As online court records, news articles, and other sources often only extend back to the early-to-mid 2000s, litigation, regulatory actions, and other adverse incidents prior to this time may escape detection by standard research, leaving investors in the dark regarding potential monetary and reputational damages. For example, even in a high-information jurisdiction such as the United States, documents from federal court cases prior to 2000 are rarely available. However, using proprietary technology, advanced research techniques, and expert intuition, Vcheck Global’s skilled investigators can uncover serious issues that industry standard public records research may miss.
Recently, Vcheck Global was contacted to investigate a high-profile subject residing in a European jurisdiction known for its opaque judicial and regulatory records. Preliminary searches of this country’s legal and regulatory records—along with red-flag media searches in English and the country’s official language—revealed little adverse information regarding the subject. However, when delving into the subject’s professional history, the investigator noticed a paucity of information prior to 2000, when the subject established their current professional affiliation. Using a proprietary database that grants access to archived copies of new articles published as early as the 1980s, the investigator identified two holding companies through which the subject pursued investment activities throughout the 1980s and 1990s. Armed with the names of these companies, further research revealed that not only had each entered bankruptcy proceedings, but that each proceeding had direct legal consequences for the subject, including asset freezes, a prison sentence, and more.
After the first of the subject’s holding companies filed for bankruptcy in the early 1990s, citing debts of nearly $100 million, media reported that the company was under investigation for false accounting and reporting. Specifically, the holding company was alleged to have sold its shares in a prominent European bank—dubbed by media as the prize asset of the subject’s family’s holdings—to a low-profile company owned by the subject’s father at a below-market price. This transaction, which occurred in the weeks prior to the bankruptcy, was later labeled an “illicit attempt to shield the shares from creditors” by a court that ordered the shares seized. As a result of these allegations, the subject, along with their holding company’s other executives, was arrested. The subject later negotiated a 23-month prison sentence.
Additionally, using the name of the subject’s second holding company, the researcher identified ongoing litigation in six outside jurisdictions related to a $3.1 million judgment that the subject had been issued in one of the six jurisdictions. Court documents revealed that the judgment stemmed from outstanding promissory notes that the subject’s second holding company had solicited from a European bank in the year prior to its $150 million bankruptcy. In 2002, the bank successfully secured the judgment to recover the outstanding debt on the promissory notes, which the subject had personally guaranteed. When the bank was unsuccessful in their repeated attempts to extract the full judgment, they filed suit against the subject in six jurisdictions. In one such jurisdiction, the bank successfully obtained an order freezing the subject’s assets at four banks.
This report highlights the challenges posed by subjects with lengthy business histories as well as the professional advantage offered by Vcheck Global’s highly skilled investigators, who are able to illuminate the darkest corners of a subject’s background. While standard public records research would have yielded a modest report with minimal coverage of the subject’s activities prior to the 2000s, Vcheck Global’s investigators unraveled a complex web of bankruptcies, arrests, asset freezes, and other valuable information that would have otherwise gone unnoticed. For more information on how Vcheck Global can assist you in your next transaction, please contact us.
Jake Malenka is an Associate for Vcheck Intelligence.