The Expert Podcast

If you are a private investigator or somebody who would hire a private investigator—whether a consumer, law firm, or attorney—you need to know about this story. This is not just an isolated example because we're going to talk about two or three other instances where engagement with a private investigator can cause huge liabilities and even criminal trouble if not done carefully. This case involves a party to a lawsuit about a personal injury case. A person was driving a car, crashed into another person, and caused injury. The injured person was suing for compensation for their injury. The person being sued hired a private investigator to watch the injured person and verify if their claims about being unable to use their arms and suffering other injuries were true. The private investigator was tasked with checking if the injured person was lifting hay bales and doing other work, thus questioning if they were truly injured.

This was a normal thing to do in many cases, including divorce, fraud, and other legal matters where surveillance is commonly used. However, the problem arose when the investigator set up surveillance on the property. The investigator parked on what they believed was a dirt road that led to the injured person’s driveway. However, the property boundary extended through this dirt road, which was actually an easement allowing neighbors access to their properties. This meant the private investigator was trespassing on the injured person’s property. Furthermore, they used magnification to zoom in on people, which made the situation worse.

As a result, the defendant found out they were trespassing, and they sued the private investigator. They demanded $13 billion in trespass and invasion of privacy claims. While it’s unclear if they will win, it’s evident that the investigator and the parties involved made a major legal error. This story serves as a warning: if you are a law firm, plaintiff, or civilian hiring a private investigator, you need to ensure that all actions taken are legal.

This is not just about surveillance but other types of research as well. For example, when pulling records on a person, you must do so legally. There’s a federal law called the Graham-Leach-Bliley Act that prohibits using certain illegal methods to gather information, such as falsifying records or posing as someone else to acquire sensitive documents. If an investigator does something illegal, not only will they face trouble, but their clients, including the law firm, could also be liable. In this case, the lawsuit wasn’t just against the investigator but also the insurance company, the plaintiff, the defense lawyers, the private investigative firm, and the investigators individually.

Another example occurred back in the early 2000s. We were involved in a lawsuit where both parties were suing each other. As part of our investigation for one of the parties, we were doing asset searches and background checks on the opposing side. In most cases, private investigators break the rules—often because they are sole proprietors who may not be up to date on the laws they need to follow. In this case, an investigator wanted to find out how much our client had in the bank. Instead of using legal channels, they created a fake check from a made-up company and sent it to our client, hoping they would deposit it and reveal their bank account information. This practice, called pretexting, is illegal.

Fortunately, our client caught the fraud and alerted us. We tracked down the fake check and traced it back to the private investigator’s agency. The investigator admitted to the action, saying they did it routinely, not knowing it was illegal. This led to serious negotiations that ultimately benefited our client. Even if the client would have won the case anyway, this discovery kept them out of legal jeopardy.

Yet another example of legal trouble came from a major Fortune 500 company in the 1990s. The company noticed that confidential information from their board meetings was leaking to the press. The CFO hired a private investigator to obtain the cell phone records of the board members to see who was calling reporters. The investigator illegally obtained the cell phone records, and when the executives confronted the board member responsible, the member filed a complaint. This led to criminal prosecution against one of the executives, and the company had to pay millions in fines.

The takeaway from all these examples is simple: make sure that if you hire a private investigator, you work with someone who is well-versed in the law. Just because you hire an investigator doesn’t mean you are off the hook if something is done improperly. It’s critical to vet your investigator and ensure they are following all applicable laws.