Due Diligence: Great Ways to Complicate What’s Easy

Few things are easier than looking the other way and doing absolutely nothing. If you’re an estate manager, you don’t get that luxury. Ever. This is true with due diligence. Since you always have to do something, you’re lucky that finding what’s out there on a person of interest has never been easier. Or more difficult. [Wait, what?] Never quicker to look into, say, your pool guy… But it’s never required more time. Cheap, but expensive. So easy, yet complex. You get the idea.

The nature of access to nearly all types of information has fundamentally changed in the last 20 years. Remember looking up topics in your local library’s card catalog, searching for and checking out books, and photocopying and transcribing passages you needed? Hopefully you’re too young for that. If not, don’t mention it to kids: They find it laughable, and preposterous. It’s the same thing with having to get details by phone, storing important information on paper, doing business by snail mail, and (Lord help us) using a fax machine. Today, more information and functionality than you can possibly handle is conveniently at your fingertips. Due diligence, like anything else, is a click of the mouse away. Nice and easy. Done. That’s all there was to it. What’s next. Right?

This is a long of way of saying there are easy ways of finding something when you have due diligence performed. However, it’s decidedly different if you have to find everything. There is a great divide between basic “check the box” reports and “leave no stone unturned” deep-dives. Always on the hook, estate managers have to make the right choice in terms of coverage, costs, and their courses of action. Inherently, your sense of security, tolerance for risk and the unknown, and willingness to actually spend money leave you somewhere in the middle, based on however much (hopefully not how little) leaves you comfortable. That is perfectly rational and reasonable. But when the integrity of your private estate, access to its valuable assets, and close contact with the Principals come into play, your choice of due diligence solution(s) can be anything except simple and straightforward…

If you do diligence yourself, bear in mind that “casual” research through Google covers an average of less than 10% of available records for your pool guy, smart home technology installation consultant, hedge fund manager, haberdasher, etc… You can use inexpensive, web-based services: U.S. Search, TruthFinder, Instant Checkmate, Intelius, BeenVerified. And you can sign up to search candidates using economical, CFPB-recognized nationwide employment screeners like Checkr, First Advantage, or HireRight. We hate to admit it, but there can be significant value for your money at virtually any price point, even at $4.95 to $49.95 a pop. But like always, you still only get what you pay for.

As of the 2016 census, there were at least 3,142 drawbacks to using instant, at-your-fingertips, web-based due diligence. 3,142 was then the official number of counties and similar local government jurisdictions in these United States. This is a gross oversimplification, but such jurisdictions are where many public and official records of relevance originate and are filed. Each has its own courts and public service agencies, systems, databases (or lack thereof), policies, records keepers, quirks, shortcomings, and myriad different physical and electronic access points to their proprietary files and information. Keep in mind the vast majority of people have lived in multiple geographic jurisdictions.

On top of that, layer state records sources (a very mixed bag), the federal government (hoo boy), professional regulatory agencies, privately-held education and employment databases, the Internet and public domain, and more. Unfortunately, no instant $5 to $50 service has the time and money to completely cover any one of them, much less all of them. Therefore, the absence of negative findings in your report on the pool guy isn’t always because the records don’t exist. [Mercifully, we deleted an additional 1,000+ words on the rigors of records checks from this post’s original draft.]

That said, records tell only a fraction of the story. Public, official, and other records are created when a threshold (often negative) is crossed, a milestone is reached, a transaction has happened, or on a recurring basis. What about the other 99.99% of the time? What is your person, entity, or asset of interest doing at 10 p.m. on a Tuesday night? What about qualitative characteristics that factor into your decision-making, but which can’t be divined by retrievable records? Habitual drunk drivers may never be stopped, heavy drug users may never get caught, and abusive persons may not be reported. Can incomplete, piecemeal records histories from thousands of disjointed sources reliably be trusted to give you the necessary insights to permit access to your private estate’s assets, wealth, and Principals? Over-reliance on public records can let the proverbial fox into your hen-house.

Again, this is a gross over-simplification of a challenge that is even more complex than it sounds. How to resolve it? Simply roll up your sleeves and move heaven and earth. More specifically, in Veraxis’ view, diligence providers must develop the resources, methodologies, and partnerships to ensure the greatest possible depth and breadth of coverage for virtually all kinds of information from truly vast and disparate sources. That includes a jurisdiction by jurisdiction search, federated databases and content aggregators, independent sources, human intelligence, the Predictive Index (ask us about this sometime), and even the tools of yesteryear – direct phone calls, hand searches for old hardcopies, and (Lord, give me patience) having to use fax machines. It means the scrutiny of hundreds, sometimes thousands of searches per person, no matter who it is, as if the entire world depended on it. It means leaving no stone unturned. It means getting what you pay for, even when your premium product comes at a premium price.

Veraxis is very pleased to partner with EstateSpace, with the intention of providing more private estates with comprehensive, white-glove due diligence services. For information on Veraxis’ work products and capabilities, visit Veraxis. Just in time for Halloween, we’re working on a truly terrifying list of estate staff candidates (redacted) whose skeletons were very scarily not found by standard checks. 

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