Why Conduct a Background Investigation?

In 1736, Benjamin Franklin famously coined the proverb “An ounce of prevention is worth a pound of cure.” It still holds true today. It’s always easier to prevent being the victim of fraud then it is to recover the missing funds. Con Artists aren’t the poster child for financial probity. It’s unlikely that your funds are sitting in a Vanguard Index Fund or a Bond Ladder. More often than not, the money has gone to support their lifestyle, which may include dining out, drinking, gambling, illicit drugs, vacation, first class travel, and all of the myriad of support it takes to run a con. An asset search costs roughly double what a thorough background investigation costs, yet there is no guarantee that you will be able to recover your funds and be made whole. If for example in the case of Bernie Madoff, approximately 81% of investor‘s money was returned, but that 81% included clawbacks of $2.2 Billion from the estate of deceased Madoff Investor Jeffry Picower. An additional $1.7 Billion was collected as part of a deferred prosecution agreement with J.P. Morgan Chase N.A. Whatever assets are recovered are usually divided between all the victims. When investing in a new venture, entrusting funds to a financial advisor, going into business with someone, or even making a down payment on a renovation, due diligence will help to prevent substantial loses.