Home again safe and sound. Showered and ready for action. Trip details to follow, for those who are interested. Regular Daily Caveat posts should resume on Monday...

-- MDT

Hong Kong left behind, we're currently hidden away at the southern end of Coloane Island, one of three major islands making up the former Portuguese colony of Macau, situated just of the coast of China and only hour ferry ride from our last berth on the Kowloon side of HK.

Macau is now independent but retains a great deal of its colonial architecture and character. In rambling about the hilly, narrow streets of old downtown you run across plazas (or more acurately, largos) that closely resemble the squares, and fountained alcoves of Barrio Santa Cruz in Sevilla, Spain (apologies, as my travels haven't led me to Portugal yet, so this would be my closest first-person comparison). Standing close upon these squares (and European-style churches, government buildings, etc.) we found a bustling array of Chinese adn Maccanese shops and foodstalls as well as high-fashion joints selling fancy furniture and country club attire.

Curiously, the place feels much more overly Chinese than Hong Kong, which we found more akin in feel to sea-side New York City or London, with global brands dominating everthing almost completely except dcuisine . The one thing that thoroughly places Hong Kong culturally is food, where local, dodgy looking noodle and dumpling shops compete cheek and jowl with all the big international chains. However, that said, I can confess to having been the only foreigner in a crowd of enthusiastic locals grabbing a quick bite at a conveniently located KFC. DON'T JUDGE - I was desperate. And fried chicken is good in any language.

Macau is also a more hopping gambling locale than Las Vegas, with some $6 billion spent here on gaming last year. The country is currently going through the family-friendly, mega-resort changes that Las Vegas has already experienced, with twins of popular Vegas attractions like The Sands, The Venetian and The Wynn popping up alongside local joints like The Golden Dragon or the Lisboa. You can also take in the dog track, go-karting, Grand Prix racing or the new Fishermans' Warf complex, which, with the paint not even yet dry, feels like a Disney attraction - an Epcot Center for Asia with mini versions of ancient Egypt, a volcano, Portugal, New Orleans and Miami (how these particular locations came together, I'll never know - continental drift, perhaps?).

Frankly, I love it here. Macau is the most charming spot I've seen accross three countries and ten thousand miles or so of travel. Getting around the islands is easy, the people are generous and kind, the scenery - both urban and rural - is amazing; the food, exceptional. And today, I (poorly but enthusiastically) winged 120 golf ball into the Ocean, walked on a black sand beach and also, found a family of wormy, germy, bedraggled beach cats with which to be friends. These are things vacations are made of...

Catch you again back in Hong Kong.

-- MDT

Labels: China, Macau, travel

Writing from an internet cafe in Hong Kong's central distrcit. Just visited The Peak and the Victoria Gardens at the summit. A long hot slog.

Got lost trying to get lunch at Gunga Dins and found my way, tired sweaty and and panting. Shortly heading back to Kowloon via ferry for a shower, a nap, dinner and perhaps the markets on Temple street.

Already miss the wonder that was Singapore, but looking forward to getting to know Hong Kong better.

Love the television here. I could watch it all day...

-- MDT

Jeremy Crook, late of Peregrine Systems and currently facing trial in San Diego after being extradited to the U.S. to answer for fraud charges relating to Peregrine's collapse, put up the $250,000 necessary for his bond but found himself back in jail soon after.

The reason? His illegal alient status. While it is unclear who tipped off the I.N.S. *wink*, Crook was barely able to savor his brief taste of freedom before being excorted back to a cell as an illegal alien... Crazy times we live in. More here.

And in vacation news, I got to pet a kangaroo today at the ridiculously cool Singapore Zoo.

Tonight - fireworks!

Tomorrow, a jungle tour.

Currently...tea and bisquits and the internet.

-- MDT

Labels: Peregrine Systems

Just a quick hello from the exec. lounge at the RC in lovely Singapore. Will be posting occaisional updates from the road, and no doubt a full-on travellog when we get back. White collar crime never takes a vacation but sometimes The Daily Caveat does.

A few more days here and then we're off to Hong Kong and Macau.

-- MDT

The recent extradition and pending trial of the NatWest three in Texas brought significant attention to an agreement recently signed between the U.S. and U.K. governments. The purpose of the treaty is, ostensibly, to speed the transfer of terror suspects between the two nations, thus its employ in pursuit of white collar criminals has been somewhat controversial.

