clarity in a complex world - mintz group · clarity in a complex world. ... navigating repositories...

New YorkAndrew Melnick212-489-7100

[email protected]

WashingtonJim Rowe

202-887-9100 [email protected]

San FranciscoPeter Lagomarsino

415-765-9900 [email protected]

Contacts

LondonIan Casewell

44 203 137 7004 [email protected]

BeijingRandal L. Phillips

86 139 1022 [email protected]

Hong KongJessica Pyman852 633 50575

[email protected]

Clarity in a complex world

Background Checks Before Deals,

Anywhere In The World.

Due Diligence Before Deals

Due Diligence on Executives

www.mintzgroup.com


How We Work:• Because the reputations of companies and individuals

may depend on the facts we gather, we recognize the importance of accuracy and attention to detail, and our responsibility to maintain the highest professional and ethical standards.

• We listen very carefully to our clients and stick to the priorities assigned.

• We pay strict attention to applicable laws and scrupulously avoid investigative steps that, even if technically legal, might undermine our clients’ interests.

• We believe that thorough investigations can and should be conducted in ways that do not invade anyone’s privacy.


Mintz Reports delve into the backgrounds and reputations of individuals

and companies prior to transactions such as mergers, acquisitions and

financings. We conduct these investigations for corporations, investment banks,

private equity firms, other investors and their legal advisors.

Mintz Reports verify the professed qualifications and track records of people

with whom our clients are considering a deal, and uncover inconsistencies,

omissions or undisclosed controversies they may have in their backgrounds.

We scrutinize companies as thoroughly as we scrutinize people.

Mintz Reports reflect our expertise in the standards and best practices for

what constitutes due diligence and responsible decision-making

before relationships.

We identify adverse issues bearing on integrity and reputation, such as

legal disputes, financial trouble, regulatory actions, media controversies and

undisclosed relationships.

Because our clients have so much at stake when considering a transaction, our

reports go well beyond obvious online sources. And following the paper trails

may be just the beginning, because our clients need to know from live sources

the context and perspective behind the data.

Many of our clients’ deals cross borders, and we have decades of experience

navigating repositories of obscure records under the norms and customs in a

variety of locales. Our user-friendly reports flag potential problems for clients to

address before making final decisions.

We do this work in every corner of the world.

Due DiligenceBefore Deals



Though not available online, we found an April 1993 Jersey Herald article that said Jane Doe’s mayoral campaign designated Roger Duncan’s company, Minefield Construction, as one of several “tainted companies” that had donated to the campaign; the money was returned.

We identified only five articles in English on the company and three articles in English on the executives, all routine. However, in the Chinese press we identified several hundred articles on the company and the individuals as well as lawsuits and regulatory actions not reported in English.

We Go Beyond Online SourcesThere’s a pervasive myth that everything about a person’s or a company’s background is available through simple online

searches. In fact, searching the web is only a first step – to access most of the records that tell a person’s or a company’s

story, one must search manually in courthouses, regulatory files and obscure archives.

We Conduct Global Searches in Local LanguagesWe conduct investigations all over the world and know where records are to be found in every country. Records and news articles are maintained per local norms and customs and are invariably in their local language; we translate from a variety of languages to achieve seamless coverage.

We Recognize Red FlagsIt takes a well-trained eye (and certainly a human eye, not a robotic template) to recognize a red flag – a routine-looking shareholder lawsuit that sparks the attention of regulators, for example, or a divorce containing allegations of financial misconduct.

We Alert Clients to Issues in Real TimeOne of the worst offenses to a client is to “sit on” red flags that come up early in the process and wait until the background check is complete. We appreciate the need to stay in close touch with our clients.

Databases indicated that, in 2002, a $2,000 judgment was filed against Roger Duncan in favor of Guyana Trading Corp. in State Supreme Court in Manhattan. In the court file, we found a signed confession of judgment, which said that the judgment was due to “money stolen from Guyana Trading Corp.”

Anatomy of a Mintz ReportHere are the unique features and best practices that set Mintz Reports apart

HIGHLIGHTIn June 2007, when Duncan was CFO of the company, one of its Brazilian subsidiaries was the subject of investigations by the Brazilian Federal Police and the CVM, the Brazilian securities regulator, in connection with whistleblower allegations in the news media that the company’s contract to provide telecom service in the Bahia state was obtained by bribing Brazilian congressmen. Although the investigations were dropped, Duncan and other officers and directors were subject to class-action shareholder litigation in Italy and the United States that was settled earlier this year.

A Jersey Herald article, titled “An Executive’s Missing Years: Papering Over Past Problems,” recounted Duncan’s early career more than 25 years ago, when he was “fired” from two companies. The article said, “Along the way, Mr. Duncan erased both jobs from his employment history. No one who checked his background discovered the omissions.”

Duncan was head of the audit committee of Milan-based Kompas Fon from January 2001 to October 2009. In its 2008 annual report filing with Consob, the Italian securities regulator, Kompas Fon disclosed that the Guardia di Finanza, the wing of the Italian law enforcement agency that covers financial crimes, had requested accounting records related to Kompas Fon’s wireless contract in Ethiopia. We propose investigating this issue further and look forward to discussing specific follow-up steps with you.

