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Inquiring Minds: Building an Investigative Team

To build an effective investigative team, CSOs need to assemble the right mix of specialized talents. Then they have to cultivate trusting relationships with other organizational leaders.

March 01, 2005 — CSO — The managing executives were concerned. The family-owned company they had acquired recently in a multimillion-dollar deal did not appear to be as profitable as they had expected. Threats had been made against their recently installed executive team, and an employee had come to them, in confidence, with a startling revelation: I think you're being bugged.

On behalf of the new ownership, Chris Marquet's investigations agency dispatched a team of 10 investigators and forensic accountants to do a little digging. The story they uncovered was worthy of a Robert Ludlum potboiler.

Under the purchase agreement, the new owners agreed that the founding family would remain in charge of the company's day-to-day management. A covert investigation of the family unearthed some interesting facts, such as the prior arrest of one family member on weapons and drug charges.

Even more disturbing, forensic accountants determined that the family had been using the company as their personal piggy bank. Corporate funds had financed homes, boats, cars, vacations and a number of other luxury items. Inventories, receivables and reserves had all been misstated to enhance the value of the company, and a cleverly designed computer program had defrauded customers by overcharging a small amount on each transaction at the point of sale. Fearful of discovery, the family was thought to be eavesdropping on the new management team. Interviews of current and former employees yielded a trove of other alleged crimes and misdemeanors, everything from sexual harassment and discrimination to suspicions of ties with organized crime.

"It was a can of worms, and it kept getting bigger," says Marquet, executive managing director and a founding principal of Citigate Global Intelligence & Security. Marquet says the investigation took place some years ago, before he formed Citigate, and he declines to name his client and the subjects of his inquiry. He says the five-month long investigation culminated in the firing of the family patriarch and three other family members, criminal charges being filed and a civil suit, the outcome of which enabled the company to recoup some of the estimated $5 million that it had overpaid for its acquisition. And in firing the family, the company was no longer obligated to pay out their hefty five-year contracts.

Few CSOs will ever have to oversee an investigation of this magnitude. Background checks, off-color e-mails and expense report cheats will compose a far greater percentage of an investigative team's caseload than will checking out surreptitious eavesdropping and alleged criminal activities. However, seasoned corporate investigators agree that regardless of the size and scope of a case, the core competencies of a good investigator and a well-managed investigation are largely the samethough by no means simple to master.