DUE DILIGENCE INVESTIGATIONS - Sobel & Co., LLC Diligence... · Due diligence is what forces you to...

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293 Eisenhower Parkway Suite 290 Livingston, NJ 07039-1711 973-994-9494 www.sobel-cpa.com DUE DILIGENCE INVESTIGATIONS

Transcript of DUE DILIGENCE INVESTIGATIONS - Sobel & Co., LLC Diligence... · Due diligence is what forces you to...

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293 Eisenhower Parkway Suite 290

Livingston, NJ 07039-1711 973-994-9494

www.sobel-cpa.com

DUE DILIGENCE INVESTIGATIONS

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SECTIONS

Due Diligence Overview of Services

1. Biographies of the Team

a. James Mottola, MS, CISM, CPP

b. Kim Miller, Ph.D., CFE

2. Business Due Diligence

a. Article – “Business Risk Mitigation Strategies: Red Flags and the

Fine Art of Vetting Your Vendor”

b. Sample Report – Business Due Diligence Investigation

3. E-Commerce Due Diligence

a. Article – “E-Commerce Due Diligence: Supply Chain Management”

b. Sample Report – E-Commerce Investigation

4. C-Suite Due Diligence

a. Article – “What They Don’t Tell You in the Interview: Not as

Advertised”

b. Sample Report – C-Suite Due Diligence Investigation

Table of Contents

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The reason investment fraud succeeds is because people are lured into

emotional decisions by the con artist without first completing their due

diligence. Due diligence is what forces you to look behind the façade,

uncover the facts, and make a well reasoned decision; however, due

diligence takes time and effort.

The Financial Mentor

__________________________________________

According to a new survey by Career Builder reported in

November 2016, 75% of employers have employed a bad hire in

the last year. The average loss, per bad hire, is estimated at $17,000.

The cost for a bad executive hire can be substantially higher,

frequently costing companies over $2 million.

Infortal Worldwide

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Biographies

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James Mottola, MS, CISM, CPP Director, Forensic Investigations and Risk Mitigation Services

James Mottola is a Director in Forensic Investigations and Risk Mitigation Services, bringing an extensive background spanning nearly three decades in leading and managing personnel in both criminal and civil investigations in national and international environments. Jim’s unique forensic investigation skills were honed during his years serving in the United States Secret Service, evolving from his earliest experiences as a Special Agent in the New York, Phoenix and Frankfurt, Germany office and culminating in his role as the Special Agent in Charge of the Newark Field Office in New Jersey.

Jim adds significant value for the firm and its clients combining a hands-on approach with a strategic perspective and a wide range of investigative situations covering multiple scenarios including white collar investigations, financial fraud prevention, and cyber-crime threat mitigation. His expertise in investigative, protective and administrative operations complements the training and expertise of the professional team in place in the Fraud and Forensic Practice and broadens the scope of services we can provide.

Professional Designations

• Certified Information Security Manager (CISM) • Certified Protection Professional (CPP)

Specializations

• Corporate internal investigations • Criminal and civil fraud investigations • Anti-Fraud prevention, detection and employee awareness training • Information security risk assessments • Internal control and policy assessments • Physical security and anti-fraud assessments • Strategic business consulting

Education

• MS, Management, College of Saint Elizabeth • BA, Political Science , Whittier College

Professional Associations

• Information Systems Audit and Control Association, ISACA • United States Secret Service, Electronic Crimes Task Force • American Society for Industrial Security, ASIS • Overseas Security Advisory Council (OSAC), US Department of State • International Association of Financial Crime Investigators, IAFCI • Association for Corporate Growth, ACG • Advisory Board Member, Vigitrust • Board Member, New Jersey Women in Law Enforcement (NJWLE)

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Kim Miller, Ph.D., CFE Consultant Forensic Investigations/Due Diligence

Dr. Miller holds a Ph.D. in Public Safety and Leadership/Emphasis in Criminal Justice. Her dissertation is entitled The Legal, Community Policing, and Resource Challenges of Dealing with Advance Fee Fraud. Dr. Miller is an Open Source Intelligence (OSINT) Specialist utilizing the dark, deep and surface web focusing on business and personal due diligence, as well as online risk assessment analysis. She is a Certified Fraud Examiner and a New Jersey Licensed Private Detective. Dr. Miller is also a Certified Paralegal and a former Special Detective Intern, Division of Criminal Justice State of New Jersey–Gangs and Organized Crimes.

Licenses and Certifications

• New Jersey Licensed Private Detective, State of New Jersey (2015) • Certified Fraud Examiner, Association of Certified Fraud Examiners (2013) • Paralegal Certification, American Institute for Paralegal Studies (AIPS) (2004) • Certificate of Distinction Tort Law and Legal Research (AIPS) (2004) • Certified Litigation Specialist, American Institute for Paralegal Studies (AIPS) (2004) • Post Cert. Diploma, Advanced Litigation and Torts/Personal Injury Law/ADR (AIPS) (2004)

Education

• Ph.D., Public Safety and Leadership/Emphasis in Criminal Justice, Capella University, Graduated with Distinctions (2016)

• M.S. Criminal Justice, Kaplan University, Graduated Summa Cum Laude (2010) • B.S. Criminal Justice, Kaplan University, Graduated Summa Cum Laude (2007)

Professional Associations

• Association of Certified Fraud Examiners • Association of Certified Anti-Money Laundering Specialists • New Jersey Licensed Private Investigators Association • American Society of Criminology • NJ Chapter of Association of Certified Fraud Examiners (Membership Chair) • New Jersey Women in Law Enforcement

Publications

• Don't Touch that Enter Key! Warn the Victim. Stop the Fraud. Green Legacy Publishing Company, LLC (2017)

• Terrorism Inside America’s Borders Explored in New Research Paper (2016) • FRAML (Fraud and Money Laundering) (2016) • Fighting Fraud with Warnings and Information (2016) • China - International Online Research Document (2016) • Know Your Candidate (2016)

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Business Due Diligence

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Sobel & Co., LLC ■ 293 Eisenhower Parkway ■ Livingston, New Jersey 07039

973-994-9494 ■ www.sobel-cpa.com

Business Risk Mitigation Strategies: Red Flags and the Fine Art of Vetting Your Vendor

By: James Mottola, MS, CISM, CPP Director of Forensic Investigations Risk Mitigation Services, Sobel & Co. LLC Kim Miller, Ph.D.

Certified Fraud Examiner Sobel & Co. LLC

In order for a business to reduce risk associated with fraud, waste and abuse, it must routinely evaluate

the many vendor relationships it relies upon to achieve its financial goals and objectives. Through

ongoing evaluative assessments, businesses can identify the risks and benefits of vendor relations to

strategically increase value and maintain business continuity.

According to Kroll in their recent Fraud and Risk Report, one out of five companies surveyed had fallen

victim to fraud as a result of a vendor relationship, while almost half "felt particularly at risk of threats

such as vendor, supplier or procurement fraud."

Contracting with an outside third party subjects a business to risks with the potential for significant

financial and reputational harm. These can take the form of fraud, breach of contract, error, breach of

confidentiality, data loss and so on. The risks associated with vendor relationships, however, can be

unique and may vary depending on the vendor as well as the service or process outsourced.

The good news is that these risks can be mitigated or reduced through investigative research and

assessment which will provide information to support management in the decision making process

before there is a problem.

Be on the lookout for these warning signs or "Red Flags":

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Red Flag: Don't Knock on My Door

In a recent vendor management engagement, the vendor's address appeared to be valid. However, a

search of the address noted it was a residence owned by a different person than the vendor. A further

search of state databases indicated that the company was registered at another address. The address

was determined to be a closed down warehouse.

