A senior executive can look exceptional on paper.

The résumé is accurate. The employment history checks out. The references are excellent. There are no obvious regulatory problems, significant lawsuits, or alarming criminal records.

But a background investigation primarily tells you what has already been documented.

Surveillance can tell you what the person is actually doing.

That distinction can matter when conducting due diligence on a CEO, founder, senior executive, managing partner, investment manager, board candidate, prospective business partner, or anyone else entrusted with substantial money, authority, confidential information, employees, and the reputation of an organization.

Consider businessman John A. Terris Sr.

Terris had operated a Padgett Business Services franchise for approximately 20 years. After the franchise relationship ended, he represented that he had retired and was no longer meaningfully involved in a competing bookkeeping and tax business established by his wife.

Padgett hired a private investigator.

The investigator entered the competing business posing as a prospective customer. According to U.S. District Judge Clay D. Land, the resulting audio and video evidence showed Terris working from an office, acting in a managerial capacity, and attempting to bring the purported customer into the competing business. Judge Land found that Terris had provided untruthful testimony on material issues. [R1]

That information was not sitting in a criminal-record database or corporate filing.

Someone had to observe what was actually happening.

That is the purpose of due diligence surveillance: to examine the gap between what records and representations tell you and what is occurring in the real world.

What Is Due Diligence Surveillance?

Due diligence surveillance is targeted professional surveillance conducted to answer a legitimate question relevant to a business, investment, governance, employment, or litigation decision.

It is not simply following someone around and waiting for something embarrassing to happen.

A properly designed surveillance investigation starts with a question.

For example:

• Is an executive actually operating an undisclosed outside business?
• Is a prospective partner spending substantial time somewhere inconsistent with what investors have been told?
• Is a senior executive maintaining an undisclosed relationship with a vendor, competitor, employee, litigant, or other person relevant to company decisions?
• Is an executive still involved with a business from which they claim to have separated?
• Is company property being used for another enterprise?
• Does a supposedly substantial business operation actually appear to exist as represented?
• Are allegations about an executive’s behavior supported by observable facts?
• Does the executive’s lifestyle or conduct create a material reputational risk for the company?

Records research can develop the intelligence.

Surveillance can test it.

What Surveillance Can Reveal That a Background Check Cannot

Traditional executive due diligence is essential.

It may include criminal records, civil litigation, bankruptcies, liens, regulatory actions, corporate affiliations, professional licenses, employment history, educational verification, property records, news coverage, social media, business relationships, and other open-source intelligence.

But those sources generally depend on information already existing somewhere.

Surveillance examines current behavior.

Suppose an executive tells a board that he has completely separated himself from another company. Corporate records confirm that his name was formally removed months ago.

On paper, the issue appears resolved.

But surveillance repeatedly documents him arriving at the company’s office, remaining for several hours, and meeting its principals.

That does not automatically prove misconduct.

It does establish a contradiction that deserves explanation.

The same principle applies to relationships, outside businesses, use of company resources, actual work patterns, and the physical operation of a company.

A database can tell you what someone owns on paper.

Surveillance may tell you where that person spends Tuesday afternoon.

Those are different forms of intelligence.

A Clean Record Does Not Mean There Is No Undiscovered Conduct

Criminal-record research is important, but it has obvious limitations.

If an executive has no significant criminal history, that means no significant criminal record was identified within the sources and jurisdictions searched.

It does not prove that the person has never committed a crime.

People commit fraud before they are prosecuted for fraud. People steal before they are arrested. Illegal transactions can occur for years without creating a public record.

The same principle applies to noncriminal conduct.

An executive can have a completely clean criminal history while concealing conflicts of interest, secretly operating another business, misusing corporate resources, repeatedly deceiving a board, associating with individuals who create serious business exposure, or engaging in lawful but highly compromising behavior.

An investigator should never infer criminality from ambiguous observations.

But a company should also avoid assuming that “nothing came back” means “nothing is happening.”

Surveillance is one of the few investigative tools capable of examining that gap.

The Public Executive and the Private Reality

Senior executives often have carefully managed public identities.

Their biographies are professionally written. Their public appearances are controlled. Their social-media profiles are curated. Their references generally know them professionally.

That public image may be completely accurate.

But it does not necessarily reveal how the person behaves outside that environment.

Surveillance may establish that an executive routinely spends time at an undisclosed company, repeatedly meets people whose relationship has been denied, uses company resources for outside activity, maintains undisclosed conflicts, or engages in public behavior substantially inconsistent with the image being presented to investors, employees, customers, or a board.

