Wall Street Journal


Before the Con Man Comes Knocking

Security needs range from strong passwords to private detectives

By Norb Vonnegut

New York (Article Edited) - If wealth advisers are so committed to "preservation of capital," why don't we spend more time protecting our clients from financial predators and teaching them security techniques?

Recently, I spent time with Nick Casale and his team at Casale Associates. Mr. Casale is a private investigator. His firm occasionally gets in the news, as it did when it was retained to baby-sit Bernie Madoff while he was out on bond before his fraud conviction.

The Madoff scam offers a strong case for using private investigators to shine a light on opaque investments, Mr. Casale says. He believes it wouldn't have taken much digging by a good PI to spot the inconsistencies in the Madoff investment firm's falsified trading record.

I asked Mr. Casale how to spot financial predators who cozy up to families and work their way into their victims' personal lives. His single most important warning to financial advisers:

"If it's out of ordinary, don't believe it's random."

He described an heiress's chance meeting with a suave developer. The man appeared affluent. He came with European grace, a bewitching accent, all the right moves. The two fell in love and planned to marry.

Not so fast.

The man was a scoundrel, says Mary Catherine Benedetto, who is Mr. Casale's partner. The firm's background check showed him to be a "guy trying to live the dream with the girl's family money." He had a little cash to flash, but everything else about him was a sham."

These days, wealth management firms are doing a better job investigating the personal backgrounds of money managers, hedge fund operators, anybody with fiduciary responsibility. That kind of due diligence is pretty much standard.

But are we doing enough to ward off the creeps who prey on the portfolios we manage?

Think about how we routinely refer lawyers, accountants and the planners who arrive with high-octane insurance pitches. It seems to me we should also keep PIs on our speed dials-just in case.

You never know who will come knocking.

Write to Norb Vonnegut at norb.vonnegut@dowjones.com

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