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Uncovering Hidden Intentions

This article has been archived and may no longer be updated.


Genie Tyburski, Web Manager, The Virtual Chase


   Originally published by Law Office Computing (Aug/Sep 2003) under the title, "Get to Know Prospective Clients." Revised to reflect resources and strategies current as of the date appearing at the end of the page.


Updated 5 March 2004. Lawyer X picks up the speakerphone when he hears Partner Gruff's voice on the other end. Without preamble, Gruff barks, "Partner Dubious in our Nashville office needs your help to check out a prospective client, who approached him about a multimillion dollar securitization deal. He says something's off about this one. Call him and see if you can conjure up some answers with that magic computer of yours." Click.

Trying to forget the pile of work he knows has to go out today, Lawyer X calls Dubious, who specializes in financial transactions.

He learns that a businesswoman approached Dubious about forming a healthcare receivables company. Ms. Ponzi outlined a business plan that involved locating healthcare providers in need of financing, and contracting with them to purchase insurance claims for patient services at a discount. The business would finance the purchase by selling interests in the claims to investors, provide a collection service for the claims and maintain records regarding the transactions. The discount, assuming the claims were paid in full, would provide enough cash to give investors a return and leave a little something for Ponzi and her partners.

"What troubles me is, she seemed knowledgeable about healthcare receivables, but claimed that neither she nor her partners had any previous involvement with this type of receivable. That doesn't add up." Dubious says.

"She mentioned certain advantages to forming a limited liability company. And the papers she showed me called for dissolution of the company in the event of a disagreement amongst the members. When I told her that the company would have to remain in existence until the investors were paid, she seemed disappointed and suggested that I could make it happen."

Dubious continues, "This might sound odd coming from a partner, but I keep asking myself, 'Why did she come to me? Why isn't she taking this to a firm in New York?'"

With the names and current addresses of the five business partners, as well as the name of a former business affiliation, Lawyer X connects to AutoTrackXP, a ChoicePoint public records research system. AutoTrackXP features a relatively new, inexpensive Global Search, which queries multiple databases for possible matches. It does not substitute for searching the individual databases. Rather, it provides an overview of what may be available.

Initially, Lawyer X hopes to verify the business partners' current addresses, discover their former recent residences, and find additional business affiliations. What he finds ultimately determines the next phase of the research, but possibilities include accessing regional online databases that contain court, real property or other public records, conducting telephone or manual research at local courthouses or government offices, searching news, case law or other full-text databases, or searching the Web.

Because a few of the individuals' names are common (e.g., John Smith), X selects the Global Search option for searching by street address and zip code. It provides the number of matches found in the individual databases and reveals the names of the databases that contain no records for the address entered.

Global Search links to results appearing in Faces of the Nation, a database that contains basic information about people. Lawyer X finds a match for the business partner at the address entered. He opts to print a National Comprehensive Report on the individual and adds a request for criminal data and information about relatives, neighbors and other possible associates. The report provides additional identifying data, such as a date of birth and Social Security number, which X might use to conduct a more in-depth investigation.

Lawyer X repeats this process for each partner and discovers undisclosed business affiliations, old bankruptcies and civil lawsuits involving the individuals. He determines that a manual search of civil court records in seven counties throughout the United States will be necessary. The online coverage of the counties, where the partners have lived or worked, is sparse or non-existent.

To find a researcher, X connects to the Web site of BRB Publications, publisher of public records books and electronic resources. BRB's Public Record Retriever Network (PRRN) assists those looking for researchers who specialize in the retrieval of public records. He enters the seven county and state combinations to display a list of researchers, their contact information, and business description. After several phone calls, X hires seven specialists to perform the necessary legwork.

While he awaits the results of the manual research, Lawyer X connects to Google, where he searches the names of the business partners. The common names retrieve too many hits. Queries consisting of the partners' telephone numbers or Social Security numbers find some Web pages of mild interest. But when X enters Peter to Paul Network, the name of the business Ponzi claimed she recently headed, he finds the Web site of an alternative investment company specializing in securitizations.

Skeptical about the company's business description, X browses the pages of its Web site for mention of Ponzi or her former company. He finds a few passing references, including one buried deep within a PDF file, which indicates that a business relationship between the two had recently come to an end.

X decides to call the state attorney general's office in the state where Ponzi resides and does business. He connects to an investigator in the appropriate division and asks if the state attorney general has any public information on file about Peter to Paul Network.

He receives a negative response, but on a whim, asks about Pyramid Healthcare Financing, the company specializing in alternative investments. The investigator recognizes the name. He tells X that the state attorney general has received several complaints, and volunteers that Pyramid Healthcare Financing is the subject of an active criminal investigation led by the U.S. Postal Inspection Service.

Following this lead, X telephones the U.S. Postal Inspection Service and speaks to one of the inspectors handling the investigation. The agent offers that the investigation also involves the FBI, the Internal Revenue Service and the Centers for Medicare & Medicaid Services.

The agent also confirms that Peter to Paul Network is part of the investigation, and suggests that X search the court records in a certain county.

Knowing that the county court research was already underway, Lawyer X connects to the Internet Archive to find out if previous versions of Pyramid Healthcare Financing's Web site would shed light on the relationship between it and Peter to Paul Network. He enters the Web site URL in the search box and retrieves more than a dozen earlier versions of the site.

Lawyer X meticulously combs through these editions of the Pyramid Healthcare Financing Web site. After a few hours, the tedious work pays off. He encounters a document that disappeared from the Web site over one year ago. It details a financial arrangement between the two that sounds suspiciously like a Ponzi scheme.

Lawyer X waits out Partner Dubious' initial reaction to the news. When he calms down, the partner remarks, "Well, I shouldn't be surprised."

"The researcher found the county court filing," X offers. "But I can't make heads or tails of it without obtaining a copy of the complaint."

"No, wait on that," Dubious instructs. "I have to confront Ms. Ponzi with this news. Let's see what she has to say."

Later, Lawyer X learns that Dubious lost the opportunity to work with Ponzi. When confronted with the information, she fired him. That, he thinks, is a good thing, after all.


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Created: 11 November 2003
Revised: 18 October 2007 (no text revisions)
URL: https://www.virtualchase.com/articles/archive/ponzi.html

Suggestions: Genie Tyburski, tvceditor [at] virtualchase [dot] com