Know Who You are Doing Business with or Risk Losing Millions

Putting someone “under a microscope” is a way of describing when a person or organization needs to be closely examined to determine if there is hidden risk. Most often, an investigative firm to performs “investigative due diligence” sometimes referred to as a “background check”. Due diligence investigations can unearth important red flags of prior behavior, undisclosed liabilities, criminal associations, or other issues that require close attention.

Real estate swindles. Impersonating a lawyer. Practicing medicine without a license leading to someone’s death. Murder for Hire. Falsified clinical trials. These are just a few things in Enochian BioSciences Inc. co-founder Serhat Gumrukcuthis’ background. He is a walking, talking worst-case scenario / business case on the importance of performing in-depth background investigations on individuals and their companies before investing. If he was an aberration, there would be no need to perform background investigations of prospective business partners, customers, key hires or other important counterparties.  In most instances, the results of a due diligence investigation are boring which is the goal.  Boring means that there is nothing in this individual or company’s background that would cause you to rethink the relationship.  This boring outcome provides that negative assurance that you checked and it’s ok to proceed.   Negative assurance isn’t the only goal though.  It is even more important to determine if these prospective relationships pose undue risk based upon their prior behavior that has manifested itself in the public domain.  Derogatory information does not necessarily mean deal-breaker.  Instead, it leads to more questions and often to a productive dialog with the business partner, customer or new hire at hand. Investigative due diligence reports often lead to conversations like this.  “As you know, we perform background investigations of all of our key relationships and we want to better understanding what we are seeing.  What can you tell me about the SEC investigation of your former employer when you were it’s CFO?”  I guess I could have said: “insert question here” since the things you may need a better understanding can vary wildly.

Performing due diligence investigations can unearth important red flags of prior behavior, undisclosed liabilities, criminal associations, or other issues that require close attention.  Armed with this information, organizations can have candid and productive dialogues with their customers and business partners to better understand any issues arising from due diligence investigations.  And on occasion, put clients in a position to derisk before their history of problematic behavior becomes your legal liability.