Another British businessman has joined the list of those extradited to the U.S. to face charges in U.S. courts, the unfortunately named Jeremy Crook. Crook is a former V.P. with Peregrine Systems, which imploded in a major fraud scandal backin 2001. Crook has reported to San Diegofor the Peregrine fraud trial and his ultimate fate is as yet unknown.

More on Crook's case, here.

-- MDT

Labels: Enron, NatWest Three, Peregrine Systems

At least that's the tale that Steve Jobs is telling. He had this to say in an interview conducted in connection with Apple's recent Showtime event, which debuted several new products and solidified Apple's move into digital downloads of feature films, via the company's juggernaut iTunes store:

"We're mostly focused on our own house right now," Jobs told CNBC in an interview broadcast on Tuesday. "And we're not under investigation by the SEC or anyone else."

"But we did discover -- you know with all the press around this -- we started our own investigation and we did discover some irregularities and we're letting that investigation have its due course," he said. "And it will be completed in the not too terribly distant future."

Jobs added that Apple is "not really talking about it until that investigation is done," just to give the investigators "the benefit of doing a completely independent investigation."

More here.

-- MDT

Labels: Apple

Perilocity is the online home of John Quarterman, RiskMan, if you will. His blog focuses on a broad range of issues including technology, data security and risk management. Ahhh....these are a few of my favorite things. Give a look when you have the time. I know I'll be a regular reader.

-- MDT

Patricia Dunn has already announced that she'll step down from her role as HP's Chairman at the start of '07, in the wake of the pretexting hullabalu that has exploded in the national press over the last week or so. Dunn will apparently remain on the HP board (we'll see if that sticks) and the company is girding itself for a closer look from state and federal authorities. The state of California, for its part, has already begun an investigation and recently announced that it has sufficient evidence to charge HP brass.

Also, since we last checked in on the story, the investigative firm hired by HP's has been outed by the New York Times, Boston-based Security Outsourcing Solutions, although published reports have also indicated that S.O.S. (the irony) hired subcontractors to do the actual impersonating...

-- MDT

Labels: HP

This recent Pittsburgh Post Gazette article has the details...

As usual, I am always somewhat surprised by what firms get mentioned in these types of articles on corporate investigations. Sure there are the usual suspects, like Kroll, which deserves by virtue of its sheer size, mention in any such article. However, there are always firms I'm unfamilair that show up, while other prominent and well known players don't merit a mention. The article is interesting, to me at least, in these sense that it shows how quickly new investigative turf can become commoditized.

Most of the firms featured in the article as gp-to Hedge Fund vetters do what I think of (perhaps unfairly) as "chop shop" style work. These types of vendors do a volume-based business, predominately operating on a stripped down check list approach to investigation. Rather than trying to be truly comprehensive, they work on the law of averages that nine times out of ten their cut-rate, limited approach won't miss any outlying or obscure details that would be an issue for their clients.

Now based on my background, I am simply biased against this approach. But then, from my first day in the business I was steeped in the practice of "bespoke" investigations, each project and budget tailored for the specific needs of the client. Now, certainly I've worked on a shoestring from time to time and overperformed for the sake of retaining a client who might beget more work, but I'll never be convinced that a checklist is the best way to conduct an investigation.

Then again, these firms appear to be doing quite well. Clients? They like checklists. And they like cheap, too.

-- MDT

Labels: background checks, Kroll

Diligence, LLC. has apparently settled charges that the firm interfered in a corruption probe conducted by the Bermudan government and KPMG FAS into the activities of the Bermuda-based IPOC International Growth Fund. (Read a little background).

KPMG brought their suit in DC District Court last year, alleging that Diligence had used bribery, deception, and computer hacking in order to get their hands of confidential information about an ongoing government inquiry into possible money laundering by the IPOC.

Another related civil action had also been filed against Diligence and law firm, Barbour Griffith & Rogers, which purportedly hired Diligence to do the snooping on behalf of LV Finance Group, a Russian firm that had been engaged in a long legal battle with IPOC.

According to that complaint, private investigators from Diligence posed as intelligence agents for the US and British governments (bit of a no-no, there) in order to convince KPMG FAS employees to turn over information regarding the ongoing IPOC money laundering investigation.