Red Flag: Sorry, I Can't Take Your Call Right Now, Please Leave a Message….

Good vendor management consists of verifying all the information, to include the various phone

numbers. For instance, are you constantly receiving voice mails and return calls from a "blocked"

number?

Red Flag: Who Really Owns the Company?

Vetting the principals is important. Be sure to ask a few key questions, such as who they are, do they

own assets and who are their spouses. Additional queries should include: Do their social media profiles

match their business profiles and why is a company name missing on the business profile of a principal

but clearly noted on the social media profile? The details matter! For example, in a recent case, the

principal spelled his name differently on different social media profiles.

Red Flag: The Numbers Just Don't Add Up

In another case, net sales for 2015 were reported at $2.3M. Interesting information and worrisome at

the same time when it was revealed that the company was in business for only six months. This became

problematic when a search of tax information indicated the business filed a welfare benefit Form 5500

to report their financial condition, investments and operations and depicted $400,000 in assets in 2014

while other documents indicated the company was not actually opened until 2016.

Red Flag: The Pieces Just Don't Fit

Inconsistent reporting was glaring in the same case cited above where a merger and acquisition was

noted in 2015 yet political donations were recorded for a candidate in 2012! A search of patents and

trademarks located a result for one of the principals . Again, this was in contrast with information noted

on the business profile and social media profile.

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Red Flag: Show Me the Money

In another matter, a search of liens and judgments noted multiple occurrences highlighting possible

financial issues.

Red Flag: The Truth is Inconvenient

Searches of residential property may not match other documents provided by the principal of the

company. The principal states they have professional licenses and while registration was located, it had

expired.

Red Flag: It Is Not What You Know, But Who You Know

In one case, a search of the principal's business partner indicated a possible criminal history for fraud. In

such a circumstance, the principal's loyalty might be compromised in favor of the partner regarding

financial transactions.

So what do these red flags teach us?

It is important to be proactive, rather than reactive when considering working with any vendor.

Whether a company is considering a new vendor or has questions regarding a current vendor's

behavior, an on-going evaluative assessment process can often take only a few hours of investigation in

order to avoid many hours of lost time, headaches and costly mistakes. Don't ignore the waving red

flags. Good vendor management, present and future, makes good dollars and good sense.

For more information on this critical topic, please visit www.sobel-cpa.com or call Jim at 973-994-9494

or email [email protected] or Kim Miller at 908-399-8386 or email kim.miller@sobel-

cpa.com

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BUSINESS DUE DILIGENCE INVESTIGATION SAMPLE REPORT

Submitted to: Law Firm of Smith and Jones One Main Street Anytown, USA Pertaining to: John Doe XYZ Company, LLC Prepared by: Sobel & Co., LLC

Date prepared: (Date)

293 EISENHOWER PARKWAY • SUITE 290 LIVINGSTON • NEW JERSEY • 07039-1711

(973) 994-9494 (973) 994-1571 FAX www.sobel-cpa.com

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TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................... - 1 -

I. ASSIGNMENT ................................................................................................... - 1 -

II. QUALIFICATIONS .......................................................................................... - 1 -

III. PROFESSIONAL STANDARDS ..................................................................... - 1 -

IV. BACKGROUND ................................................................................................ - 1 -

V. DOCUMENTS REVIEWED ............................................................................ - 1 -

VI. SCOPE OF WORK: DUE DILIGENCE INVESTIGATION ...................... - 2 -

VI. LIMITATIONS ................................................................................................ - 11 -

VII. PROPOSED ADDITIONAL FOLLOW-UP INVESTIGATION………………..-14-

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EXHIBITS

Exhibit A Associated Relatives and Address List (J. Doe) Exhibit B Affidavit of Indigent Status (J. Doe) Exhibit C Waiver of Extradition - Provincial State to Commonwealth, 2005 (J. Doe) Arrest Warrant, Ocean County Provincial State - 2005 (J. Doe)

Exhibit D Out of State Court Fugitive Notice Provincial State, 2005 (J. Doe) Exhibit E Docket Sheet, Provincial State, 2005, (J. Doe) Exhibit F Big Town Police Document, Theft by Deception Exhibit G Chapter 7 Bankruptcy, 1998, (J. Doe) Exhibit H SEC – Form D, 2016, XYZ Company (J. Doe) Exhibit I Dun and Bradstreet Report Information, XYZ Company, LLC Exhibit J Recent Twitter messages for XYZ Company Exhibit K Facebook Profile of Jane Charles, William, and Alfred Doe Exhibit L Linkedin Profile, John Doe, XYZ Company Exhibit M Facebook profiles of John Doe Exhibit N Liens and judgments John Doe (1991 to 2015) Exhibit O Selective Service Number for John Doe Exhibit P XYZ Company website (2010) Exhibit Q Executive Assistant, XYZ Company, LLC, Indeed.Com Exhibit R Doe Capital Brokers Inc., James Doe, Officer, (Report) Exhibit S Capital Stars by PQR, Article 2017 Exhibit T Capital Capital, LLC, (Report) Exhibit U Court Administrator, Commonwealth, Criminal Disposition (J. Doe)

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EXECUTIVE SUMMARY The Due Diligence Investigation of John Doe has brought to light a number of Red Flags revealing a history of criminal activity for fraud and related offenses, financial hardships, i.e. bankruptcy, a material misrepresentation regarding education and a highly unlikely indicated work experience. John Doe’s affiliation as an officer of XYZ Company, LLC, while on the surface may appear plausible, information developed as part of this investigation leaves much doubt to whether he or the companies are actually engaged in legitimate business. This is based upon data which is common and readily accessible to investigators and which are indicative of most individuals conducting business, such as appropriate licenses, certifications, and industry memberships. Moreover, it is apparent that great lengths may have been taken by John Doe or someone to give others the impression, that he and the companies are engaged in a legitimate business activity. Another Red Flag for investigators is the lack of ownership, the title for real property or any other asset which would be revealed for someone operating a legitimate business, especially while representing to others a wealthy lifestyle. FINDINGS (Classification): A number of findings have been incorporated into this report and are classified in as a Finding which may be relevant to this investigation and subject entity. Key Findings are specifically relevant as it may represent an intentional representation or omission by a subject or bring to light previously unknown information. Throughout the report, a number of additional investigative leads have surfaced which are recommended as Proposed Additional Follow-up items. The Proposed Additional Follow- up items are summarized on the final page of this investigative report. In some cases, the research required to obtain this information goes beyond the current scope of this investigation, is outside the legal ability of the investigator to access it, for example, the information cannot be obtained without a court order. Such limitations will be summarized as needed. Red Flag and Key Findings Summary: • Investigations revealed that John Doe did not attend the education institution noted on

social media profiles.

• No results listed the subject or entity with FINRA.

• No results were located for the subject or entity with SIPC.

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• Based on proprietary databases, John Doe was incarcerated.

• John Doe is listed in the Commonwealth Criminal Statewide Service.

• A bankruptcy case concerning John Doe was filed under Chapter 7 of the United States Bankruptcy Code.

• A Dun and Bradstreet report was located regarding XYZ Company. Two addresses

are noted, one of which is John Doe’s current residence.

• Based on the LinkedIn profile, John Doe is currently listed as the Managing Director of XYZ Company.

• An initial search of proprietary databases revealed a lack of customary business

history information, to include no Dun and Bradstreet reporting for XYZ Company.

• There is no address company name on the building roster.

