April 21, 2013
Facing the end of his athletic career, a famous sports figure decided to try his hand at movies. He had a good shot at some lead roles and everything seemed to be going his way-but his personal life. A security firm he’d hired found out his girlfriend was not all she claimed to be. She’d been a prostitute, had a substance abuse problem, and those were just the issues they knew about. Feeling he wasn’t in love with her, the actor decided to sever ties.
But his girlfriend wasn’t going to go that easy. She warned him that if he dumped her, she’d run to the tabloids claiming he was drunk and abusive. The fact that it wasn’t true was irrelevant. He saw his promising movie career being jeopardized. He decided to offer her a monetary settlement. He and his attorney invited the woman to lunch in a public place, with his security detail in tow. The attorney offered the woman $500,000 to $1 million if she would sign a cease-and-desist contract and walk away. She suddenly stood up, refused the offer, became irate and started to leave. As the attorney tried to calm her, she grabbed a steak knife and lunged at her ex-boyfriend, slashing the knife in the air near his face. The attorney intervened and was slashed across the arm before the security detail could grab her. She was booked for assault with a deadly weapon. She eventually agreed to a settlement and the actor dropped the charges.
“The attorney earned his keep. And so did we. But it’s an example of how things can really get out of hand,” says Alon Stivi, whose firm, Direct Measures International, provided the sports star’s security.
Stivi, who counts Warren Buffett among his former clients, says he’s dealt with wealthy individuals for almost 20 years, and the biggest challenge for them is knowing whom to trust.
“Us regular people don’t have to worry about that. But once you become ultra-wealthy, especially if you made a fortune or got an inheritance or you invented something, people come out of the woodwork pretending to be your long lost friend, and it can become a serious problem,” Stivi says.
The wealthy walk a minefield, security experts say. From needy relatives and parasitic partners to unstable individuals or employees with ulterior motives (such as a nanny who takes the job to infiltrate their home), the rich are constantly surrounded by people who have the potential to do them harm. And that harm can include everything from identity theft to extortion, even kidnapping.
“Most prominent people, at one time or another-whether they’re from the entertainment or business community or politics-are going to attract the attention of someone who will focus on them more than they would the average person, simply because of their wealth,” says William Besse, an executive director with the security firm Andrews International. “Money has its advantages. But it also attracts an element who may intend to do wealthy people some harm, to take advantage of that celebrity or wealth.”
While affluent people need security, they don’t always need men with dark suits and earpieces standing vigil. What they do need is to screen more and reveal less personal information, according to experts.
One of the biggest leaks in a wealthy family’s security is their children’s Facebook accounts, experts say. Highly sophisticated criminals will prowl the Internet for any information they can get about their target, and Facebook pages are ripe with things like vacation photos and people’s dates of birth. So while the parents in a wealthy family may have a heavy security detail around them, their children may unknowingly be their weakest link.
“A lot of clients don’t really think they’re vulnerable until we actually point things out,” says Dorothy Sarna, senior vice president of Risk Management Services for the Private Client Group at Chartis, which insures one third of the Forbes 400.
Whom To Trust?
It takes time for the wealthy to be able to decipher who is trustworthy and who is not, Stivi says. Some fall back on childhood friends, thinking they can trust the people who knew them before they were rich. But those relationships can sour when the wealthy individual hires a security firm that vets all of her friends and intimate partners. Many clients are reluctant to do background checks on their friends for just that reason, Stivi says.
“They feel that by doing that to another human being, it removes the personal touch. It feels like a business transaction,” he says.
But it’s essential, he says.
“It’s either that or they wind up settling out of court with some dirtbag who meant them no good. And all of that could have been avoided if they were properly screened,” Stivi says.
And that may be the best-case scenario. Kidnapping is actually one of the greatest risks the wealthy face, and it’s often perpetrated by someone they know-someone who has intimate knowledge of their comings and goings. Abductions often occur in locations where the victims feel most secure. About 90% of kidnappings occur within view of the victim’s home or office.
“The people who are closest to them and get to know their routines present their greatest vulnerability, says William Besse, an executive director at Andrews International, a security firm based in Valencia, Calif. “If it’s a high-profile criminal act, a burglary or robbery or kidnapping, the people involved are going to place that target under surveillance, and they’re going to try to learn as much as they can about this person.”
Exxon executive Sidney Reso was abducted from his own driveway in wealthy Morris Township, N.J., in 1992. Tuxedo manufacturer Harvey J. Weinstein was kidnapped in 1993 by a man who worked for Weinstein as a collar maker. Weinstein had just finished his customary breakfast at his favorite diner when he was forced into a car and whisked away. In 2003, billionaire hedge fund manager Eddie Lampert was kidnapped at gunpoint while leaving work. They nabbed Lampert, who at the time owned the $9 billion private investment fund ESL Investments Inc., at his office after seeing that he went in every Saturday and parked in the same spot-the one with his name on it.
“A bunch of guys went onto the Internet to find out who the wealthy people in the area were. Lampert wasn’t at the top of the list, but whoever was had security measures in place, and they felt Lampert was an easier target,” says Frank Rodman, president and COO of Truefort, a New York-based security advisory firm that exclusively services the wealthy.
David Letterman’s painter hatched a plan to kidnap Letterman’s son, a plan that might have come to fruition had the painter’s accomplice not told police about it.
“He had the access and the opportunity. He also happened to have a criminal record that a basic due diligence at the front end might have found,” Rodman says.
Security experts say sophisticated criminals, from kidnappers to ex-KGB agents who are now unemployed and freelancing, use people like domestic help to infiltrate the lives and businesses of wealthy people. Kidnapping isn’t the only crime in which they’ve been involved. Some steal credit card numbers and bank account information, as well as other personal information that allows them to commit identity theft or fraud.