While the ongoing legal maneuvering had been held very close to the vest, according to KYCNews and the Bermuda Royal Gazette, it appears that Diligence has settled its way out of trouble for $1.7 million.

-- MDT

Labels: bribery, KPMG, money laundering

It is hard to believe that there are kids coming into school this year that have no living memory of the events of September 11, 2006. I certainly will never forget it, having felt the impact of the plane that hit the Pentagon rattle through the windows of the apartment my wife and I were living in at the time. Like everyone else, we sat glued to the television for the next 72 hours, watching, waiting and absorbing it all. While I can't say that we've learned the lessons of that day very well as a country, I remain hopeful that despite our government's missteps, ignorance and ego that we can continue to avoid a reoccurence of such a tragedy on our own soil.

Today's is a day to remember family and friends, and to think a good thought for all those who keep us safe and comfort us when we're in need. They were the heroes of that day and they remain the unsung heroes among us today, even as the politicians natter on.

-- MDT

Hewlett Packard CEO and spymaster, Patricia Dunn is sitting in quite the hot seat this week. Clearly she underestimated the potential (turns out, overwhelmingly) negative reaction to public disclosure of her acquisition of ten HP directors' personal phone records through questionable means. Dunn is now facing a much bigger problem than the media leaks her mole hunting was supposed to eliminate. The HP board is set to meet again as soon as today to determine what, if anything, will be done with Dunn. Meanwhile, here's a handy FAQ on the whole situation, from CNet and a little background on the phone records privacy issue. No new news for regular readers of this space.

As an aside, when we founded Caveat Research, my former firm, back in 2004, we made a decision that we would not employ pretextual interview techniques, and we certainly would have never, via a pretext, used an individual's personal details to obtain their private phone records. Even without pretexting, I'd like to think that our work product stood well alongside anyone else's in the business. All the same, you have to feel for Patricia Dunn. She's the CEO of a long-struggling company that was faced with regular, frustrating leaks to the media that she felt hurt their business.

As an executive might on any other internal fraud matter, she employed investigators to get to the bottom of it. And she DID get her man. The problem comes with the short cuts allowed by the phone record legal loophole (soon to be closed). With their tactics the investigators involved put their client (or in this case, their client's client) in line for potentially serious blowback. The investigators could have likely come up with evidence just as damning regarding confirmed leaker, George Keyworth II, without employing pretexting, just as professional atheletes who use steroids could in many cases reach the same heights of performace without the use of drugs. The results might not be as comprehensive or sexy and the investigation might have taken longer, but no one would be talking about Dunn losing her job at this point either.

-- MDT

Labels: Caveat Research, HP, Patricia Dunn

The Internal Revenue Service just pulled their government-issue van-pool sedan up to the red carpet at the federal stock options task force soiree, backdating of course being the year's hottest event. The task force was formed back in July of this year when the volume of backdating cases that would need to reviewed became apparent. Call it the in crowd.

More here.

-- MDT

And Mike Masnick does on not exactly have positive things to say about Patricia Dunn's tactics - tactics which now threaten to place HP in the cross-hairs of a variety of Federal and state law enforcement agencies based on the admitted use of pretexting by investigators (or data brokers employed on behalf of investigators) retained by HP at the highest level.

Now, pretexting for financial records is solidly in the illegal column, as per the Graham Leach Bliley Act of '99. Pretexting to accuire other personal information, say, phone records, for instance is a somewhat grayer area. Definitely frowned upon, but, strictly illegal, not really (although in California...maybe at least a misdemeanor).

More (undoubtably) to come.

-- MDT

Labels: HP, Techdirt

Here's an interesting piece from Mondaq, which is representative of the reasons why I continue to value and enjoy their newsletter subscription service (and why you should too). The article, written by Benjamin McFarlane of B.J. McFarlane & Co., a London-based lawfirm, details the impact of a recent legal decision (Hughes v. Carratu) on evidence-gathering by investigators on behalf of attorneys in the UK.

Here's the nugget:

...The decision of the High Court this summer in the case of Hughes v Carratu is a warning to investigation agents, and the lawyers that instruct them, that they both need to be very careful about how information concerning defendants is sourced.

It is, of course, notoriously difficult as a litigator to obtain accurate financial information about any target, but this decision has highlighted the need for the use of strictly lawful means when obtaining that information.

