Digital trails and detective stories

Last week HSBC hosted ‘Follow that trail: real-life detective stories’ at their Spinningfields offices. We were joined by Rachel Carson of Neotas and Michael Locke of Begbies Traynor. Read on for the interesting insights our delegates who braved the snow were treated to…

Can you trust the entrepreneur you are about to invest in? Is your new senior manager a ‘fit and proper person’? What can you do if you lose money as a result of a suspicious insolvency case?

One solution is to use a professional who can help establish the true facts. Our recent pro-manchester breakfast seminar, organised in conjunction with the insolvency trade body R3, featured two ‘financial detectives’ – an intelligence expert who uses ‘digital trails’ to screen people on behalf of banks and investors, and another who investigates suspicious insolvency cases to find money that has been stashed away.

Rachel Carson from Neotas, which uses social media, deep and dark web and other open sources to reveal insight about individuals, their lifestyles and networks, says there is now a wealth of information available through open sources: “There is no need to spy on people with binoculars any more. Often you can see straight into people’s living rooms from their social media photos and find details of almost every aspect of their lives, without even leaving home.”

Neotas’ service is particularly useful for private equity investors, as well as banks who have to vet clients and senior staff to meet the demands of the anti-money laundering and Senior Manager regimes.

Although the individuals Neotas screen will have already passed the standard background checks, interviews and reference checks, one in three cases identify at least one area of concern. Admittedly some can be put down to student pranks, but others show evidence of something more sinister such as drug abuse, violence or fraud. In the past six months, the team reported four people to Crimestoppers, two to the Serious Fraud Office and one to the anti-terrorist service Prevent.

Rachel warns that criminals can also use online information and says people should be careful of what they put on social media and other sites. “Even if you set your Facebook profile to private, be careful what you ‘like’, or how you interact with videos and other public content as that can leave you exposed. Beware of registering personal email address and data, for example when registering a website, and always use a password keeper service.”

Meanwhile Michael Locke of Begbies Traynor, who has spent 20 years as an investigative insolvency specialist, warns that there is now far less scrutiny of insolvency cases due to staff cuts within the Insolvency Service and the new format for creditor reports which offers less detailed information.

“It is possible for individuals to fill in a form and declare themselves bankrupt, having transferred their property into an associate’s name,” he says. “If their debts are under £2m, it is likely that no-one will check the situation. Insolvency Service staff simply don’t have time to verify the facts of every case, while investors and other creditors may simply accept the situation at face value.”

Michael has investigated over 1,000 cases including over 200 ‘Lloyd’s Names’ – wealthy individuals who in the 1970s and 80s, would agree to underwrite insurance losses in exchange for tax benefits and significant returns. Following a series of disasters in the 1990s, many lost their fortunes. Some declared themselves bankrupt and tried to hide their assets unlawfully. Michael has recovered over £20m from ‘Names’.

He urges creditors in insolvency cases to look out for the signs. “Watch out for assets unexpectedly disappearing and round-sum payments going out of the account – nothing costs exactly £10,000! If you have suspicions, it is worth consulting an investigations specialist who can follow the trail and try to find any hidden assets to help recover your money.”

Paul Barber, North West chair of R3 and a partner at Begbies Traynor, said: “The event highlights the importance of preventing and detecting fraud. The insolvency profession plays a key role in tackling fraud and returns millions to the Crown and to creditors each year.”