While kidnappings in the U.S. are rare, they are not beyond the realm of possibility, so wealthy individuals should prepare for those as well, security firms say.
“The success ratio of kidnap ransom in the U.S. is very low. But that doesn’t mean you don’t have a few idiots out there wanting to try,” says Ron Williams, a former Secret Service agent who has protected former U.S. presidents from Nixon to Clinton, and now owns his own security firm.
Home invasions are more frequent in the U.S. than kidnappings, Williams says. Over the last two years, Beverly Hills and Bel Air, Calif., have seen a rise in crimes in which wealthy women who have been shopping near their homes are followed back to their houses by gang members, who slip in the gate right behind them. They then rob them in their own garage or driveway and leave.
“They’ll see a woman wearing a Rolex, driving a Mercedes, and they’ll follow her home,” Williams says.
Williams advises his affluent clients to keep a low profile when they go out. People of substantial means should fly under the radar screen-meld into the environment, he says. Drive a Prius instead of a Rolls-Royce and leave the Rolex home, Williams advises.
Kidnapping is actually a greater risk for the wealthy when they travel abroad. Kidnapping rates, internationally, are on the rise, experts say, and it’s being perpetrated across the globe, from organized criminals in Brazil and Russia to drug lords in Mexico, where kidnapping has become a lucrative sideline to the drug business.
In Mexico, Colombia, and Venezuela, there’s also been a rash of so-called “express kidnappings” in the last two years, wherein a taxi driver spots a wealthy individual-perhaps because of her expensive jewelry or shoes-picks her up, but then instead of driving her to her destination, takes her to a remote location where his associates are waiting. The tourist is then forced to go to several ATMs and take money out of her accounts. Some kidnappings are done close to midnight so if the ATM has a daily cash limit, the abductors can wait until after midnight and get another bite at the apple. Afterward, their victims are usually let go.
“It’s pretty easy for the kidnappers. It’s not as much work as having to hold someone for ransom,” says Tim Gaspar, CEO of Gaspar Insurance Services in Encino, Calif.
“Kidnap and ransom” insurers say they are getting as many as two claims a month for express kidnappings, Gaspar says.
Some wealthy individuals have purchased special GPS devices so that if they’re abducted, authorities can track down their signal and find them. BrickHouse Security sells a product called Spark Nano, which is a GPS tracker with a panic button that, if pressed, sends an instant alert to a security company monitoring the device. It sells for $99, plus a monthly fee of about $30 to $40.
Another product is Executrac, which is basically just an app for a BlackBerry smartphone that turns the phone into a GPS device. It also includes a panic button. There’s no monthly fee, outside of the fees already charged by the person’s cell phone carrier.
“We’ve definitely seen an increased interest in the panic button feature,” says Todd Morris, president of BrickHouse Security in New York. “People are traveling internationally, leaving their children behind. They want to know that when they’re gone in Europe, if their kids have trouble, they can push a button and get help.”
Practically speaking, the Spark Nano makes more sense, Morris says, because the first thing a kidnapper does is throw his victim’s cell phone away. The Spark Nano device, on the other hand, is a tiny device that can be easily hidden. One can keep it in his or her pocket and depress the panic button without anyone noticing. Also, the battery lasts five to seven days.
In general, security experts say the less public information out there about an individual, the less vulnerable he is. That’s why they recommend that wealthy people do not register their homes, cars, boats, planes or any other significant assets in their own name, or under their home or company address.
A good security firm will do a Google search on its client to see how much and what type of information comes up. The firm can then contact the disseminators of the information to make sure it is removed from public view.
If the client has an airplane, for example, it should not be named something that would easily identify the aircraft’s owner, experts say. If you’re Oprah Winfrey, you don’t register your airplane under the name “Harpo, Inc.” Anyone looking at an airplane’s aviation records can tell which planes are coming and going from the small airports, and with that information they can determine who is likely to be flying in and out.
Most security firms will do a basic risk assessment of their client to determine where the holes are. They look at the individual’s public profile: the level of his public prominence, the issues surrounding him in the public domain, the likelihood he will attract unwarranted attention. Those working in the financial sector, for instance, are vulnerable these days because so many people have lost their jobs, while those on Wall Street seem to be doing fairly well. Indeed, Dick Fuld, the former CEO of Lehman Brothers, was punched in the face while working out at Lehman Brothers’ gym, just after the firm announced it was going bankrupt. AIG executives had protesters picketing outside their homes after their bonuses were announced.
A corporate communications employee at one financial firm says she spent half a day on the telephone pleading with The Wall Street Journal not to publish a photo of one of the firm’s bankers if the paper was also going to publicly reveal the amount of his bonus. Some fear the fallout if New York Attorney General Andrew Cuomo makes good on his threat to release bankers’ bonus amounts if he is elected governor.
“There could be laid off employees, because of the poor practices of a particular company, and yet employees see the heads of those companies getting hundreds of thousands of dollars in bonuses. That can make those people who received bonuses potential targets,” says Philip Farina, CEO of Farina and Associates, a Miami-based security firm that specializes in travel and hospitality. It’s changed the mentality on Wall Street. Where some in the financial sector used to strut their accomplishments and wealth, many would now rather lay low, security sources say.
It’s not just executives in financial services who are potential targets. Farina knew a corporate officer at a non-financial services company who began receiving death threats at her home from a disgruntled employee who’d been let go years earlier. The employee was identified before he was able to carry out those threats.
“Some people just wake up one day and say, ‘This is the day I’m going to do something,’ ” Farina says.
ABP World Group Risk Management
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