Thursday, July 11, 2013


Let's assume that, during your due diligence investigation of a prospective bank client, you find negative information,* in an article or sanctions summary, that is sufficiently serious to disqualify the individual or entity as a client. What do you do next ? You validate that information, from an official source, for your file, so that, should there be an audit, or a question arises about the accuracy of your information, you can support your conclusion with an official record.

Here is where you go, in the US, to obtain the evidence you need to verify the accuracy of your information:

(1)Federal criminal arrests and convictions: Federal criminal cases are available online at Public Access to Court Electronic records, PACER. Visit  Since Federal law does not allow defendants to seal or expunge records, even cases where there is no conviction remain available to you. I consider this a primary source of information, not merely on your subject, but his or her associates as well. Organized crime ties are sometimes discovered by looking at co-defendants, and others, linked to your subject, in case files of your subject.

(2) State court criminal arrests and convictions: most local and country records are available online, at little or no cost, but they generally do not contain the actual pleadings, like PACER does, but you can still access the dockets, to verify both arrests and convictions.

(3) Information about fraud, Ponzi schemes, and other white collar crimes: Again. PACER has the details of Federal crimes you want, but state court online services rarely offer the pleadings. Civil fraud and white collar cases are great resources on PACER. if you are searching for a civil judgment entered against your target in state court, in many states, attorneys for the victims record certified copies in the Official Records register where the defendant resides, to obtain a lien on assets. Check out the website of the local government for online services, to find official records libraries.

(4) Federal Tax Liens: These are recorded in the local county Official Records registers.

(5) Foreclosure judgments, final judgments and liens: Official records in the county where the property or the defendant resides.

(6) Federal Securities problems:, the SEC website, for civil and regulatory matters involving individuals or corporate entities.

(7) Sanctions: If an individual is listed as OFAC sanctioned in an article or other secondary source, pull down the entry at the official site. to confirm. Remember that there are de-listings of sanctioned parties. Always check to confirm active sanction status.

(8) Poor financial condition of individual or entity: PACER for bankruptcy records, Official Records
for judgments and liens from banks and other creditors.

With the foregoing resources, one can validate the negative information obtained, and document its accuracy.
* My personal preference for the source of negative information in due diligence inquiries can be found here.  

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