• Liens and judgments were located for John Doe from 1991 to 2015 totaling approximately $100,000.

• An advertisement for an Executive Assistant position to support the CEO of XYZ

Company was located.

• Neither adult child is friends with John Doe on Facebook.

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I. ASSIGNMENT Due Diligence Investigation regarding John Doe and Company XYZ.

II. QUALIFICATIONS James Mottola is the Director of Forensic Investigations in Sobel & Co.’s Forensic Accounting/Litigation Services Group since November 2015. Having spent a career in law enforcement he has been involved in the investigation, detection, and prevention of fraud in a variety of situations that include white-collar crime, securities fraud, money laundering, insurance fraud, and computer crime investigations.

Kim Miller, Ph.D. is a Certified Fraud Examiner and NJ Private Detective. She earned her Doctorate Degree in Public Safety with an emphasis on criminal justice. She has over 15 years of open source intelligence investigative and research experience, including but not limited to various types of fraud and money laundering activities.

III. PROFESSIONAL STANDARDS This engagement has been performed in accordance with the American Institute of Certified Public Accountants’ Statements on Standards for Consulting Services.

IV. BACKGROUND Company XYZ is currently involved in an ongoing “business relationship” with ABC Person, the client.

V. DOCUMENTS REVIEWED

In preparation for this report, the following documents were reviewed: • Safety and Security Information • Business Checking Account • Marketing Materials • Various Agreements and Documents • Photographs • Other

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SCOPE OF WORK: DUE DILIGENCE INVESTIGATION SUBJECTS AND ENTITY:

Primary Subject: John Doe Primary Entity: Company XYZ

TAXONOMY:

Searches were conducted using the identifiers of John Doe and Company XYZ. Due to the commonality of the names, additional identifiers were used if necessary.

PRIMARY SUBJECTS: JOHN DOE AND COMPANY XYZ Personal: John Doe was born on 07/04/1976 and has an SSN of 123-456-789. He appears to currently reside at 123 Main Street, Anytown, USA. The following are findings:

• Relatives and Associates • Unverified Prior and Current Addresses • Email Addresses

Social Media: A profile for John Doe was located which denotes he is employed by a different company then located in open source searches.

LinkedIn:

Key Finding: A profile for John Doe was located.

Facebook:

The Facebook profiles for John Doe, ex-wife and children were researched for associated relationships. Key Findings:

• A profile was located for John Doe’s ex-wife. • Profiles were located for John Doe’s children. • Neither adult child is friends with John Doe on Facebook.

Proposed Additional Follow-up: Investigate commenters on the Facebook profile to determine their relationship to John Doe.

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EDUCATION: The LinkedIn profile of John Doe indicates that he attended Any School USA. Key Finding: Investigations revealed that John Doe did not attend this institution, as verified with the Institution.

FINRA BROKERCHECK®: BrokerCheck provides information on current and former FINRA-registered brokers and brokerage firms. It also provides information about investment adviser firms and representatives through the Investment Adviser Public Disclosure website, sponsored by the Securities and Exchange Commission. Key Finding: No results listed the subject or entity with FINRA. SECURITIES INVESTOR PROTECTION CORPORATION (SIPC): SIPC was created under the Securities Investor Protection Act as a non-profit membership corporation. SIPC oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble, and customer assets are missing. Key Finding: No results were located for the subject or entity with SIPC.

GLOBAL WATCH LIST: This Sanctions List Search application ("Sanctions List Search") is designed to facilitate the use of the Specially Designated Nationals and Blocked Persons list ("SDN List") and all other sanctions lists administered by OFAC, including the Foreign Sanctions Evaders List, the List of Persons Identified as Blocked Solely Pursuant to E.O. 13599, the Non-SDN Iran Sanctions Act List, the Part 561 list, the Sectoral Sanctions Identifications List and the Non-SDN Palestinian Legislative Council List. As part of its enforcement efforts, OFAC (Office of Foreign Assets Control) publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entity, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them. Key Finding: No results were located for the subject or entity.

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CRIMINAL RECORDS: A search of state and county Department of Corrections Records, Court Records, Arrest Logs and Proprietary databases which aggregate data from the previously mentioned sources located the following records for John Doe. Note: Some states do not provide this information.

PROPRIETARY DATABASES:

Key Finding: Based on proprietary databases, John Doe has criminal records in various states. Follow-up: Additional research results are pending. COMMONWEALTH-STATE: A search of the Commonwealth State Office of Court Administration (OCA) provides an on-line Commonwealth Statewide criminal history record search. The search results are public records relating to open/pending and convictions in criminal cases originating from County/Supreme, City, Town and Village courts of all 62 counties. Sealed records are not disclosed. Town and Village criminal disposition data are limited. Arrest records do not constitute a criminal record. Commonwealth allows sealing of certain violations, traffic infractions, juvenile offenses, and if a criminal case is in the favor of the defendant. Note: Not all Commonwealth County records have been searched. Key Finding: No results were located for John Doe. COMMONWEALTH STATEWIDE SERVICE: Key Finding: John Doe is listed in the Commonwealth Statewide Service. Follow-up: Additional investigative research results are pending regarding possible additional criminal activity relating to John Doe in Commonwealth.

PROVINCIAL STATE:

Key Finding: John Doe is listed in Provincial State. Follow-up: Additional investigative research results are pending.

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SEX OFFENDER: A search of the NSOPW website, which is the only U.S. government Website that links public state, territorial, and tribal sex offender registries from one national search site did not locate results for John Doe. Key Finding: There are no offenders with the name of John Doe listed in the NSPOW Offender Registry.

NEWS: A search of databases containing newspapers, magazines, journals, newsletters, all Reuter’s sources, government press releases, and transcripts of television and radio shows and congressional testimonies were done. In addition, The Major World Publications group file, MWP, contains full-text news sources from around the world, which are held in high esteem for their content reliability were searched. This includes the world's major newspapers, magazines, and trade publications which are relied upon for the accuracy and integrity of their reporting. Access to certain freelance articles and other features within this publication include blogs, wire services, newspapers, magazines. The Region of Coverage is the United States and International locations. Additional searches of magazines, wire services, blogs, business and industry news, university newspapers, web news, interviews, profiles, and biographies. Key Finding: No results were located for the subject or entity.

BIOGRAPHICAL REFERENCE: Searches of Political Profiles, Marquis Who's Who® Biographies, Boardroom Insiders, and Debrett's People of Today did not locate any results for the entity. Key Finding: No results were located for the subject or entity. BANKRUPTCY AND LITIGATION: Bankruptcy filings can include chapter filed, disposition, attorney information, trustee information, whether or not assets are available, creditors meeting date and location, complaints and claims deadline information, and more. Coverage includes 50 states plus the District of Columbia, Guam, and the Virgin Islands. Key Finding: A bankruptcy case concerning John Doe was filed under Chapter 7 of the United States Bankruptcy Code. (See Exhibit)

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LITIGATION: The search encompassed combined United States District case law file containing all case law from United States District Courts for all 50 States from 1789 to current, the District of Columbia, the District Court for Puerto Rico, the District Court for the Virgin Islands, the District Court for Guam, the District Court for the Mariana Islands, the Court of International Trade from November 1980, the Judicial Panel on Multi-District Litigation from 1968, the Special Court, and the Regional Rail Reorganization Act of 1973. Key Finding: No results were located for the subject or entity. BUSINESS AFFILIATIONS: The following search results were located for the subject and entity: A Dun and Bradstreet report was located regarding XYZ Company. Key Finding: Two addresses are noted, one of which is John Doe’s current residence. Key Finding: Based on a Sec.gov filing, Form D, John Doe is affiliated with XYZ Company. Key Finding: Based on the LinkedIn profile, John Doe is currently listed as the Managing Director of XYZ Company. Key Finding: An initial search of proprietary databases revealed a lack of customary business history information, to include no Dun and Bradstreet reporting for XYZ Company. Proposed Additional Follow-up: In-depth due diligence. BUSINESS LOCATION: The following was located regarding the business location.