The decision does not in fact set out any consequences if an investigation agent uses unlawful means to obtain information and it remains to be seen how far the Claimant, Mr Hughes, will take his action.

However, the Court while it merely envisaged that there may be remedies where personal and protected information has been unlawfully obtained, did decide that it is legitimate for a Claimant to have discovery of any documents which an investigation agent has obtained about him in circumstances where a part of that information has evidently been obtained illegally.

This disclosure may of itself prove embarrasing to those involved...

To say the least. If you want to join-up and get a look at the rest of the article, as well as sign up for a few of Mondaq's infinitely intersting newsletter lists, you can do so here.

-- MDT

Tom Perkins not the mole...George Keyworth, fingered? So says the WSJ. And CEO Patricia Dunn's okaying of third parties using pretexts with phone companies in order to "acquire" private phone records of company directors...well that bit is just heating up.

More here.

-- MDT

Labels: HP

The NoVa White-Collar Workers Golf Posse makes its triumphant return to Hains Point, DC tomorrow morning. We'll be down a man, with one of our usual foresome taking some time off to celebrate the birth of his second son. Another regular may go down to the same affliction any day now, so we have to savor the greens, fairways and, lets face it, rough, while we can.

Hopefully we can bring some decent game tomorrow, but for now allow The Daily Caveat to savor this put, successfully (and somewhat surprisingly) sunk on our last trip 'round HP's Red Course:




No really!

-- MDT

I hate when you've been writing something for, oh say, 30 minutes or so and then your browser freezes and you lose everything... These are the times that try men's souls...

So consider yourself spared of my lengthy peanut gallery musings. Cut to the chase and read David Kaplan's new Newsweek article which details the increasingly ugly fight between Hewlett Pakard's current chair, Patricia Dunn and former director Thomas Perkins, who resigned after discovering that Dunn had initiated electronic surveillance of 10 HP directors in an attempt to discover who had been leaking juicy company details to the press.

"Surveillance" in this case apparently means paying folks to obtain the person private phone records of the directors in question (a subject we've addressed repeatedly at The Daily Caveat). Perkins, for his part, in addition to being furious about the whole affair also denies being the leaker. Post-resignation from his board seat, he has been attempting to force HP to publicly reveal Dunn's surveillance scheme, which Kaplan's article has now done nicely.

Perkins has been trying to force HP to revise the 8K filed with the SEC at the time of his resignation. These documents are supposed to record the reasons for a director's departure (and are a regular tool of investigators seeking to I.D. witnesses) especially if the breakup involves a dissagreement with the company. Perkin's 8K, however, was curiously devoid of any such nuances.

The Perkins 8K was expected to be revised any day now by HP, and it looks like as of Wed morning, it has been, to reflect their take on the whole - still bubbling - affair.

-- MDT

Labels: HP

We're adding some new bells and whistles to the site, starting with a revised link section in the right hand column. Gone is the one dimensional blogroll, replaced by a java-powered, multi-categorized expanded linkery.

Some of the categories still bear filling out and some additional sections are pending. But give a look around and thanks to The Daily Caveat's web-ace Timoni Grone for handling the update so spiffily.

If its web design your needing, you could do worse than contact Miss Grone, care of her Synergizement contact info at the bottom of the page. Sooner rather than later I'll be adding descriptions for all the links to give some sense of why their worth my time and possibly yours.

-- MDT

Hope you all enjoyed some much needed rest and relaxation over the long weekend, which we Americans have been celebrating since 1882! (although it didn't become an official national holiday until 1894).

-- MDT

It was reported earlier this year by the Stanford Securities Litigation Clearinghouse that, thus far, despite their high media profile stock option schenenighans have accounted for a relatively small portion of litigation over the course of 2006. But according to the NYT, things are heating up.

-- MDT

Its not as if we didn't see this coming with. The ever-interesting Techdirt has the latest.

-- MDT

Labels: database, Techdirt

Althought the location of literal third man, former-Comverse CEO, Kobi Alexander, remains a mystery two other former execs have plead Not Guilty on related charges. Greg Reyes, Stephanie Jensen both late of Brocade Communications Systems are now out on bail and awaiting trial. Kobi, well, he's still in the wind.

--MDT

Labels: Brocade, Comverse, Kobi Alexander