search records at the county clerk’s office, or visit the marina.
6. I can just send you my results, and you can sort through them – An asset search involves piecing together all the bits of found information. It’s not a pretty sight, and, for the uninitiated, it can be daunting and a waste of time. That’s because the untrained eye can miss what’s important, or, just as essential, what’s missing.
Any other myths about asset investigations that you’ve encountered?
To learn more about online asset research, check out my latest course, Beyond the Balance Sheet: Strategies for Finding Financial Assets Online. Make sure to use coupon code Phelps10 for a discount.