We were recently asked to gather some information on a company that had taken delivery of $800,000 worth of merchandise, but had decided not to pay for that merchandise. The attorney asked us to find out what happened to the merchandise, and where the company banked so a “provisional remedy” could be implemented to attach this company’s funds prior to a judgment.
We sent in an investigator to look at the various types of merchandise sold by this company, and ask specifically for the merchandise that had been delivered but not paid for. It appeared, according to the store manager, that all of this equipment was shipped to a new company in another city that was a spin-off of the old company. The sales person was very knowledgeable both about the equipment and the business. We were told that the company had experienced some hard times and used the spin-off to settle a debt with another company and to lower the overhead by shifting employees and stores from the current brand to a new brand. This is more or less a chapter and- verse description of a fraudulent conveyance of the creditor’s property secured by a UCC 1 Financing Statement. The ghost shopper continued to shop and when they had decided on a piece of equipment, offered to pay via a bank wire. The accountant, who was in the back office, provided the full coordinates for the bank-to-bank transfer of funds. These were given, and in 15 minutes the investigator had all of the information for a fraudulent conveyance action on top of a collection action, using the bank account information. For thoroughness, the investigator called back and said that since the wire was from overseas, a different bank would be preferable, and did they have a different bank that could accept the wire? Yes, according to accountant, they did: They had a Merrill Lynch money market account, and supplied the wire coordinate for that, with the accountant adding, “Gosh I hope this works; these are the only two accounts we have.”
For the investment of a few hours, including writing up the report, our investigator went to the store and got the entire recent history of the store from one of the sales persons. With a small-added pretext of trying to wire funds, he also got all of their demand-account information.
This was a collection matter involving a large sum of money and a debtor not behaving too well. But is this much of your information shared with those that will share it with the world? Have you identified what information is critical to your business and should not be shared? If your organization has not identified information that is of value, and that shouldn’t be discussed, you can have some measure of confidence that it has been and will continue to be shared with those who shouldn’t know it.