This does not mean every unusual aspect of an executive’s personal life is relevant.

The issue is materiality.

Would the conduct reasonably affect the individual’s judgment, honesty, conflicts of interest, fiduciary obligations, susceptibility to coercion, ability to perform the position, leadership credibility, or the reputation of the company?

If not, it may simply be private.

If so, it can become legitimate due diligence.

An Executive Can Embarrass a Company Without Committing a Crime

Corporate risk does not begin and end with criminal conduct.

An executive may engage in completely lawful behavior that would nevertheless cause serious problems if it became public.

This matters most when the executive is closely associated with the company itself.

A CEO may appear in investor presentations, media interviews, conferences, recruiting materials, charitable initiatives, customer meetings, and public statements about the company’s values.

Employees may view that executive as the embodiment of corporate culture.

Investors may have committed capital partly because they trust that person’s judgment.

The board has effectively vouched for the executive by placing them in authority.

Under those circumstances, the executive’s reputation and the company’s reputation can become difficult to separate.

The concern might involve repeated dishonesty, reckless public behavior, serious substance-related conduct, compromising associations, undisclosed relationships affecting business decisions, or another pattern that could produce substantial reputational damage.

The question is not whether an investigator approves of the executive’s lifestyle.

The question is:

Could this conduct materially affect the company if it became known?

If the answer is yes, it may be relevant to executive due diligence.

Real Example: Surveillance Contradicted John Terris’s Representations

The SmallBizPros v. Terris case provides an unusually clear example.

John Terris represented that he had retired following the termination of his Padgett Business Services franchise.

A competing business had been established by his wife, but Terris portrayed his involvement as minimal.

Padgett retained a private investigator, who entered the business posing as a prospective customer.

Judge Clay D. Land found that the resulting recording showed Terris working from an office, acting in a managerial capacity, and attempting to bring the purported customer into the competing business. [R1]

The court also discussed a website associated with the competing company. After references to Terris supposedly disappeared, the site listed a person called “John Alvin” whose qualifications tracked Terris’s professional biography. Judge Land concluded that the listing actually referred to John A. Terris Sr. [R1]

The lesson is straightforward.

Contracts established what Terris was prohibited from doing.

Records provided background.

Surveillance showed what he was actually doing.

Real Example: Employees Secretly Building a Competing Business

The Texas case Wooters v. Unitech International, Inc. illustrates a different type of investigative problem.

Unitech International operated in the offshore and subsea oil-and-gas industry.

Chris Kutach worked as a service manager. Jason Pennington worked as a sales manager.

According to the Texas First Court of Appeals, company founder Bernt Hellesøe became suspicious after discovering evidence that someone had tampered with his office door.

He retained private investigator John Moritz.

Moritz installed investigative audio and video equipment at the office. The investigation captured Kutach discussing confidential company information and plans for a competing company, Infinity Subsea. The court also described communications and activity involving the competing enterprise while Kutach and Pennington were still employed by Unitech. [R2]

After they were terminated, Moritz conducted forensic examinations of company computers and phones and recovered files and other information relevant to the dispute. He later arranged a recorded meeting involving an individual posing as a prospective investor in Infinity Subsea. [R2]

Before the investigation, their official titles still said:

Service Manager.

Sales Manager.

Those titles did not reveal the activity developing underneath them.

The investigation did.

Surveillance Can Establish Relationships That Records Cannot

One of the most valuable things surveillance can establish is also one of the simplest:

Who is actually meeting whom?

Formal corporate records may show no connection between two people.

Social media may reveal nothing.

Both individuals may deny a meaningful relationship.

But repeated surveillance may establish that they meet regularly.

That fact alone does not prove wrongdoing.

Suppose a senior purchasing executive repeatedly meets the owner of a vendor before major contracts are awarded. There may be an entirely legitimate explanation.

But if the relationship was previously denied or undisclosed, the observation creates a reason to investigate further.

Researchers can then examine business histories, family relationships, property ownership, prior employment, corporate entities, litigation, shared addresses, and other connections.

Surveillance provides the observable relationship.

Research provides context.

Together, they may reveal something neither source could establish alone.

Real Example: The Executive Responsible for Enforcing Company Policy

A published investigation by the Office of the Privacy Commissioner of Canada involved the Vice President of Human Resources of a trucking company.

The regulator did not publicly name the individuals.

