Case Study - Theft of Restaurant Cash

The owner of a franchise chain restaurant discovered that over $13,000 in deposits were unaccounted for. He reported that the funds have either been deliberately lost or stolen. He did not want to go to the police and report the money as stolen for fear of the police pressing charges against one of his employees, whom he treats as family. He contacted Webcognita because he wanted to know what happened to the money so he could make an effort on his own to get the money back.

Summary:

The owner of a franchise chain restaurant discovered that over $13,000 in deposits were unaccounted for. He reported that the funds have either been deliberately lost or stolen. He did not want to go to the police and report the money as stolen for fear of the police pressing charges against one of his employees, whom he treats as family. He contacted Webcognita because he wanted to know what happened to the money so he could make an effort on his own to get the money back.

In return, he would deal with who the culprit was of this loss and theft investigation. The owner believed that whoever did take the money was obviously very desperate, and that desperation concerned him enough to want to help his employee, not prosecute. The client contacted Webcognita because he wanted to launch an investigation but keep it internal, not involving the police. The client spoke with Webcognita to learn what approaches could be used. Webcognita proposed the following investigation plan.

The first step was to obtain a list of the store employees who were assigned to make the deposits on the days in question. The second step was to contact the bank and ascertain whether there were any cameras that gave a direct view of the night depository box. The third step was to see if any of the bank employees had a direct link to any of the restaurant employees.

A seasoned investigator was assigned to interview seven employees that had access to the deposits. During the interview process, it was determined that none of the employees had a direct association with the missing money. There was nothing that indicated that any of the employees were responsible for the theft. The second avenue of investigation was to determine which bank employees had access to the deposits and to obtain and review the videotapes of the days in question. Based on the information gathered by the investigator, none of the bank employees was ever left alone with the money. There was always one bank employee partnered with a manager when processing any deposits. Unfortunately, the bank did not have cameras that gave a direct view of the night deposit box, and therefore the bank employees’ story could not be verified via video. The final avenue of the investigation was to conduct background investigations into the bank employees to see if there was any direct link between any of them and/or the restaurant staff. The intent was to find anything that would indicate that this was collaborative effort to defraud the store owner.

Conclusion:

The investigation proved to be successful in the sense that none of the restaurant or bank employees appeared to be a culprit. It is possible that the deposits became lodged in the night deposit box and someone else retrieved the money. There are many questions as to how and why the money disappeared that remain unanswered and the investigation is still ongoing today. Until a viable suspect is identified, the manager of the restaurant will be held accountable for the money, as it was his responsibility to see the money credited to the proper bank account.

What to do next:

If you are facing a similar situation or looking for any type of investigation to be done, contact us for a free consultation. No case is too big or too small, we will work with you to get the same positive results. Our licensed and trained professionals are on call 24 hours a day at (928) 328-1524 or you can also contact Webcognita online.

Understanding Investigative Pretexts

PRIMER FOR INVESTIGATIVE PRETEXT (A guide for today's investigator)

by Alan Pruitt, PI, Private Investigator, Owner - Webcognita

DEFINITION(S):

pre·text n.

An ostensible or professed purpose; an excuse.
An effort or strategy intended to conceal something.

tr.v. pre·text·ed, pre·text·ing, pre·texts
To allege as an excuse.

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[Latin praetextum; from neuter past participle of praetexere; to disguise :
prae-, pre- + texere, to weave; see teks- in Indo-European Roots.]
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Source: The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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pretext \Pre"text\ (origin?; 277), n. [F. pr['e]texte, L. praetextum, fr.
praetextus, p. p. of praetexere to weave before, allege as an excuse; prae before + texere to weave. See Text.] Ostensible reason or motive assigned or assumed as a color or cover for the real reason or motive; pretense; disguise.

They suck the blood of those they depend on, under a pretext of service and kindness. --L'Estrange.

With how much or how little pretext of reason. --Dr. H. More.

