Earlier this month, Apple
Note that I distinguish between creditors and private investigators: to protect themselves from liability and create what the Nixon administration might call “plausible deniability”, creditors themselves will rarely investigate a debtor in outside of the formal framework of post-judgment discovery which is authorized by laws and rules of court, e.g., debtor examinations, subpoenas, etc. To go beyond this and obtain information about a debtor that is not available through the court process, creditors will often hire a private investigator and ask him to create a file on a particular debtor. The record eventually provided by the private investigator will give the creditor the information he wants, but does not tell the creditor how the information was obtained and, frankly, the creditor does not want to know. If something blows up later because the PI crossed a no-go line somewhere, the creditor will just sit back and say, “I never told the PI to do that,” and he’ll almost always get away with it. responsibility for what it is that the private detective has done.
While there are certainly some private investigators who wouldn’t even think to cross the line between legal and illegal driving, there is still no shortage of private investigators who don’t hesitate to cross the line in search of juicy information – thus ensuring them more future work – as long as their own chances of getting caught are low. With all that in mind, here are some of the most aggressive things I’ve seen private investigators do over the years.
GPS Trackers and AirTags. As mentioned, GPS trackers have been used for many years by private investigators. They’re cheap (“Amazon’s Choice” is only $17) and they’ll create a detailed map and timeline of a debtor’s travels. Installing the magnetic tracker on a debtor’s car takes about three seconds, and the devices are so small that a debtor has no chance of finding it unless there’s a full chassis inspection. of the vehicle. Even if a debtor finds a GPS tracker, good luck proving who owns it.
Knowing where the debtor is going is an invaluable source of information for creditors. If the debtor’s car turns up in a bank’s parking lot, chances are the debtor has an account there and a creditor could hit that bank with a levy. If the debtor’s car shows up at a storage facility, the creditor can get a break and enter order and bring in a locksmith and a moving van to empty the debtor’s storage locker. If the debtor goes to the same business at about the same time every day and stays there for a long time, the creditor can get a garnishment order on the debtor’s wages if that is where the debtor is employed .
Voice recorders. Sound-activated voice recorders are sometimes used by private investigators, although this is a patently illegal practice that violates federal wiretapping law. It is also something where the private investigator runs a higher risk of being caught, since the device must be both placed and extracted. Nevertheless, some private investigators break into a debtor’s car and place such a device where it is difficult to find it, for example by sticking it under a seat. After some time, the private detective will extract the recorder, then listen and summarize all the conversations relating to the assets. Because nowadays people tend to talk frequently on their cell phones while driving, the chances of the device picking up asset information are often worth the risk. Again, this is a highly illegal practice, but some private investigators run the risk as the chances of being caught are quite low.
Pretext. When a private investigator impersonates the debtor, it is called pretense, and the most common use is for the private investigator to call local banks on behalf of the debtor and request account balances, using almost always the debtor’s date of birth and social security number that the private investigator will have previously obtained. This is an ancient practice, dating back decades.
In more modern times, the pretext has been used by private investigators to gain access to a debtor’s social media, which can sometimes provide an abundance of useful information since debtors tend to be prying in what they post. on social media. Debtors will go to their debtor’s examination on Monday and claim to have no assets, but on Tuesday they will post pictures of their new BMW or vacation photos from Cabo.
Pretexting also has its other uses by creditors, and a memorable example is a case in which I was not involved in which debtors fled the United States with all their assets. Using pretexts at airline counters, a private investigator was able to discover a few months later that the debtors were returning to the United States for a weekend for personal reasons. The creditor obtained subpoenas for the debtor and an order forcing them to surrender their passports, which the court granted without question, and right after the debtors were cleared, they were served and their passports taken . The debtors were then stranded in the United States and, after being dragged into court, had to repatriate all their assets back to the United States where their creditor seized them.
Piracy. If the excuse isn’t bad enough, the most aggressive private investigators will often hire a hacker to break into a debtor’s computer system and download their personal files. It’s not as hard as it looks, especially since most people have nothing to do with “techies” and generally fail to keep their software systems and anti-virus software up to date, malware and firewalls. People are also likely to be lazy and just leave their computers on and connected to the internet, and not shutting them down when not in use, giving a hacker enough time to quietly break into a system. and perform a data dump. Although also highly illegal, hacking is generally undetectable by the ordinary computer user and, in any event, it is extremely difficult, even for law enforcement, to trace an incident of piracy to its source. If someone is hiding assets, those assets will usually be identified in some way in the files obtained by the hacker and given to the private investigator, who then tells the creditor where to look for them (but without, of course, tell the creditor how all this juicy information suddenly appeared).
Consumer information. Obtaining consumer credit information from a debtor is an area that is not illegal, or at best a gray area where no one is ever charged, and usually a creditor will obtain this information themselves. if he doesn’t hire a private detective to collect them for him. . Thanks (or not) to a strong credit reporting industry in the United States, a lot of useful information is immediately and inexpensively available to creditors at the push of a button in the form of credit reports.
Some people might wonder why credit reports would be so valuable to a creditor since they only tell that creditor about other creditors of the same debtor? Not so. Credit reports show all sorts of activity, including information about utility payments. If utility payments seem boring, consider the debtor who has a primary residence that is disclosed to creditors but protected by homestead. However, this same debtor also keeps a vacation home in a nice location that he doesn’t want to lose to creditors and therefore hasn’t disclosed it (maybe it’s hidden in a trust or LLC or Something). The creditor’s report will show that the debtor is making utility payments (water, gas, electric, cable) for the vacation home, and this will tell the creditor that it exists.
Just as juicy, credit reports also show credit applications and these can be invaluable to creditors. In one of my own cases, a debtor brought a lot of documents to his debtor exam that showed he was completely broke, had very little income, yada, yada, yada. A look at the debtor’s credit report, however, revealed that he had recently applied for credit from the local Mercedes dealership in an attempt to hire a car. What followed was my subpoena to the Mercedes dealership for the credit application, which showed that the debtor had certified under penalty of perjury that his annual income exceeded $300,000 per year. This, after a trip to court where the judge excoriated the debtor and his attorney, led to an undisclosed debtor case and the case eventually settled with the judgment paid almost in full.
Final Thoughts. Can the debtor know how the creditor obtained all this information? Not really. A particular aspect of post-judgment enforcement litigation is that only creditors have the right to be discovered, and a debtor has no right to depose the creditor, issue demands for documents, or do anything whatever else. Unless the debtor can present hard evidence of illegal conduct that they can present to law enforcement, the debtor is simply stuck.
The lesson from all of this is that asset concealment generally does not work against a creditor who is willing to shell out the necessary funds to investigate the debtor’s assets outside of the formal court setting. Hiding assets may work for a while, but the truth will probably come out eventually and then there will be very negative repercussions with the court.
This is the area where asset protection planning done well in advance of any claim (and before one takes out personal guarantees) can benefit the debtor, since the debtor can present assets in plain view without having to commit of perjury, but the creditor may have difficulty accessing those assets, so the case will end up settling on less than the full amount of the assets. In fact, while representing debtors, I almost inevitably give them the advice that eventually every asset they’ve touched once will likely be known to the creditor sooner or later, so they might as well make full disclosure up front and we’ll fight on the creditor’s ability to access the assets, which is an entirely different approach and doesn’t put us behind the 8 ball with the court.
This approach has consistently proven successful, with attempts to hide assets from creditors generally being much less effective.