The VP was responsible for enforcing employment policies. Management began receiving reports that he was involved in a relationship with another employee under circumstances potentially implicating the company’s conflict-of-interest policy.

Management questioned him.

He denied the relationship repeatedly.

The company eventually hired a private investigator.

According to the Privacy Commissioner’s findings, the investigator followed the VP after he left the company’s facility and observed him at a residence different from the address the company had on file. Surveillance documented both employees entering and leaving that residence, while property-related research provided additional corroboration. [R3]

The surveillance lasted approximately five days.

When management confronted the VP with information indicating that he and the other employee were residing together, the discussion included his responsibilities as Vice President of Human Resources and the expectation that he uphold company policies and values.

He subsequently resigned. [R3]

The significance was not merely a personal relationship.

It was the discrepancy between what a senior executive responsible for enforcing company policy repeatedly told management and what the investigation established.

A criminal background check could not answer that question.

Surveillance could.

Surveillance Can Verify Whether a Business Is Really Operating as Represented

Due diligence surveillance is not limited to following people.

It can also examine businesses.

Imagine an investor considering a multimillion-dollar investment in a company that claims to operate a substantial facility.

The website looks impressive.

Management provides photographs.

Financial materials suggest substantial operations.

The investor receives a carefully organized tour.

But what happens on an ordinary day when no investor is expected?

Field surveillance can document observable activity such as:

• employee arrivals and departures;
• customer traffic;
• commercial vehicles;
• deliveries;
• apparent staffing;
• movement of inventory;
• hours of operation; and
• activity at related facilities.

One quiet afternoon proves very little.

But repeated observations that are dramatically inconsistent with the company’s representations may justify deeper investigation.

Sometimes the most useful due-diligence tool is simply an experienced investigator watching what actually happens.

Surveillance Can Reveal How an Executive Actually Uses Their Time

Time itself can be material.

An organization may compensate an executive hundreds of thousands or millions of dollars a year because it expects that person’s professional attention to be devoted substantially to the company.

Suppose credible information suggests otherwise.

An executive may represent that they work primarily from one location while repeatedly spending substantial portions of the week somewhere else.

A founder may claim full-time commitment to a company while operating another enterprise.

An executive may say involvement with another business ended months ago while continuing to visit it routinely.

Surveillance can help identify whether such activity is isolated or forms a pattern.

That distinction matters.

A single visit usually proves very little.

Multiple observations, developed intelligently and combined with records research, can reveal considerably more.

Reputational Risk Can Become Financial Risk

There is empirical evidence that misconduct involving senior executives can have consequences beyond the individual.

Finance professors Brandon N. Cline, Ralph A. Walkling, and Adam S. Yore examined managerial misconduct in their peer-reviewed study “The Consequences of Managerial Indiscretions: Sex, Lies, and Firm Value,” published in the Journal of Financial Economics. [R5]

Their research found that disclosure of personal managerial indiscretions was associated with deterioration in shareholder wealth and operating performance, loss of business relationships, increased shareholder litigation, and other adverse consequences. [R5]

The point is not that every embarrassing incident produces those results.

It is that customers, investors, employees, counterparties, and markets may interpret information about a senior executive’s judgment or integrity as information about the company itself.

That is why executive reputational risk is not merely a public-relations concern.

It can become a business concern.

Executive Conduct Also Shapes Corporate Culture

There is another reason the conduct of senior executives matters.

Employees watch leadership.

The U.S. Department of Justice Criminal Division’s Evaluation of Corporate Compliance Programs, updated in September 2024, specifically instructs prosecutors to evaluate “Conduct at the Top.” [R4]

The DOJ asks whether senior leaders model ethical behavior, whether management tolerates increased compliance risks in pursuit of revenue, whether leaders encourage unethical conduct to achieve business objectives, and whether investigations into misconduct are appropriately independent, objective, scoped, and documented. [R4]

Researchers Lee Biggerstaff, David C. Cicero, and Andy Puckett reached a related conclusion in “Suspect CEOs, Unethical Culture, and Corporate Misbehavior.”

Their research found higher levels of corporate misconduct among firms led by CEOs who personally benefited from options backdating, with results consistent with senior executives influencing corporate culture. [R6]

That does not mean every questionable personal decision predicts corporate misconduct.

It means the behavior of the person at the top cannot always be separated neatly from the organization beneath them.

