Security

SECRET SERVICES

A Private Eye Has Found A Lucrative Niche Helping Entrepreneurs
Protect Secrets, Bust Embezzlers, And Keep Scandals Out Of The Press

NEW YORK-The entrepreneur, the owner and CEO of a small financial
services company in New York City, was distraught. His son, who was
in his 30s, had been hooked on cocaine and heroin for years. He would
not return phone calls from his family. The father had spent a small
fortune to hire addiction experts to help his son, but every effort
had failed. He feared that his son would either overdose or get
arrested and damage the reputation of the family business, which the
CEO's grandfather had started. Finally, another CEO suggested that
the entrepreneur call Robert Strang, head of
(http://www.investigativemanagement.com/staff.asp)Investigative
Management Group, a private-investigation firm in New York City adept
at keeping family scandals out of the press.

The private detective acted quickly, moving the troubled son by
private jet to Los Angeles and away from his circle of drugged-out friends.

Strang even put a psychiatrist onboard ready to prescribe drugs to
help the addict through withdrawal. Once on the West Coast, Strang
hired the son a lawyer, provided a 24-hour support team, and
eventually enrolled him in a detox program.

After kicking his addiction, the son started his own company. Four
years later he is still running it.

While not all of Strang's cases turn out so happily, he has done well
enough to cut himself a lucrative, fast-growing niche handling sticky
problems for entrepreneurs, corporate titans, and other wealthy clients.

When Strang, 49, with his business partner, Ann Hayes, 46, both
retired DEA agents, started Investigative Management Group in 2003,
they knew they needed to stand out in a crowded field.

The answer: white-glove service-at a price-and strict confidentiality.

With their preppy good looks and understated, country-club style,
Strang and Hayes blend seamlessly into the world of their clientele.
Hayes favors ladylike floral suits, speaks with a South Carolina
twang, and has a warm, confiding manner that undoubtedly puts clients
at ease. Strang, a native of New Jersey with a self-deprecating sense
of humor, is able to fraternize with not only downtrodden drug
abusers but also prestigious executives.

The detective business is divided among big firms like
(http://www.krollworldwide.com)Kroll, which do anti-terrorism and
fraud-prevention work for Fortune 500 clients, and tiny, one-person,
Philip Marlowe-type offices.

According to the U.S. Bureau of Labor Statistics, 10,000
self-employed private investigators operate in the U.S., many of them
retired law-enforcement agents.

More than a few, however, fail because of increasing competition from
big security firms, which have been on a growth spurt and a hiring
spree (see chart). Others fall prey to poor financial practices. In
Indiana, for example, about half of private eyes don't renew their
licenses two years after seeking them, and the case is similar around
the country, says Don Johnson, editor of PI Magazine: Journal of
Professional Investigations and owner of Trace Investigations in
Bloomington, Ind. Often detectives don't know how to survive if major
clients are slow to pay the bill for an investigation. "It's a lot
more than working on a case," says Johnson. "You have to treat it as
a business."

But before they launched IMG, Strang and Hayes already had years of
experience running a private-investigations firm. In 1989 they
started Strang Hayes Consulting, which they sold in 2001. During
those years they built relationships with many wealthy clients-from
the owners of sports teams to major retailers.

Before long the two discovered that in addition to needing routine
services such as building-security and travel-safety consulting, some
clients had problems that few firms were equipped to handle. They
ranged from a mentally ill son's refusal to take his medication to
untrustworthy employees who steal sensitive information about the
entrepreneurs' businesses.

When Strang kept hearing that many entrepreneurs didn't trust
mainstream private-investigation firms, some of which routinely leak
information on cases to the media in a quest for publicity, he and
Hayes decided to start Investigative Management. By offering to
tackle delicate situations with a heightened level of discretion, the
pair found a steady supply of work from clients who were well
equipped to pay their bills on time. "Most of our cases are
referrals," says Strang. "People who call us are already comfortable
because someone in their circle has recommended us." Two years after
the company's founding, Strang says, the 25-employee firm is making a
profit on annual sales of more than $5 million.

To be sure, Investigative Management Group's services aren't for everyone.

The tab for a case that requires several months of surveillance and a
team of medical, legal, and computer forensics experts can easily run
into the low six figures.

The problems that entrepreneurs ask Strang to solve often involve
idea theft by a trusted executive, or false accusations by an
unstable employee, or outsiders seeking to extort money.
"Entrepreneurs are optimists," says Strang. "When they find someone
who shares their vision and can help them succeed, they overlook some
red flags along the way." One time a CEO hired the firm to check out
the past behavior of an employee who had falsely accused him of
sexual harassment. Relying on his field detectives-most of whom are
former law-enforcement agents-Strang uncovered a slew of data that
had never turned up when the company initially hired the complaining
employee. "We were able to determine that she had a history of
litigation and hospitalization." That information, when revealed to
the accuser, was enough to end her complaints. "We were able to
defuse a potential litigation against our CEO," says Strang.

In another case, an entrepreneur suspected that a key executive at
his medical technology company was trying to leave to start his own
firm. There was no smoking gun, but Strang trusted the entrepreneur's
gut instinct. "Usually entrepreneurs in these businesses-people who
live and breathe the business-almost have a sixth sense that tells
them something is wrong," says Strang. By sending a digital forensic
unit into the company at night to gather data from the employee's
computer and by having undercover detectives shadow him through city
streets so that they could overhear his private conversations, Strang
and his team were able to confirm the entrepreneur's worst suspicions.

There are times, however, when companies need to involve law
enforcement in their problems, no matter how much they would prefer
having an investigator handle the situation quietly.

If there is clear evidence, say experts, that a crime such as drug
dealing or inventory theft has taken place in the workplace, it must
be reported to the police. "The client has to protect himself from
liability," says Johnson, of PI Magazine. "And part of that liability
would be not reporting a crime." So while private eyes can solve some
sticky problems, it's best to leave justice to the pros.