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Key Finding: There is no company name listed on the building roster.

SOCIAL MEDIA: Twitter: (See Exhibit) A Twitter profile was located for John Doe, XYZ Company. A list of the tweets is attached, (Exhibit) from April 2016 to April 2017. LinkedIn: (See Exhibit) Key Finding: There is no reference to John Doe in LinkedIn. Proposed Additional Follow-up: Verification of employment. The following individuals endorse all of John Doe’s skills. Proposed Additional Follow-up: Investigate the individuals who have endorsed John Doe.

PROFESSIONAL LICENSES: Key Finding: No results were located for John Doe in a search of the Commonwealth Office of Professions' official database. PROFESSIONAL AFFILIATIONS, DESIGNATIONS, AND HONORS: Key Finding: No results were located for John Doe. OPEN SOURCE SEARCHES: Key Findings: No open source results were located for John Doe or Company XYZ.

LIENS/JUDGMENTS: Key Finding: Liens and judgments were located for John Doe from 1991 to 2015 totaling approximately $250,000. PROPERTY FORECLOSURES: Key Finding: There were no property foreclosures located for John Doe.

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UNIFORM COMMERCIAL CODE FILING (UCC): No UCCs were located for John Doe. CAMPAIGN CONTRIBUTIONS: A search of campaign contributions by John Doe or Company XYZ did not locate any results. CHARITABLE GIFT DONATIONS: A search of donations by John Doe or Company XYZ did not locate any results.

ASSETS: Various databases were searched to determine real property owned by John Doe, ex-wife and their children and the parents of the subject. John Doe REAL PROPERTY:

• A search of the Commonwealth City Department of Finance Office of the City Register did not reveal any property that appeared to be owned by the subject or entity in the Boroughs of Commonwealth City.

• A search for property owned by the subject or the entity based on the recent address

in New Jersey located the following at 123 East West Street, Anytown, Commonwealth.

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VEHICLES, AIRCRAFT, AND WATERCRAFT:

• A search of aircraft did not locate any results for the entity or the subject. • No watercraft registered in John Doe’s name, children, ex-wife, or entity were

located. • No vehicles registered in John Doe’s name, children, ex-wife, or company names

were located. Mother of John Doe Key Finding: D. A. John Doe, the mother of John Doe currently owns real property located at 456 Main Street, Anytown, USA. Children of John Doe Key Findings: No results were located. Ex-Wife of John Doe Key Finding: No results were located.

STOCK OWNERSHIP: Key Finding: A search of stock ownership including records obtained from the Securities Exchange Commission (SEC), including Forms 4 and 144 filed with the SEC located a Form D for Company XYZ. (See Exhibit) SECURITIES AND EXCHANGE COMMISSION/EDGAR: The Securities and Exchange Commission requires all publicly held U.S. companies to file reports disclosing their financial condition, results of operations, and any other information that is of significance to investors. The SEC began to require those filings to be made electronically, through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) System. The database contains the full text of EDGAR filings from 1991 as well as annual and quarterly reports and proxy statements of more than 4,000 US companies, filed with the Securities and Exchange Commission since 1987. Key Finding: A current search of EDGAR did not locate any results for XYZ Company. Key Finding: A search of stock ownership including records obtained from the Securities Exchange Commission (SEC), including Forms 4 and 144 filed with the SEC located a Form D for Company XZY. PATENTS AND TRADEMARKS: A current search of online indices did not locate any or Live or Dead trademarks or patents for the subject or company.

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MILITARY STATUS: The Selective Service Number 123456 was located for John Doe with a date of registration of 01/01/1991. (See Exhibit) VOTER REGISTRATION: John Doe is registered to vote as of October 28, 2015. The last vote date was November 8, 2015. OPEN SOURCE SEARCHES: XYZ COMPANY, LLC: Capital Stars on Line Magazine: Key Finding: Information found on http://www.website.com does not coincide with the D&B Report and SEC Form D both previously noted in this report. (See Exhibit) INDEED.COM: Key Finding: An advertisement for an Executive Assistant position to support the CEO of XYZ Company was located. (See Exhibit) Proposed Additional Follow Up: Locate and investigate the current and former executive assistant and monitor the social media profiles to determine if there are any postings regarding John Doe. CORPORATION WIKI: Key Finding: The following results were located. (See Exhibit) FORM 5500 - 401K - PROFIT SHARING PLAN & TRUST: The Form 5500 reports the status and activity of retirement plans to the Internal Revenue Service (lRS). The IRS uses this form to determine whether a retirement plan is in compliance with all requirements. Form 5500 must be filed with the IRS by the last day of the seventh month following the plan’s year-end. Key Finding: No Form 5500’s was located for the business entity.

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- 11 -

BUSINESS SEARCHES: Key Finding: A search of Provincial State Department of Corporations and additional proprietary database searches did not locate any information regarding the business entity. The file combines all of the major sources of company profiles. The file includes profiles of companies and company executives, annual reports and other SEC filings, bankruptcy reports, merger and acquisition transactions, earnings reports. The file covers all US public companies, more than 200,000 private US companies, and many thousands of other companies around the world. WEBSITE RESEARCH: The website is www.anycompany.com registered by John Doe on May 28, 2010, with the last update on August 1, 2016. (See Exhibit) Key Finding: A website dated February 8, 2009, was located. The website uses a different phone number and has a different address than the current website address.

VI. LIMITATIONS:

The information contained herein is based on research data obtained from various websites; however, no representations or warranties or claims of responsibility for the accuracy or completeness of any information contained herein can be made.

VI. PROPOSED ADDITIONAL FOLLOW-UP INVESTIGATION

1. Additional forensic investigative resources could be employed to review financial records, such as bank records and tax returns in order to reveal the actual financial strength of the companies as well as the veracity of John Doe’s business intentions.

2. Investigate commenters on the Facebook profile to determine their relationship to John

Doe.

3. Additional criminal investigative research.

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4. In-depth due diligence regarding business history information.

5. Locate and investigate the current and former executive assistant and monitor the social

media profiles to determine if there are any postings regarding John Doe.

6. Online monitoring of John Doe’s social media.

7. Quarterly updates of online open source and proprietary databases.

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E-Commerce Vendor Due Diligence

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Sobel & Co., LLC ■ 293 Eisenhower Parkway ■ Livingston, New Jersey 07039

973-994-9494 ■ www.sobel-cpa.com

E-Commerce Due Diligence: Supply Chain Management

By: James Mottola, MS, CISM, CPP Director of Forensic Investigations Risk Mitigation Services, Sobel & Co. LLC By: Kim Miller, Ph.D., CFE Certified Fraud Examiner Sobel & Co., LLC

The emergence of online marketplaces such as Amazon and eBay has provided consumers with the advantage of purchasing a variety of items anytime from any number of merchants with just a few clicks of a mouse. This evolution and transformation of commerce from traditional brick and mortar (bricks) to E-Commerce (clicks) have created economic opportunities for entrepreneurs to acquire and resell items to consumers at a minimal markup, driving profit through sales volume. In order to compete with traditional supply chain channels with retailers like Walmart, businesses use an online platform’s distribution and logistics networks such as Fulfillment by Amazon (FBA). While this amazing ecosystem has made “point and clicks” on Cyber-Monday preferable to “shop ‘til you drop,” Black-Friday, it does not come without risks to businesses with virtual storefronts. If you are an online seller, having a presence on Amazon is absolutely necessary - as its platform alone represents almost 80% of online market share among other platforms like, eBay, Newegg, Rakuten, Jet.com according to 1010data for Ecom Insights. Even among all retailers with an online presence, Amazon alone represented more than 25% of all sales as reported by Digital Commerce Magazine.