Mintz Reports are User-FriendlyClients are often frustrated by “data dump” reports that require them to wade through reams of undigested background information. We write user-friendly reports that include an executive summary, present complex information in everyday language, and attach the raw documents that we find.

We Clear Up the Fog of Common NamesClients hate hearing from their investigative firms, “We are not sure whether any of these is the relevant person – they are a name match only.” We solve dilemmas caused by common names, including using care in ensuring that a potentially disqualifying issue indeed involves the executive and not someone else with the same name.

We Find Trouble in a Person’s Past Even When His Name Isn’t on ItThe American CFO whose tenure was marred by an options-backdating scandal or the Italian executive who stepped off the board of the telecom company amidst fraud accusations – these are both situations that raise red flags, but in neither case was the person sued or formally accused of misconduct. It is important to search for controversies involving someone’s past employers and boards regardless of whether his or her name is on them.

Mintz Reports Go Back More Than a Few YearsMany investigative firms choose an arbitrary time period, some as short as the last three years, when looking into an executive’s background. But executives can have long track records, and we often recommend going all the wayback to college.

In July 1983, a Roger J. Duncan pled guilty to driving under the influence in Oklahoma County, Oklahoma, according to an August 1983 Oklahoma City Times article. We believe this was the relevant person because 1) the relevant person worked at a consulting firm in Oklahoma after college, according to his bio; 2) the defendant was 24 years old at the time, which is consistent with Duncan’s age at the time; and 3) we found no other Roger J. Duncans in the state of Oklahoma.



Anatomy of a Mintz Report

It is common for executives to omit brief stints at jobs that didn’t work out or didn’t fit well with current career goals, like the airline executive who for several months worked for a casino. People often hide such omissions by stretching the dates of jobs held just before and just after. It is often the “little things” people edit out of their pasts that a prospective business partner most needs to know.

Jobs erased from resumes

Falsified degrees

Accusations in lawsuits

Undisclosed company affiliations

Trail of failed companies

Bankruptcies

SEC investigations

Tax liens and disputes

Sexual-harassment claims

Litigiousness

Bombs in regulators’ files

People who have filed for bankruptcy sometimes go to considerable lengths to hide their financial pasts. They may “accidentally” transpose digits in Social Security numbers or use middle names instead of their given names on official documents. People sometimes “edit” their resumes to remove employers that went bankrupt. Of course, a bankruptcy alone isn’t necessarily a deal-killer. You need to know the facts behind the filing. That’s why we generally interview one or two of the filer’s creditors. Sometimes these interviews confirm that the filer is a bad bet. Other times, our investigation reveals that the filer, while under serious financial pressure, was trustworthy and responsible.

Subpoenas. Reprimands. Consent decrees. Sanctions. Hearings. Fines. Criminal charges. Consumer complaints. These are the kinds of documents in regulators’ files that some executives hope you won’t find. The challenge in digging them out is that each government agency around the world makes this information public in varying degrees, and through a maze of websites and databases. Information about a shipping company, for example, might be filed with a customs division, a consumer bureau, an environmental agency or, if it is public, a securities regulator. The best nugget in regulators’ files is often the name of the government investigator on the case. A discreet conversation with that person can help you understand what’s on the paper record.

What Mintz Reports Most Often Uncover

Jobs erased from resumes

Falsified degrees

Accusations in lawsuits

Undisclosed company affiliations

Trail of failed companies

Bankruptcies

SEC investigations

Tax liens and disputes

Sexual-harassment claims

Litigiousness

Bombs in regulators’ files

Secret Companies

Fake licensing credentials

Past criminal trouble

Reason for leaving a job

Façade of wealth

Drunken driving

Scrutiny by consumer and advocacy groups

Controversies in the media

Charges against foreign subsidiaries

A surprising number of executives create companies they don’t tell anyone about – not their employers, their bankers, or their prospective business partners. When we uncover these side companies, we think about self-dealing issues, such as whether the company sells supplies to the businessman’s employer or leases office space to it.

Business people seeking to obtain financing sometimes entertain their financial backers in lavish homes or aboard fancy boats. But this show of wealth may be a façade concealing a different reality. How much equity an executive really has in that extravagant home can be found in property records or a conversation with a former business partner, for example. In addition, liens on property can be good leads in investigating a person’s financial status.

Some multinational corporations that appear to have clean records may in fact have kept their own reputations intact by arranging for a subsidiary to take the fall for a corporate scandal. We investigated an international construction company that looked solid, except for a subsidiary’s central role in a bribe-paying scandal. In another case, a parent company ended a criminal investigation of its corporate practices by arranging for its offshore subsidiaries to enter a guilty plea. Searches of news articles about the parent company turned up nothing negative, but our investigation led us to a source who tipped us to look at the subsidiaries. Only then did the true story unfold.



What Mintz Reports Most Often Uncover

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