I saw this on another thread and thought it was interesting.
Companies Hire Private Eyes
To Unmask Online Detractors
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
Jeffrey R. Bedser does some of his best work at home, at about 2 a.m., when he logs on to the Internet pretending to be a woman.
The clean-cut father of young twins isn't sampling X-rated Web sites. He's putting in overtime as head of the new Internet-crimes group of International Business Research Inc., a corporate-investigations company based in Princeton, N.J.
With undercover operations on the Web, he smokes out angry ex-employees or stock-fraud suspects. One of his favorite tricks: using a female alias to strike up late-night e-mail correspondence.
"We've never yet used sexual innuendo," says Mr. Bedser, a 31-year-old former corporate-security manager for two big pharmaceutical companies. But "there has been occasional flirting."
With an explosion of online corporate chat by investors, more companies are hiring private eyes to track down people posting anonymous messages they don't like. Though the freewheeling banter is frequently off-base, companies fret that investors may believe -- or trade stock on -- what they see posted on a Web site or a stock-message board.
Once a company learns the identity of a detractor, it can try to find grounds to sue the person. If it's an employee, he or she can be disciplined. In cases of possible stock manipulation, companies can refer messages and the identity of the author to stock regulators.
Unmasking some of its online detractors, HealthSouth Corp., a Birmingham, Ala., provider of rehabilitation services, has filed lawsuits against some, with allegations including defamation.
'Hot Stuff'
To help round up cybersuspects, IBR and rivals Kroll Associates and DSFX LLC, based in Falls Church, Va., have all formed special groups to tackle Web-related assignments. "This is hot stuff," says Michael Cherkasky, president of New York-based Kroll Associates, one of the largest investigation firms.
Before the Internet, these corporate sleuths mostly performed "due diligence" checks on acquisition targets or investigated embarrassing internal thefts. Now, tactics are more high-tech. Mr. Bedser and his staff of three, including two fresh Princeton University graduates, routinely correspond via e-mail with suspected stock manipulators using fake names. They also sift through reams of e-mail messages for clues to a suspect's occupation or geographic location.
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Mr. Bedser's group was once on the trail of someone suspected of issuing threats to a chief executive on a Yahoo! Inc. stock-message board. After striking up an online conversation, the investigators (posing as a friendly young woman named Terry) suggested the suspect click to a separate home page to see a snapshot of Terry.
It was a trap. The amateur-looking page had family photos -- including one of a smiling woman wearing shorts, said to be Terry. Staking out the site, IBR watched as the visitor clicked on, then followed his electronic tracks back to a local Internet-service provider in Miami.
IBR identified another target by playing chess. FutureLink Distribution Corp. had hired the company to unmask "ZeroBid," who had posted message-board accusations that the software-leasing company, based in Irvine, Calif., could be fraudulently promoting its stock through a "pump-n-dump" scheme.
IBR staffers noticed that ZeroBid left a message on the Raging Bull stock-discussion Web site, saying, "This board is dead. I'm going over to play chess on Yahoo." They tracked ZeroBid down at the chess site and, using assumed names, challenged him to matches for several weeks. "We tried to make him think we were worse than we were, so we could get tips" and play longer, IBR's Mr. Bedser says.
ZeroBid eventually mentioned his nickname and his employer, a Rhode Island brokerage. IBR matched the nickname to a list of the firm's employees. FutureLink passed on ZeroBid's postings to securities regulators. The matter is pending.
FutureLink says it launched its hunt for ZeroBid after that name appeared on hundreds of negative notes on a message board. Cameron Chell, FutureLink's chairman, says he believes ZeroBid was trying to drive down the price of his company's stock.
Some of the postings, however, included unflattering facts that investors might find relevant: Mr. Chell, for instance, was fined $25,000 by the Alberta Stock Exchange last year and settled allegations that, as a Canadian stockbroker, he made unauthorized and unsuitable transactions for clients. Those included selling clients securities of a company of which he was president and chairman without fully disclosing his involvement.
'Conspiracy Theories'
Mr. Chell confirms those details, but says ZeroBid went too far by accusing him of "all these conspiracy theories."
In e-mail messages and in a phone interview, the man IBR identified as ZeroBid declined to give his real name and denied trying to manipulate FutureLink's stock or ever owning it. He said he just stumbled across FutureLink's annual report in a Securities and Exchange Commission database, noticed information about Mr. Chell's past and decided to post some of it on the Internet. ""I was just goofing around," he said. He didn't know he'd been investigated by a private eye, but says he "figured they probably would" try to uncover his identity.
Some investigation companies aren't comfortable with all the covert cat-and-mouse tactics. Jay Dawdy, head of the corporate division of New York's Beau Dietl & Associates, says his company shies away from "any sort of complex sting, or creating identities" on the Web. "It's all evolving as far as privacy."
It's unclear whether tactics private investigators use to coax identities from people online could constitute an invasion of privacy, say lawyers who specialize in Internet issues. The SEC, for example, doesn't conduct undercover Internet operations, says John Reed Stark, chief of the agency's Office of Internet Enforcement.
Adds Joseph Grundfest, a professor of business and law at Stanford University's law school, "It's not against the law to say bad things about a company's stock and management and strategy."
Often, private detectives use covert methods to track suspects because they don't have the luxury of using criminal subpoenas and search warrants, as law-enforcement agents do. In April, such legal muscle helped the Federal Bureau of Investigation crack a notorious Web hoax, involving PairGain Technologies Inc., in a matter of days. Under subpoena, Internet service providers quickly released records that led the FBI to a PairGain employee, who has since pleaded guilty to fraud charges. The employee had sent the company's stock soaring by posting a bogus but authentic-looking news report saying PairGain was being bought by an Israeli company.
Private investigators are "hamstrung because at some point there's information they can't get," says Chris Painter, the assistant U.S. attorney from Los Angeles who prosecuted the PairGain case.
But many suspects don't cover their tracks very well, investigators say. IBR once helped a large pharmaceutical company find a Canadian pharmacist, using the name PharmaFool, who had criticized one of the company's new anti-inflammatory drugs on a message board.
Once it found him, the drug company ended up leaving PharmaFool alone after discovering he wasn't a competitor or an insider, as it had suspected. The man IBR believes to be PharmaFool didn't return calls for comment.
IBR's big break in the case? The man used the same PharmaFool screen name on another message board, where his public "personal profile" also included his town, his favorite hockey team and his real name.
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