Syn: Pretense; excuse; semblance; disguise; appearance. See Pretense.

Source: Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.
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pretext n 1: something serving to conceal plans; a fictitious reason that is concocted in order to conceal the real reason [syn: stalking-horse] 2: an artful or simulated semblance; "under the guise of friendship he betrayed them" [syn: guise, pretence]

Source: WordNet ® 1.6, © 1997 Princeton University

MEANINGS:

Roget's Thesaurus goes on to illustrate the meaning with:

I. VOLITION IN GENERAL

2. Causes of volition

[Ostensible motive, ground, or reason assigned] Pretext.

[Nouns] pretext, pretense, pretension, plea; allegation, advocation; ostensible motive, subterfuge, obtensible ground, obtensible reason, phony reason; excuse (vindication) [more]; color; gloss, guise, cover.

loophole, starting hole; how to creep out of, salvo, come off; way of escape.

handle, peg to hang on, room, locus standi; stalking-horse, cheval de bataille, cue.

pretense (untruth) [more]; put off, dust thrown in the eyes; blind; moonshine; mere pretext, shallow pretext; lame excuse, lame apology; tub to a whale; false plea, sour grapes; makeshift, shift, white lie; special pleading (sophistry) [more]; soft sawder (flattery) [more].

[Verbs] pretend, plead, allege; shelter oneself under the plea of; excuse (vindicate) [more]; lend a color to; furnish a handle; make a pretext of, make a handle of; use as a plea; take one's stand upon, make capital out of , pretend (lie) [more].

[Adjectives] ostensibly (manifest) [more]; alleged, apologetic; pretended [more].

[Adverbs] ostensibly; under color; under the plea, under the pretense of, under the guise of.

II. MODES OF COMMUNICATION

Untruth.

[Antonyms: veracity.]

[Nouns] untruth, falsehood, lie, story, thing that is not, fib, bounce, crammer, taradiddle, whopper.

forgery, fabrication, invention; misstatement, misrepresentation; perversion, falsification, gloss, suggestio falsi; exaggeration [more].

invention, fabrication, fiction; fable, nursery tale; romance (imagination) [more]; absurd story, untrue story, false story, trumped up story, trumped up statement; thing devised by the enemy; canard; shave, sell, hum, travelerís tale, Canterbury tale, cock and bull story, fairy tale, fake, press agent's yarn; claptrap.

myth, moonshine, bosh, all my eye and Betty Martin, mare's nest, farce.

irony; half truth, white lie, pious fraud; mental reservation (concealment) [more].

pretense, pretext; false plea [more]; subterfuge, evasion, shift, shuffle, make-believe; sham (deception) [more].

profession, empty words; Judas kiss (hypocrisy) [more]; disguise (mask) [more].

[Verbs] have a false meaning.

[Adjectives] untrue, false, trumped up; void of foundation, without- foundation; fictive, far from the truth, false as dicer's oaths; unfounded, ben trovato, invented, fabulous, fabricated, forged; fictitious, factitious, supposititious, surreptitious; elusory, illusory; ironical; soi-disant (misnamed) [more].

[Phrases] se non e vero e ben trovato; "where none is meant that meets the ear" [Milton]

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-- Lot's of verbage to ponder! I like my own version, "Truth By Guile".

CASE LAW:

FTC v. Rapp, CA 99-WM-783 (D.Col.)

The actions of James Rapp, a private investigator who owned a firm called Touch Tone Information, specializing in pretext investigations, resulted in an indictment and conviction for racketeering, with a 75-day jail sentence and four years of probation. The verdict was handed down in Colorado in January 2000.

Bottom line: Do not use pretext to gain access to banking and financial customer data.

- While this may seem like a common sense issue, you cannot legally access someone else's financial records and bank information. This is among the most heavily protected areas of personal privacy. The recently passed Gramm-Leach-Bliley Financial Services Modernization Act specifically makes gaining unauthorized access to banking and financial customer data through pretext a criminal offense.