One of the greatest risks for these roughly two million outside marketplace sellers, who represent almost half of all items sold on Amazon, is a suspended or delisted account. A delisted account is basically the equivalent to boarding up your storefront. This can occur for a variety of reasons such as receiving negative feedback by consumers or worse or for selling phony or fake items or items stolen or not authorized to be sold in certain markets by the original manufacturer. You do not want to be delisted because re-opening your virtual storefront can be an arduous and time-consuming process. As you are getting back into business, other sellers will quickly step in to provide products to your potential customers. Meanwhile your inventory sits stagnant, gathering dust in a garage or on a warehouse floor.

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It pays to do the right thing and avoid the hassles associated with doing the wrong thing. Oversight of vendors through an E-Commerce Due Diligence Program can significantly reduce risks attributed to suppliers and vendors in order to keep fast-moving commercial enterprises moving quickly.

As a result of our experience in assisting clients with “virtual storefronts,” we have developed a process to uncover “red flags.” Here are a few common concerns:

Initial Appearance

The fictitious website or no website - The company website has no hyperlinks. For example, XYZ Company states it sells a certain product, however, when clicking on the apparent hyperlink there is no link. When clicking on the contact information, there is still no hyperlink. All of the data is on only a home page, denoting the page was “thrown up” quickly for appearances only. Scammers can spin up a fully functioning and fairly sophisticated website very quickly.

Lesson: Don’t judge a company by its website!

Spelling mistakes and poor language on the website - Poor language indicates deeper issues. Fraudulent websites can be designed or produced in other countries where English is not the first language. Review the website for spelling and grammatical errors. For example, “we are selling factory outlet via the internet, we by are products from the factory and have products throughout the world, this why we offer cheep prices.”

Lesson: If doesn’t look professionally written, it probably isn’t!

Nailing Them Down

Physical location - In this circumstance, the company is not located at the address listed according to the due diligence investigation and a search of public records or proprietary databases. In addition, calls to the property owners denote the company moved out years ago. Phone calls to the company to determine the location are directed to voicemail, and no response is received. There are a number of address locations that are frequently used to incorporate a business and a few of those are domiciled in Delaware. However, it is not unusual for E-Commerce businesses to operate out of warehouses, so don’t be surprised if that is actually the case.

Lesson: Use good judgment when seeking out the actual location of the company!

Who is the Owner?

Principals of the company - The LinkedIn profiles of principals state they serve as the CEOs of numerous companies. However, due diligence uncovers that those businesses do not exist. The

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principals also use various modifications of their names. Sometimes, the name you associate with the vendor is not the name on record. This can be confusing when conducting record checks, so getting the correct name can make all the difference.

Lesson: It is helpful for you to know the other parties in the business and their track record!

By the Numbers

Financial issues - Due diligence turns up lawsuits, liens, bankruptcies, evictions and foreclosures for the principals of the company. For example, in a review of the property tax records, the tax bill was not paid for the past five years.

Lesson: Financial details from previous years really matter when determining the honesty of a vendor or online retailer.

Public Records

Criminal history and civil litigation - A Federal criminal case indicates that the principal was charged with having a fake passport, or the business is subjected to numerous lawsuits, by debtors.

Lesson: A pattern of less than ethical behavior or fraud can be an indication of a future actions.

The Take Away

When conducting business in E-Commerce, supplier and vendor relationships can be based on short-term transactional needs which often translate into conducting fewer transactions with a greater number of partners. Often times, these resources come as a referral from other businesses in the industry, through word of mouth, and reputation.

With so much at stake, we recommend clients take all the necessary steps to reduce the risk by establishing an E-Commerce Due Diligence Program.

For more information on this critical topic, please visit www.sobel-cpa.com or call Jim at 973-994-9494 or email [email protected] or Kim Miller at 908-399-8386 or email [email protected]

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E-COMMERCE INVESTIGATION

SAMPLE REPORT

Submitted to: E-Commerce Business One Main Street Anytown, USA

Pertaining to: Company A Company Principal A

Prepared by: Sobel & Co., LLC

Date Prepared: (Date)

293 EISENHOWER PARKWAY – SUITE 290 LIVIGSTON, NEW JERSEY 07039-1711

(973) 994-9494 (973) 994-1571 FAX www.sobel-cpa.com

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I. ASSIGNMENT

E-Commerce Due Diligence Investigation regarding Company A and Company Principal A

II. QUALIFICATIONS

James Mottola is the Director of Forensic Investigations in Sobel & Co.’s Forensic Accounting/Litigation Services Group since November 2015. Having spent a career in law enforcement I have been involved in the investigation, detection, and prevention of fraud in a variety of situations that include white-collar crime, securities fraud, money laundering, insurance fraud, and computer crime investigations.

Kim Miller, Ph.D. is a Certified Fraud Examiner and NJ Private Detective. She earned her Doctorate Degree in Public Safety with an emphasis on criminal justice. She has over 15 years of open source intelligence investigative and research experience, including but not limited to various types of fraud and money laundering activities.

III. PROFESSIONAL STANDARDS This engagement has been performed in accordance with the American Institute of Certified Public Accountants’ Statements on Standards for Consulting Services.

IV. BACKGROUND Client retained Sobel & Co. LLC to conduct a Vendor Due Diligence Investigation into a supplier of consumer electronics as part of their online marketplace supply chain.

V. DOCUMENTS REVIEWED Bankruptcy documents Newspapers Financial reports Litigation documents

VI. SCOPE OF WORK: DUE DILIGENCE INVESTIGATION

Primary Entity: Company A

Primary Subject: Company Principal A

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TAXONOMY: Search taxonomy included Company A and Company Principal A and derivatives thereof. Additional search criteria were used if necessary.

Key Finding Summary:

• A search of telecom blogs located negative findings on Reddit Telecommunications Central denoting customers inquiring about “persistent problems over the past year that is costing him business” regarding Company A.

• A call to the property owner denoted that Company A is not located at 123 Any Street, Anytown/State, the location stated in a Dun & Bradstreet report.

• A review of the search interfaces of the specialized FCC databases located results regarding Company A.

• The annual sales are $100,000 as of April 4, 2016 for Company A.

• UCC filings were located for Company A.

• Company A filed for Chapter 11 Bankruptcy in 2009 in New Jersey Federal Court.

• A search of Federal and State proprietary databases denote that Company A was involved in a civil lawsuit filed in Ann Arbor, Michigan in 2007 whereas Company A as the defendant, was found guilty of breach of contract and paid an undisclosed amount to the plaintiff.

• Principal A filed for Chapter 13 Bankruptcy in 2009 in New Jersey Federal Court.

• Principal A’s name is noted on the OFAC Sanctions List.

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COMPANY A Information: Company A was registered in California as a domestic company on March 1, 2007. The status is active. The Agent for Service of Process (SOP) is Mr. XXX. The business and mailing address is the same as the SOP address. The filing number is xxxxxx. Federal Communications Commission (FCC): A review of the search interfaces of the specialized FCC databases located the following regarding Company A.

