Asset Searches v. Due Diligence

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When I speak at various functions or conduct CLE training seminars, I am often asked to comment on methods that can be used to locate assets – clearly a topic that most every lawyer who handles plaintiff litigation is interested in.

I have experience conducting asset investigations aimed at satisfying a judgment and as a part of a client’s due diligence to determine if someone is credit worthy, a good hire, a good partner in a new business venture or to determine if bringing a lawsuit is worthwhile. It is my belief that due diligence investigations provide a far greater value to the consumer than asset investigations. In fact, I encourage anyone considering entering in an agreement, contract, or any type of relationship where trust is an important factor to first complete a due diligence investigation.

The obvious goal of an asset investigation is to locate attachable assets to satisfy a judgment. Bank accounts, wage garnishments, securities, real estate, vehicle related items such as autos, boats, snowmobiles, all terrain and recreational vehicles, airplanes, or tangible personal possessions such as jewelry, antiques, firearms, boat slips, or country club memberships are all potential value items sought by a creditor. When conducting an asset investigation, it is quite common that the result of our findings is to firmly establish that the debtor is truly a debtor. Other judgments, pending litigation, tax liens, mechanics liens and impending bankruptcy are routinely uncovered. For the most part, this all makes perfect sense. Rather than possessing substantive assets that they’ve managed to secret away while choosing not to abide by whatever contract or agreement that made them a judgment debtor, it is more likely that they don’t have any money to pay their creditor.

Unfortunately, tracking down these assets is not a simple matter as there are no legal or reliable databases available to determine, for example, where someone banks or holds security interests. Vehicle related assets are of course registered with the state, and real property assets are recorded with counties. However, in most cases, these types of assets are secured by loans, liens, mortgages or other encumbrances. There have been database offerings that claim, for a fairly large fee, to report bank account information. The legality of the sources used to obtain this information has always been in question. Additionally, when one uses such a service, it is all too common to receive outdated banking information of closed accounts.

I will freely admit, as a private investigator, I have access to a number of sources not available to the general public and that my firm frequently uncovers hidden assets using these sources. It is my belief, however, that if your client has waited until they have a judgment to retain our services, in most cases, they’re too late.

A far more valuable and useful tool to incorporate into legal advice, business partnerships, executive hiring, banking, private finance, business acquisitions, or even personal relationships, is conducting due diligence.

By relying on information provided in an employment application, loan application, curriculum vitae or in personal references, your client is potentially missing out on a wealth of information the subject may not want them to know. These sources are inadequate to evaluate the character and history of a person or company that your client is about to enter into a relationship with.

If not specifically asked, the subject has no motivation or obligation to disclose negative occurrences in their past. And, even when your client asks the right questions, there is no guarantee of upfront answers. If the subject does not believe your client will follow up or verify information or if they are aware that the information is not easily accessible, they may intentionally omit all or some past negatives. They may even outright lie.

With a due diligence investigation, not only can all of the information provided by the subject be thoroughly vetted, contacts to references made, and interviews of past associates or creditors conducted, a variety of other sources of information will be accessed and reported. Such sources would include criminal records, social media profiles, civil records, real property records, vehicle records, divorce records, bankruptcy, corporate affiliations, educational institutions, UCC filings – most of which can be obtained without the knowledge or consent of the subject being investigated.

It has been stated by many that information is the most powerful tool at your disposal. For many they delay in obtaining that knowledge until damage has already been done to their business or personal relationships.

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