There are investigators who like to grab all available information when conducting an investigation. This is wasteful, dangerous and unnecessary. While such information may prove useful during an investigation, you might also gain it through previously submitted financial statements, Dun & Bradstreet reports and similar data checks, as well as through conducting interviews. The flip side is the inadvertent creation of a claim for the insured for invasion of privacy - a claim that would likely prevail.

Insurance Claim Information:

- Several states, 17 at last count, have adopted some version of the National Association of Insurance Commissioner's Insurance Information and Privacy Protection Model Act (NAIC 670-1), which states:

No insurance institution, agent or insurance support organization shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction; provided, however, a pretext interview may be undertaken to obtain information from a person or institution that does not have a generally or statutorily recognized privileged relationship with the person about whom the information relates for the purpose of investigating a claim where, based upon specific information available for review by the commissioner, there is a reasonable basis for suspecting criminal activity, fraud, material misrepresentation or material non-disclosure in connection with the claim.

Of particular note, the state of Minnesota specifically prohibits any type of pretext in Chapter 72A of the Minnesota Insurance Statute.

Food Lion, Inc. v. Capital Cities/ABC, Inc., 964 F.Supp. 956 (M.D. N.C.
1997)

For those outside Minnesota, pretext remains a viable means for gaining information. This was evidenced in the 1997 Food Lion, Inc. v. Capital Cities/ABC, Inc., 964 F.Supp. 956 (M.D. N.C. 1997) case. Many remember the multi-million-dollar lower court verdict, which was reduced to just $2 by the 4th Circuit Court of Appeals. While not endorsing pretext, it did establish that the mere use of a ruse was not sufficient to create damages.

Further examples of cases where pretext has been deemed intrusive include:

Green v. State Farm Fire and Casualty, 667 F.2d 22 (9th Cir. 1982)

The circumstances in this case far exceed the normal pretext. In this instance of suspected arson, the adjuster posed as a state policeman, threatened the insured with prosecution (in the role of adjuster) and implied to neighbors that the insured had set the fire. It is the view of this author that the $250,000 in punitive damages had more to do with the nature of the ruse and the adjuster's conduct than the mere use of the pretext.

Redner v. Worker's Compensation Appeals Board, 485 P.2d 799 (Cal. 1971)

In this case, the pretext again went far beyond an indirect interview. An investigator induced the claimant to drink to intoxication and then saddle and ride a horse, all the latter of which was videotaped by the investigator. Here, again, the overzealous tactics of the investigator are more in question than the pretext element itself.

Turner v. General Adjustment Bureau, 832 P2.d 62 (Utah App 1992)

As evidence of many courts' permitting pretext as a viable investigative tool, I offer the following:

Turner v. General Adjustment Bureau, 832 P2.d 62 (Utah App 1992) - In this case, investigators were repeatedly invited into the claimant's home while posing as marketing representatives. They only made note of the claimant's comments about her activities and did not videotape her while inside her residence. Videotape was only obtained outside the claimant's residence. As such, the court ruled that the investigators' actions caused no damages because the time inside the house was brief and for a purpose permitted by the claimant.

The seemingly critical element is that they made no attempt to alter the claimant's behavior, nor did they videotape her within the residence. By acting with a degree of restraint, the investigators showed respect for her privacy. This may seem a subtle nuance, but it is the difference between actionable behavior and acceptable behavior.

Another important consideration is that pretext of individuals other than the pretext cannot likely result in a privacy violation. Claimants who have already volunteered information to neighbors can hardly call foul when that information is conveyed to other parties, provided that there is no privileged relationship.

If, for example, an investigator were to pose as a state investigator conducting an investigation of the insurance company to interview the claimant's attorney, and in doing so managed to elicit information about the claimant not commonly known to others, this would be a clear breach of the insurance statute, not to mention a host of others. A good rule of thumb is to treat claims-related pretext as a parachute. If the plane (your usual method of investigating) is failing, jump out and pull the cord. If you are progressing through the investigation smoothly, however, there is really no need for pretext. If, for example, you were already getting videotape of the claimant's activities in a bodily injury case, why would you bother with a pretext? Remember: Parachute!