• The FCC Registration number for Company A is 0003788346. • Company A is noted in an Electronic Tariff filed on March 4, 2014. • A search of the FCC’s Electronic Comment Filing System (ECFS) for official

records in the FCC's docketed proceedings from 1992 to the present did not locate any results for Company A.

Dun & Bradstreet Information: Company A is noted as being located at 123 Any Street, Anytown/state, with a telephone number of XXX-XXX-XXXX. The annual sales are $100,000 as of April 4, 2016. The company has three employees. The type of business is Business Services. Bankruptcies/Liens/Judgments: Company A filed for Chapter 11 Bankruptcy in 2009 in New Jersey Federal Court. Uniform Commercial Codes (UCCs): The following UCCs were located filed in California. Newspaper Searches: A search of over 1,000 newspapers did not locate any results for Company A. Litigation Searches: A search of Federal and State proprietary databases denote that Company A was involved in a civil lawsuit filed in Ann Arbor, Michigan in 2007 whereas Company A as the defendant, was found guilty of breach of contract and paid an undisclosed amount to the plaintiff. Website:

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Company A’s website is CompanyA.com, created on May 11, 2007 and expiring on June 11, 2023.

Address:

Below is a photograph of the building where Company A is located based on the Dun & Bradstreet Report. A call to the property owner denoted that Company A is no longer in this location.

Below is a photograph of the shopping plaza where Company A is located based on the California Secretary of State.

PRINCIPAL A Bankruptcies/UCCs/Liens/Judgments: Principal A filed for Chapter 11 Bankruptcy in 2017 in New Jersey Federal Court. Newspaper Searches: A search of over 1,000 newspapers did not locate any results for Principal A. Criminal and Civil Matter Searches: Searches of the following did not locate any results.

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Open Sources: Proprietary database sources All Federal and State Litigation Department of Corrections Sex Offender Registry Principal A is noted on the OFAC Sanctions List. The search application is designed to facilitate the use of the Specially Designated Nationals and Blocked Persons list and all other sanctions lists administered by OFAC, including the Foreign Sanctions Evaders List, the List of Persons Identified as Blocked.

Social Media:

A LinkedIn profile was located for Principal A. There does not appear to be any negative information on the profile.

Principal A has a Facebook or Twitter profile. There does not appear to be any negative information on the profile.

Open Sources:

A search of open sources did not locate any negative findings regarding Principal A or Company A.

A search of telecom blogs located negative findings on Reddit Telecommunications Central denoting customers inquiring about “persistent problems over the past year that is costing him business” regarding Company A.

A search of open sources using the phone number did not locate any negative findings.

A search of open sources using the email addresses did not locate any results.

VII. LIMITATIONS

The information contained herein is based on research data obtained from various websites; however, no representations or warranties or claims of responsibility for the accuracy or completeness of any information contained herein can be made.

VII. PROPOSED ADDITIONAL FOLLOW-UP INVESTIGATION

Additional Proposed Follow Up:

• Locate and review financial documents for Company A for assets and current debt. • Locate and review IRS 5500 document for Company A.

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• Investigate further the OFAC Sanction list results to determine why Principal A’s name is noted on the list.

• Investigate further the allegations on the telecom blog.

Disclaimer: The information contained herein is based on research data obtained from various web sites however no representations or warranties or claims of responsibility for the accuracy or completeness of any information contained herein can be made. Due to the vacillating nature of the internet verification of any item, there is no guarantee the information will be available at any given point. We accept no liability whatsoever whether in contract, in tort, for negligence, or otherwise for any direct or consequential loss of any kind arising out of the use of this information or its contents or of the recipient relying on any such information. Neither the information nor any opinion expressed in this report purports to be a complete description due to this vacillation of the information on the internet.

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C-Suite Due Diligence

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Sobel & Co., LLC ■ 293 Eisenhower Parkway ■ Livingston, New Jersey 07039

973-994-9494 ■ www.sobel-cpa.com

What They Don’t Tell You in the Interview: Not as Advertised

By: Kim Miller, Ph.D. Certified Fraud Examiner Sobel & Co., LLC By: James Mottola, MS, CISM, CPP Director of Forensic Investigations Risk Mitigation Services, Sobel & Co. LLC Our firm was recently engaged by a client to conduct a background investigation for an Executive as part of their executive search process. This Executive Due Diligence Investigation brought to light a number of legal and financial reasons for conducting a thorough review of an Executive’s employment, education and financial relationships. Most importantly, a Board of Directors has a fiduciary responsibility to protect a company from the financial and reputational exposure, which could occur when an Executive intentionally misrepresents employment history or educational achievements to impress his or her new company. The potential risk is minimized when a thorough review is conducted. According to CareerBuilder.com, the average cost for a bad hire, is estimated at $17,000, and the cost to the organization for a bad executive hire can be much higher, running about $2 million.. Both nonprofit and for profit organizations can find themselves in the midst of a situation that might have been avoidable with a small investment of time and resources to conduct an Executive Due Diligence Investigation. Watch Out for the Padded Resume In one high profile example, Yahoo CEO Scott Thompson was fired after it was found he padded his resume with an embellished college degree, ending his term at the company after just four months. http://money.cnn.com/2012/05/13/technology/yahoo-ceo-out/ Be Wary of Lapses in Judgment Citing a "lapse in judgment," for which "there can be no acceptable excuse”Bausch & Lomb CEO lied about his MBA degree, but was able to keep his position because he was deemed too valuable to fire. Ronald Zarrella had to give up his $1 million bonus when it was revealed that he never received his MBA from NYU as he claimed he did. He actually enrolled in the program, but never completed the courses. https://www.wsj.com/articles/SB103592955485648631

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Be Careful of Those Misstated Academic Records In another well-known situation, RadioShack's CEO, David Edmondson, lied about having a four-year degree when he only had a three-year degree. Edmondson joined Radio Shack in 1994 and quickly advanced in the company until he became CEO in 2005. A year after attaining his new title it was reported that Edmondson had not earned degrees in theology and psychology from Heartland Baptist Bible College as he had claimed. Radio Shack's board of directors stood up for their new CEO, but Edmondson decided to resign. He said: "I clearly misstated my academic record and the responsibility for these misstatements is mine alone. I understand that I cannot now document the diploma." http://www.businessinsider.com/9-people-who-were-publicly-shamed-for-lying-on-their-resumes-2012-5#radioshacks-ceo-lied-about-having-a-four-year-degree-when-he-only-had-a-three-year-degree-8 The Resignation Kenneth Lonchar joined Veritas Software Corp. through a merger in 1997. Four years later, Lonchar won CFO Magazine's Excellence Award for Managing External Stakeholders. The next year, the glorified CFO fell from grace when it was revealed that he never received an MBA from Stanford as he claimed. He never even earned the accounting degree he said he did from Arizona State University as he had stated, but instead received his degree from Idaho State. As a result of this news, Veritas stock fell nearly 16% which represented nearly $20M. http://www.businessinsider.com/9-people-who-were-publicly-shamed-for-lying-on-their-resumes-2012-5#the-ceo-of-a-major-software-firm-lied-about-getting-an-mba-from-stanford-the-companys-stock-dove-when-the-truth-surfaced-9 Will It Happen to Your Company? While these samples of risk exposure all took place at well-regarded and well-known companies, this risk is not limited to large corporations. In fact, any company of any size is vulnerable. To avoid these extremely costly embarrassments, an Executive Due Diligence Investigation can bring to light a number of key findings, such as the following: • Revealing possible inconsistencies in employment and education history. For example, various

positions noted on the resume are not noted on the LinkedIn profile. • Newspaper articles denote employment positions not referred to on the executive’s resume or

LinkedIn profile. • Education cannot be verified due to lack or attendance, falsification or completeness. • Criminal records highlight a less than stellar past. • The executive is affiliated with ABC Company, an inactive company registered in Colorado. This

company is not noted on the resume or LinkedIn profile, which creates loose ends that raise more questions.

