Whenever a high-net-worth (HNW) subject crosses my desk, I’m reminded of the age-old adage I first encountered in journalism school: “Follow the money!”
Turns out, it’s good advice. Individuals with a seemingly tremendous amount of wealth and professional success can trigger all kinds of emotional responses, which can often cloud our judgment: Some of us may be impressed by it, others angered or jealous, yet my time studying journalism and my career as an investigator have taught me to first lead with a healthy dose of skepticism.
A subject’s source of wealth is an important line of inquiry in most investigative work. Whether for high-stakes litigation, pre-M&A vetting, or anti-money laundering (AML) compliance, confirming an individual’s high-net-worth status and understanding where that wealth came from can separate a subject’s legitimate achievements from a client’s legal or reputational disaster.
Today, we’ll walk through a recent case in which our client narrowly avoided the latter.
Complaints prompt investigation into a HNW group member’s background
Our client—an exclusive networking club for high-net-worth individuals—had received complaints regarding a member’s apparent lack of business acumen, calling into question the source of her wealth and her motives for membership in the organization. A “background check” from an online service had reported no litigation or financial issues for her; however, the member complaints persisted, and the group’s leadership decided they wanted to learn more about her and her professional qualifications.
Court documents and business records reveal initial source of wealth
Our subject presented herself as a wealthy tech entrepreneur who had founded and led several successful companies; however, we quickly learned through public records research that after moving to the US in the 1990s to attend an elite business school, she worked as an investment banker for only a couple years before marrying a businessman who had established several tech companies.
Her husband subsequently sold one of these companies for more than $100 million, at which point the couple was sued in multiple Racketeer Influenced and Corrupt Organizations (RICO) Act cases filed by former employees of the company. These suits alleged the couple was co-mingling their companies’ funds to dilute the plaintiffs’ ownership interest and that the couple had partnered with—and given significant cash gifts to—known members of a crime syndicate.
Court documents reflected that while our subject held various titles at the company, she in no way actually worked there or contributed to its operations or success. Rather, the plaintiffs alleged she had used company funds improperly to purchase international vacations, various luxury goods such as jewelry and handbags, and multi-million dollar properties in Europe, the Caribbean and elsewhere for her own personal use. Additional research found that after the RICO cases were ultimately dismissed, our subject went on to form several new businesses on her own, none of which appeared to achieve any measurable amount of success or significant streams of income. At the time of our investigation, she appeared to be attempting to launch a media-related company featuring interviews with successful business professionals, many of whom she presumably met through our client, the exclusive club. Her apparent proximity to these successful entrepreneurs was lending an air of legitimacy to her public image and narrative as a high-achieving business executive herself.
Current legal entanglements present reputational risk for client
Not only did our court records analysis reveal that our client was right to question the subject’s actual experience in building successful businesses, but it also revealed some ongoing legal issues that presented a significant reputational risk to our client and its members.
Our subject had divorced her first husband—the tech executive—who alleged in court that she had purposefully moved their family abroad to file for divorce in a more financially favorable jurisdiction. In a related custody dispute, her ex-husband also alleged that our subject’s second husband physically abused their children and our subject failed to intervene, and that the children had arrived for visitation with notable injuries that were causing them pain. Our subject denied these accusations, and the custody dispute remained ongoing. Our client faced significant reputational risk by continuing to allow this member to promote her affiliation with the club and take advantage of its members in an attempt to build her own brand.
Confirming the existence and interrogating the sources of an individual’s or family’s wealth is an exercise we routinely conduct for clients in myriad situations, whether they are vetting a potential business partner or board candidate, attempting to recover a debt, or simply seeking to better understand a person’s background and experience. Here at 221B, “Follow the Money” will remain a critical piece of our investigative work to ensure we give our clients the intelligence and insights they need.