Attempted Investment Banking Fraud
On behalf of a Swiss headquartered investment bank, a due diligence investigation was performed of the investment group seeking investment banking investment in connection with the planned roll-up of numerous assisted living and nursing home facilities. One of the individuals who had been described in the prospectus as the primary investor, had one item in the initial background check showing a recent criminal charge in the State of California. State public records have a limited amount of information that is available electronically. Consequently, a field investigator was deployed to review the manual court records and to make inquiries. The field investigation revealed that the state prosecution was being held in abeyance in an anticipation of a forthcoming federal indictment charging embezzlement and criminal money laundering. Further investigation revealed that this individual was an attorney who was charged with embezzling over $3 million from escrow monies on deposit with his law firm and using that money to fund his lifestyle. It further revealed that his law practice had recently been closed down and filed for bankruptcy liquidation. The investigation enabled the investment bank to deny the investment which in all likelihood would have been used to assist the main borrower to flee the jurisdiction along with the bank’s investment.
