CRA Forensic Services experts were engaged by a publicly traded critical infrastructure sector company that was hiring a new chief operating officer. The company’s human resources team had commissioned its “standard” background check on the leading candidate, which did not identify any irregularities. However, given the seniority of the position, and the fact that the company was under significant legal pressure and regulatory scrutiny for major historical compliance failures, the chief legal officer (CLO) retained us to conduct additional, privileged integrity due diligence on the candidate. The CLO appreciated also that a SOX 404 violation could occur, for example, if the failure to perform a robust background check led to fraud or financial misstatement.
Our team identified multiple issues that raised questions about the candidate’s integrity, character, and competence—including blistering criticism from a bankruptcy administrator related to an unsuccessful attempt by the candidate to file for bankruptcy in order to avoid repaying a relocation bonus when separating from a prior employer: “Debtors’ Chapter 7 case should be dismissed … either on the grounds that the case should be presumed to be an abuse of the [Code] … or upon any finding by the Court that the petition was filed in bad faith.” Since personal bankruptcy was never granted, these facts were not and never would have been uncovered by the company’s “standard” background check.
Our various findings allowed our client to move forward with an “eyes-wide-open” approach and enabled the CEO to front our findings with the Board.
The team was led by Kristofer Swanson, Vice President and Forensic Services Practice Leader and Patricia Peláez, Principal. Both are licensed private investigators, holding Permanent Employee Registration Cards issued by the Illinois Department of Financial and Professional Regulation, as required to furnish certain investigative services.
Our team assists in the prevention, detection, and correction of a broad range of risks and potential misconduct, thereby helping companies reaffirm their commitment to integrity and to exquisite corporate governance. Recent allegations at other public companies have included financial statement irregularities, fraud, FCPA non-compliance, #MeToo issues, theft of trade secrets, ineffectiveness of SOX controls, cybercrime, and more.