• A search of campaign contributions denotes that the executive donated to a group that is not deemed favorable.

• The executive is involved in a bankruptcy by former shareholders for unknown actions • The executive’s social media profiles denote unprofessional or unethical behavior • Liens and judgments against the executive present poor financial judgment.

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• There are lapsed professional licenses on the executive’s resume that no longer represent current competencies.

Although the executive in our matter presented information that was verifiable and true, giving our team and our client’s organization the confidence to eventually hire a top tier professional, recent history tells a different story for some businesses that did not exercise an appropriate level of due care. The reputational risk to stakeholders can have a quantifiable effect the bottom-line. This risk can be mitigated through a comprehensive and professional investigation to validate the candidates presented educational and professional background as well as bringing to light red flags that would have otherwise not been revealed. A hiring manager or a board can certainly follow up with the executive as part of the hiring process to gain clarification on any potential misunderstanding or misrepresentation to avoid a more contentious, time consuming and publicly embarrassing misstep. Executive hiring can have a significant reputational and financial impact on a business, especially when a board or human resources team doesn’t engage a trusted advisor who helps gather the information needed to ensure that a candidate is not later discovered to be “not as advertised.”

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C-SUITE DUE DILIGENCE INVESTIGATION

Submitted to: Company 123.Com (Client)

Pertaining to: CEO, Candidate

Prepared by: Sobel & Co.

Date Prepared: (Date)

293 EISENHOWER PARKWAY • SUITE 290 LIVINGSTON • NEW JERSEY • 07039-1711 (973) 994-9494 (973) 994-1571 FAX www.sobel-cpa.com

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................ - 1 -

I. ASSIGNMENT .................................................................................................... - 2 -

II. QUALIFICATIONS ............................................................................................ - 2 -

III. PROFESSIONAL STANDARDS ....................................................................... - 2 -

IV. BACKGROUND ................................................................................................. - 2 -

V. DOCUMENTS REVIEWED ............................................................................... - 2 -

VI. SCOPE OF WORK: DUE DILIGENCE INVESTIGATION ............................ - 3 -

VII. LIMITATIONS .................................................................................................... - 9 -

VIII. PROPOSED ADDITIONAL FOLLOW-UP INVESTIGATION ....................... - 9 -

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EXHIBITS

Exhibit A Resume of the candidate

Exhibit B Mortgage documents

Exhibit C Real estate records

Exhibit D Relatives and unverified addresses

Exhibit E LinkedIn profile

Exhibit F News articles

Exhibit G, H, I Social media search results

Exhibit J Education verification

Exhibit K Open source search results

Exhibit L Corporate registration

Exhibit M SEC documents

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EXECUTIVE SUMMARY The Executive Due Diligence Investigation of the Candidate has brought to light a number of key findings revealing possible inconsistencies in employment and education history. Various positions noted on the resume are not noted on the LinkedIn profile. Also, newspaper articles denote employment positions not referred to on the Candidate’s resume or LinkedIn profile. Education cannot be verified through fee databases. Key Findings Employment/Business Affiliations • Several anomalies were located when comparing the resume to the LinkedIn profile and

other findings. • Two LinkedIn profiles were located for the Candidate. • Candidate is affiliated with ABC Company, an inactive company registered in Colorado.

This company is not noted on the resume or LinkedIn profile. • A current search of EDGAR noted that the Candidate has an affiliation with Company USA.

There does not appear to be a mention of this affiliation on the resume or the LinkedIn profile.

• The Candidate notes on his resume and his LinkedIn profile that he was at various

companies. Financial

• UCCs were located for the Candidate. • A search of campaign contributions denotes that the Candidate donated to the Independant

party in 2011. • Based on Colorado real estate records, 123 Main Street is owned by the Candidate with no

mortgage. • Results were located stating the Candidate is involved in a bankruptcy. Education

• The Candidate graduated from University in 2012. Proposed Additional Follow-up • Further in-depth due diligence regarding business history information not noted on the

Candidate’s resume or LinkedIn profile to determine the Candidate’s affiliation.

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I. ASSIGNMENT Executive Due diligence Investigation regarding the Candidate.

II. QUALIFICATIONS James Mottola is the Director of Forensic Investigations in Sobel & Co.’s Forensic Accounting/Litigation Services Group since November 2015. Having spent 26 years with the United States Secret Service I have been involved in the investigation, detection, and prevention of fraud in a variety of situations that include white-collar crime, securities fraud, money laundering, insurance fraud, and computer crime investigations. Kim Miller, Ph.D is a Certified Fraud Examiner and a NJ Private Detective. She earned her Doctorate Degree in Public Safety with an emphasis on criminal justice. She has over 15 years of open source intelligence investigative and research experience, including but not limited to various types of fraud and money laundering activities.

III. PROFESSIONAL STANDARDS This engagement has been performed in accordance with the American Institute of Certified Public Accountants’ Statements on Standards for Consulting Services.

IV. BACKGROUND Sobel and Co. was engaged to perform an Executive Due Diligence Investigation of the Candidate, by ABC Company as part of their Executive hiring process.

V. DOCUMENTS REVIEWED

In preparation for this report, the following documents were reviewed: • resume of the Candidate, • open source information, • social media profiles, • propietary and government databases.

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VI. SCOPE OF WORK: DUE DILIGENCE INVESTIGATION SUBJECTS AND ENTITY:

Primary Subject: The Candidate TAXONOMY:

Searches were conducted using the identifiers of the Candidate’s name. Due to the commonality of the name, additional identifiers were used if necessary.

PRIMARY SUBJECT: THE CANDIDATE PERSONAL: Proprietary databases, public records, and open sources denote that the Candidate was born on XXXXX and has a Social Security number of XXX issued in New Jersey. No current email addresses were located using open sources and fee database searches. Key Finding: Based on real estate records, the property noted above is owned by the Candidate. There does not appear to be a mortgage on the property.

Findings: Relatives and unverified addresses are noted in Exhibit D. SOCIAL MEDIA: Key Finding: Two LinkedIn profiles were located for the Candidate. See Exhibit E.

Key Finding: Several anomalies were located when comparing the resume to the LinkedIn profile and other findings.

• The resume states the Candidate was employed at ABC Company from 2012 to 2015, whereas the LinkedIn profile states otherwise.

Key Finding: A Facebook profile for the Candidate was located. See Exhibit G.

Finding: A Twitter profile for the Candidate was located. There does not appear to be any extensive tweeting activity on the profile. See Exhibit H.

Finding: An Instagram profile was located for the Candidate. The profile is private. See Exhibit I.

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EDUCATION: The LinkedIn profile of the Candidate indicates that he attended the following educational institutions and received the following degrees. See Exhibit J.

o Key Finding: This education cannot be verified using fee databases due to the following options: The Candidate has chosen to keep student records private. The school has blocked the release of the individual's records. In this

instance, the Candidate must contact the school directly to release records.

The Candidate never received a degree from the selected school The Candidate never enrolled. The Candidate used another name.

Proposed Additional Follow-up: Additional due diligence.

Key Finding: The Candidate graduated from the University.