Personal Conduct and Professional Conduct May Not Be Completely Independent

A 2019 study by John M. Griffin, Samuel Kruger, and Gonzalo Maturana, “Personal Infidelity and Professional Conduct in 4 Settings,” explored whether a particular measure of private conduct correlated with professional misconduct. [R7]

The researchers used data associated with the Ashley Madison breach and compared it with misconduct in several professions.

Among their findings, companies whose CEOs or CFOs appeared among the users studied were more than twice as likely to be associated with corporate misconduct. [R7]

The study does not establish that infidelity causes corporate misconduct.

It should not be interpreted that way.

Its relevance is narrower: the data provided evidence that personal and professional conduct may not always be completely independent.

For executive due diligence, that is worth understanding.

But due diligence surveillance is not “infidelity surveillance.”

Relationships are only one possible category.

More often, the important issues involve undisclosed businesses, conflicts, misuse of company resources, customer diversion, competing employment, unexplained associations, reputational exposure, discrepancies in business operations, or other conduct relevant to a legitimate corporate decision.

Good Surveillance Is Intelligence-Driven

The strongest surveillance investigations generally begin before an investigator enters the field.

Suppose a client believes an executive is operating an undisclosed competing business.

Research may first identify:

• possible corporate entities;
• operating addresses;
• known associates;
• historical relationships;
• vehicles;
• websites;
• archived websites;
• litigation;
• professional licenses; and
• other relevant intelligence.

Surveillance can then answer the unresolved questions.

Does the executive actually go there?

How often?

Who else appears?

What activity occurs?

Does a pattern develop?

The observations may then generate additional names, businesses, vehicles, or locations that require further research.

The investigative cycle becomes:

Research → Intelligence → Surveillance → Corroboration → Assessment

That is considerably more effective than simply following someone without a defined objective.

Sometimes the Most Important Finding Is a Contradiction

Significant due-diligence findings are not always crimes or dramatic revelations.

Sometimes they are contradictions.

The executive says one thing.

Surveillance shows another.

A subject says they have no involvement with a business.

They are repeatedly observed there.

Someone denies a meaningful relationship.

Investigators document repeated meetings.

A company describes a substantial operating facility.

Observation shows very little activity.

None of those facts automatically establishes fraud or wrongdoing.

But they create an important question:

Why is what we are observing different from what we were told?

That question can be more valuable than finding another old record in a database.

Surveillance Can Also Disprove Allegations

Professional surveillance should not start with the assumption that the subject has done something wrong.

Sometimes it produces the opposite result.

A company may receive an allegation that a senior executive spends several afternoons every week operating another company.

Surveillance may confirm it.

Or it may establish that the executive goes exactly where they said they go and that the allegation is unsupported.

That can protect both the executive and the organization from acting on bad intelligence.

The purpose of surveillance is not to manufacture adverse information.

It is to establish facts.

Professional Surveillance Must Be Lawful and Proportional

Investigators should understand the legitimate purpose of the investigation, the questions being answered, the relevance of the observations, alternative explanations, applicable legal restrictions, and when the investigation has accomplished its objective.

California law expressly recognizes investigations involving conduct, activity, movement, associations, reputation, and character as private investigative work.

California Business and Professions Code § 7521 includes obtaining information concerning a person’s habits, conduct, business, occupation, honesty, integrity, credibility, trustworthiness, activity, movements, whereabouts, affiliations, associations, transactions, acts, reputation, and character. [R8]

That does not make every surveillance technique lawful or appropriate.

Privacy, trespass, recording, employment, consumer-reporting, harassment, and other laws may apply depending on the facts.

Professional surveillance should document legally observable activity relevant to a legitimate investigative purpose.

The Higher the Position, the Greater the Consequences

The level of due diligence should reflect the stakes.

A senior executive may control millions of dollars.

They may approve acquisitions, select vendors, control sensitive information, manage relationships with investors and regulators, oversee internal investigations, hire senior personnel, and influence the strategic direction of the organization.

They may also become the public face of the company.

The consequences of misunderstanding that person can therefore be enormous.

A résumé tells you what someone represents about themselves.

Public records tell you what has been documented.

References tell you what other people know.

Open-source intelligence tells you what can be discovered publicly.

Surveillance can show you what the person is actually doing.

No single investigative method provides a complete picture.

But for certain high-stakes decisions, surveillance can provide information that cannot realistically be obtained any other way.

Due Diligence Surveillance in Los Angeles

LA Intelligence conducts executive due diligence investigations, corporate investigations, background investigations, and professional surveillance in Los Angeles, Beverly Hills, and throughout Southern California.