If you hire outsiders to conduct your investigations, I highly recommend requiring them to add you as an additional insured on their E&O policies. Otherwise, their coverage affords you no real insulation, and you'll end up spending money explaining why it wasn't your fault. If you fail in your efforts, you'll pay and then spend some more money subrogating the claim against your vendor. A little work up front gathering documentation will prevent that.

In addition, get to know your investigative vendors. Find out what types of training their personnel have, what their standards are and how well they understand your concerns and needs. Most importantly, get references, then call them and find out what it is like to work with the vendor on a daily basis. Ideally, these references will have done business with your prospective vendor for a couple of years.

You, in turn, should spell out what is - and is not - permissible during the course of conducting investigations for you. Make it part of a hold-harmless and have your prospective vendor sign it. This is no guarantee a problem won't occur, but spelling it out on paper clears up communication and reduces some of the liability in the event of a problem.

-- This article is Copyright 2002 - 2008 (c) Alan Pruitt. Electronic reproduction rights are explicitly granted with the stipulation that this authorship and permission note must remain attached.

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Alan Pruitt is a licensed Private Investigator with over twenty five years of experience in the private and public sector. In 2002, he established a consulting practice known as Webcognita. Alan is also a frequent guest columnist for investigative related publications in the United States and in Europe. His views of the investigation industry are frequently shared with investigators in a variety of Internet forums. Webcognita maintains a web site at http://www.webcognita.com and you can contact Alan at info@webcognita.com.

The Nature of Investigations

The first step in determining if your particular situation requires the services of a private investigator (or detective) is to first manage expectations of what exactly a private investigator (or detective) can do for a client as a service provider.

As an aid to help our clients better understand the nature of the Private Detective industry, the processes by which we work, and the regulations by which we are governed, we have prepared this blog so you may have more realistic expectations regarding the work Webcognita of Yuma, Arizona will conduct on your behalf.

1. We have no more authority than does a private citizen. We are not police officers. The training, testing, background checks, and certification process we go through in order to obtain our licenses is meant to set us apart as individuals who are committed to unbiased professionalism. As such, we are bound to rigid codes of conduct dictated by the State of Arizona and California.

2. Similarly, we are not attorneys. Though we are very knowledgeable of the laws governing our actions, any advice we give concerning the direction of your case is merely a suggestion that should be approved by any legal representative you may have.

3. We are not magicians. Ours is an industry revolving around detail gathered through available information, the understanding of this detail, and the working knowledge of how to follow the trails we uncover. This detailed information is generated through diligence and knowing where to look. Just as librarians are not geniuses, they simply are trained on where and how to find the information.

4. Sometimes the information generated is contrary to what the client hopes to find. We cannot guarantee results. We can only guarantee that the necessary information, documentation, etc. will be searched for diligently, legally, expediently, and as economically as possible.

5. If surveillance is necessary we feel obligated to inform you of the “real life caveats.” Surveillance, especially moving surveillance, is a hit and miss science. We can perform these observations under agreed upon time and location parameters but cannot promise activity on behalf of the subject. Similarly, moving surveillance carries with it inherent obstacles such as the unpredictable nature of traffic. There is no guarantee that contact with the subject can be maintained as we cannot predict traffic flow, traffic conditions, weather, or other unforeseen problems. As in number one above, we have no more authority than an ordinary citizen. This includes traffic laws.

6. Webcognita can, however, make a promise that most of the other agencies can’t. That is, that we will do everything in our power to reach the goal of obtaining the information you need in a timely and economical fashion and conduct ourselves in a professional and discreet manner while representing you in your case.

Please visit Webcognita for more information.

We look forward to being your premium investigation service provider in Yuma County, Arizona and the surrounding area (including Imperial County, California).