GLOBAL WATCH LIST: This Sanctions List Search application ("Sanctions List Search") is designed to facilitate the use of the Specially Designated Nationals and Blocked Persons list ("SDN List") and all other sanctions lists administered by OFAC, including the Foreign Sanctions Evaders List, the List of Persons Identified as Blocked Solely Pursuant to E.O. 13599, the Non-SDN Iran Sanctions Act List, the Part 561 list, the Sectoral Sanctions Identifications List and the Non-SDN Palestinian Legislative Council List. As part of its enforcement efforts, OFAC (Office of Foreign Assets Control) publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entity, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them. Finding: No results were located for the Candidate. CRIMINAL RECORDS: A search of state and county Department of Corrections Records, Court Records, Arrest Logs and Proprietary databases which aggregate data from the previously mentioned sources did not locate any results for the Candidate. Note: Some states do not provide this information.

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NEW YORK STATE: A search of the New York State Office Unified Court System provides a statewide criminal history record search. The search results are public records relating to open/pending and convictions in criminal cases originating from County/Supreme, City, Town and Village courts of all 62 counties. Sealed records are not disclosed. Town and Village criminal disposition data are limited. Arrest records do not constitute a criminal record. Small State allows sealing of certain violations, traffic infractions, juvenile offenses, and if a criminal case is in the favor of the defendant. Finding: No results were located for the Candidate. NEW YORK VINE SERVICE – DEPARTMENT OF CORRECTIONS: Finding: No results were located for the Candidate.

SEX OFFENDER: A search of the NSOPW website, which is the only U.S. government Website that links public state, territorial, and tribal sex offender registries from one national search site did not locate results for the Candidate. Finding: There are no offenders with the name of the Candidate listed in the New Jersey Sex Offender Registry. NEWS: A search of databases containing newspapers, magazines, journals, newsletters, all Reuter’s sources, government press releases, and transcripts of television and radio shows and congressional testimonies were done. In addition, The Major World Publications group file, MWP, contains full-text news sources from around the world, which are held in high esteem for their content reliability were searched. This includes the world's major newspapers, magazines, and trade publications which are relied upon for the accuracy and integrity of their reporting. Access to certain freelance articles and other features within this publication include blogs, wire services, newspapers, magazines. The Region of Coverage is the United States and International locations. Additionally, a search of executive profiles databases, all news and negative news databases, SEC Filings, Congressional Testimony and United States Case Information did not locate any results for the Candidate.

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Searches of magazines, wire services, blogs, business and industry news, university newspapers, web news, interviews, profiles, and biographies were done. Key Finding: Results were located regarding the Candidate. See Exhibit F.

BIOGRAPHICAL REFERENCE: Searches of Political Profiles, Marquis Who's Who® Biographies, Boardroom Insiders, and Debrett's People of Today located the following result. Key Finding: Results were located regarding the Candidate. BANKRUPTCY AND LITIGATION: Bankruptcy filings can include chapter filed, disposition, attorney information, trustee information, whether or not assets are available, creditors meeting date and location, complaints and claims deadline information, and more. Coverage includes 50 states plus the District of Columbia, Guam, and the Virgin Islands. Key Finding: Results were located stating the Candidate See Exhibit K. LITIGATION: The search encompassed combined United States District case law file containing all case law from United States District Courts for all 50 States from 1789 to current, the District of Columbia, the District Court for Puerto Rico, the District Court for the Virgin Islands, the District Court for Guam, the District Court for the Mariana Islands, the Court of International Trade from November 1980, the Judicial Panel on Multi-District Litigation from 1968, the Special Court, and the Regional Rail Reorganization Act of 1973. Finding: No results were located for the Candidate. BUSINESS AFFILIATIONS: Based on open sources, the resume and the LinkedIn profile, the Candidate is affiliated with various companies. See Exhibit E. Key Finding: The Candidate notes on the resume and LinkedIn profile that he was employed at ABC Company and is the Chief Executive Officer. There were no corporate registration or filing documents for this company.

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Key Finding: Additional searches noted that the Candidate is affiliated with Company 123, Inc., an inactive company registered in New Jersey. This company is not noted on the resume or LinkedIn profile. See Exhibit L. Proposed Additional Follow-up: Additional due diligence regarding the companies to determine the Candidate’s role in these companies, including but not limited to news, litigation, financial, and open source investigations. PROFESSIONAL LICENSES: Finding: The Candidate does not appear to have any professional licenses.

PROFESSIONAL AFFILIATIONS, DESIGNATIONS, AND HONORS: Finding: Open source searches denote the Candidate is a member of various affiliations. OPEN SOURCE SEARCHES: Finding: No negative or derogatory information appeared to be posted regarding the Candidate. See Exhibit K for postings of interest. LIENS/JUDGMENTS: Finding: No results were located for the Candidate. PROPERTY FORECLOSURES: Finding: No results were located for the Candidate. UNIFORM COMMERCIAL CODE FILING (UCC): Key Finding: UCCs were located for the Candidate filed in New Jersey. See below. CAMPAIGN CONTRIBUTIONS: Key Finding: A search of campaign contributions denotes the Candidate donated $250 to the Democrat committee.

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CHARITABLE GIFT DONATIONS: Finding: A search of charitable gifts of $1 million or more did not locate any results for the Candidate. ASSETS: Various databases were searched to determine real property owned by the Candidate. Key Finding: Based on real estate records, the residence is owned by the Candidate. There does not appear to be a mortgage on the property. The property was purchased for $1,000,000 on March 3, 1999. See Exhibit B.

REAL PROPERTY: Key Finding: Based on real estate records, the residence is owned by the Candidate. There does not appear to be a mortgage on the property. The property was purchased for $1,000,000 on April 1, 2010. See Exhibit B. VEHICLES, AIRCRAFT, AND WATERCRAFT: Finding: A search of vehicles, aircraft of watercraft registered in the Candidate’s name did not locate any results. STOCK OWNERSHIP: Finding: A search of stock ownership including records obtained from the Securities Exchange Commission (SEC), including Forms 4 and 144 filed with the SEC did not locate any results for the Candidate.

SECURITIES AND EXCHANGE COMMISSION/EDGAR: The Securities and Exchange Commission requires all publicly held U.S. companies to file reports disclosing their financial condition, results of operations, and any other information that is of significance to investors. The SEC began to require those filings to be made electronically, through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) System. The database contains the full text of EDGAR filings from 1991 as well as annual and quarterly reports and proxy statements of more than 4,000 US companies, filed with the Securities and Exchange Commission since 1987. Key Finding: A current search of EDGAR noted that the Candidate has an affiliation with ABC Company, Inc. See Exhibit M.

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PATENTS AND TRADEMARKS: Finding: A current search of online indices did not locate any or Live or Dead trademarks or patents for the Candidate. MILITARY STATUS: Finding: No results were located for the Candidate. VOTER REGISTRATION: Finding: The Candidate is a registered Democrat with a last voting date of November 8, 2012.

VII. LIMITATIONS The information contained herein is based on research data obtained from various websites; however, no representations or warranties or claims of responsibility for the accuracy or completeness of any information contained herein can be made.

VIII. PROPOSED ADDITIONAL FOLLOW-UP INVESTIGATION

In-depth due diligence regarding business history information not noted on the Candidates resume or LinkedIn profile to determine the Candidate’s affiliation.

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Thank you for taking the time to read about Sobel & Co.’s Business Due Diligence Services. If you have any further questions or would like to schedule a gratis

consultation, please contact us:

CALL: 973-994-9494

EMAIL: [email protected]

WEBSITE: www.Sobel-cpa.com

Thank You