Our approach is intelligence-driven.

Depending on the matter, an investigation may combine public records, corporate and litigation research, investigative databases, open-source intelligence, interviews, field investigation, and discreet professional surveillance.

The objective is to identify meaningful discrepancies, verify material representations, document relevant conduct, and provide clients and counsel with objective information that supports better decisions.

When significant money, authority, confidential information, or corporate reputation is being placed in one person’s hands, a background investigation can answer important questions.

But sometimes the most important question is much simpler:

What is actually happening?

Source References

[R1] SmallBizPros, Inc. d/b/a Padgett Business Services v. John A. Terris, Sr., U.S. District Court for the Middle District of Georgia, Civil Action No. 3:14-CV-34 (CDL), Preliminary Injunction Order, June 10, 2014, U.S. District Judge Clay D. Land.
The order describes John A. Terris Sr.’s representations that he had retired, Padgett’s use of an investigator posing as a prospective customer, audio and video evidence of Terris working in the competing business, the “John Alvin” website listing, and the court’s findings regarding Terris’s continuing involvement and testimony.
URL: https://law.justia.com/cases/federal/district-courts/georgia/gamdce/3%3A2014cv00034/92234/17/

[R2] Tim Wooters v. Unitech International, Inc., Texas First Court of Appeals, No. 01-15-00174-CV, Opinion issued January 26, 2017.
The opinion describes Unitech founder Bernt Hellesøe’s retention of private investigator John Moritz, investigative audio and video, Chris Kutach and Jason Pennington’s activities involving proposed competitor Infinity Subsea, forensic examinations of company devices, confidential business information, and a recorded meeting involving a purported prospective investor.
URL: https://law.justia.com/cases/texas/first-court-of-appeals/2017/01-15-00174-cv.html

[R3] Office of the Privacy Commissioner of Canada, PIPEDA Case Summary #2007-388, “Personal relationship between two employees triggers covert video surveillance by employer and raises consent issues,” November 2007.
The published findings describe a trucking company’s investigation of its Vice President of Human Resources, his repeated denials concerning a relationship with another employee, the company’s use of a private investigator, surveillance at a residence, corroborating property research, and the executive’s subsequent resignation.
URL: https://www.priv.gc.ca/en/opc-actions-and-decisions/investigations/investigations-into-businesses/2007/pipeda-2007-388/

[R4] U.S. Department of Justice, Criminal Division, Evaluation of Corporate Compliance Programs, updated September 2024.
The DOJ guidance addresses “Conduct at the Top,” executive modeling of ethical behavior, management tolerance of compliance risks, corporate culture, board oversight, and the importance of properly scoped, independent, objective, and documented investigations.
URL: https://www.justice.gov/criminal-fraud/page/file/937501/dl

[R5] Cline, Brandon N.; Walkling, Ralph A.; and Yore, Adam S., “The Consequences of Managerial Indiscretions: Sex, Lies, and Firm Value,” Journal of Financial Economics, Vol. 127, Issue 2, 2018, pp. 389–415.
The peer-reviewed study examines personal managerial indiscretions and their associations with shareholder wealth, operating performance, business relationships, litigation, regulatory scrutiny, and executive careers.
URL: https://www.sciencedirect.com/science/article/pii/S0304405X17302969

[R6] Biggerstaff, Lee; Cicero, David C.; and Puckett, Andy, “Suspect CEOs, Unethical Culture, and Corporate Misbehavior,” Journal of Financial Economics, Vol. 117, Issue 1, 2015, pp. 98–121.
The study examines relationships between CEO behavior, options backdating, corporate misconduct, and organizational culture.
URL: https://www.sciencedirect.com/science/article/abs/pii/S0304405X14002608

[R7] Griffin, John M.; Kruger, Samuel; and Maturana, Gonzalo, “Personal Infidelity and Professional Conduct in 4 Settings,” Proceedings of the National Academy of Sciences, Vol. 116, Issue 33, 2019, pp. 16268–16273.
The study examines associations between a measure of private conduct and professional misconduct across several professional settings, including corporate executives.
URL: https://pmc.ncbi.nlm.nih.gov/articles/PMC6697898/

[R8] California Business and Professions Code § 7521, Private Investigators.
The statute defines private investigative work to include obtaining information concerning a person’s habits, conduct, business, occupation, honesty, integrity, credibility, trustworthiness, activity, movement, whereabouts, affiliations, associations, transactions, acts, reputation, and character.
URL: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=7521.&lawCode=BPC