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The Digital Detectives

The Burgeoning World of Corporate Security Has Gone From Cloak and Dagger to Computers and Databases

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Another high-profile case came in 1991, when the Russian government hired Kroll to locate billions believed to have been siphoned from the treasury by party officials. Kroll reportedly sought records from Russia's major food and oil suppliers and discovered legions of shell companies and secret accounts. The information was then turned over to Russian Prime Minister Yegor T. Gaidar. (Sources say actual recovery successes were never fully disclosed.) Around the same time, Kuwait paid Kroll more than $100,000 a week to hunt down Saddam Hussein's immense stash of assets, worth an estimated $10 billion. According to a 1991 Time article, the trail included a $3.5 million Beverly Hills mansion and a Panamanian shell company called Montana Management, which Hussein used to buy an 8.4 percent stake in the magazine publisher Hachette.

Today, however, Kroll faces a tougher sell for its services. The Big Six accounting firms are all expanding their investigative units. Price Waterhouse, for instance, more than doubled its forensic accounting and investigative staff in the past two years to 600 members. "White-collar investigations is the fastest growing segment of our practice," notes Frank Piantidosi, a Price Waterhouse regional managing partner. Competition from the Big Six is also forcing Kroll to defend its steep fees--which critics charge are among the industry's highest. Many of Kroll's investigations last two to three weeks and cost about $10,000 to $15,000, and analysts say clients get a shock when their bills arrive. Kroll's Ernest Brod denies that charge--arguing that clients may request a flat fee for services. He also says that 75 percent of Kroll's revenues come from repeat business.

Nevertheless, Kroll's problems have been compounded by reports that the firm is hemorrhaging top talent. Managing directors have quit from Kroll's London, Los Angeles and New York offices. Some went to accounting agencies such as Coopers & Lybrand; others, like Bart Schwartz, left to form their own shops. Though harmful in its own right, the attrition may also have hindered Jules Kroll's attempts to cash in on his firm's success by selling the agency or merging with another one.

Kroll had posted what some describe as a "for sale" sign since at least 1991. That was when the company announced plans to merge with Business Risks International, a Nashville-based detective agency. The deal collapsed, however, as did talks with other detective agencies and Coopers & Lybrand. Finally, in April 1997, Kroll seemed to locate a worthy suitor in the insurance data-collection firm, Choicepoint--a recent spinoff of Equifax Inc., the consumer credit-reporting company. Analysts say that the merger would have been perfect for Kroll, combining the company's investigative expertise with Choicepoint's massive databases of consumer credit information. "It would have been a brilliant acquisition for both sides," says a source close to the deal.

But Jules Kroll stunned the industry a few months later when he shunned Equifax's $70 million bid, choosing instead to merge with the O'Gara Co. Kroll told the Times that O'Gara lured him with more money and greater control. O'Gara offered 6.75 million shares of its stock--valued at about $81 million at the time--plus $14 million to wipe out the company's debt. O'Gara also enticed Kroll by agreeing to make him chairman and chief executive officer.

Kroll's Ernest Brod says that the new company plans to "leverage off some of the security systems and security hardware O'Gara is known for." The combined agency will still be an industry force--with 950 employees at 39 offices worldwide and an estimated annual income of $200 million.

In the weeks preceding the O'Gara merger, Jules Kroll and his secret agents remained characteristically low-key. Calls to Kroll's office over a period of six weeks were not returned. When asked why he was unavailable for interviews, the firm's spokeswoman, Elizabeth Hunter, said the agency was in a "quiet period."

However, if Jules Kroll's work is the stuff of spy stories, his reticence with reporters doesn't seem surprising. Kroll's dealings have made him a very wealthy man. (He already owns an estate in Westchester County, New York, and stands to reap at least $50 million worth of O'Gara stock once the deal is finalized early in 1998. Why should he shed the classic gumshoe's anonymity now? Hammett's Continental Op would probably have just tipped his fedora and walked quietly away.

Daren Fonda is a writer living in New York. One Tough Cop

"Put 10 cigars in front of me and I'll pick out the Cuban," ventures detective Richard "Bo" Dietl. "The other night someone gave me a Montecristo No. 2. I looked it over and could tell immediately it was counterfeit. I can always tell the difference."

If Bo Dietl weren't earning his living as a sleuth, his claim might sound a bit brash. But he's spent decades busting cons, first as a New York City street cop then as a private detective, and he could probably finger the phony Cuban cigar if only because he channels that sixth-sense of the professionally suspicious. Dietl carries a silver humidor in his trunk, packed with Hoyo de Monterrey Double Coronas, Partagas Lusitanias and Montecristos. He hands them out to friends and clients. But he has little patience for smokers who can't tell the difference between a robusto and a panatela.

"I'll test the person first, ask him questions before I give out one of my babies," he says. "I get the best cigars in the world at this little place in New York. But what I think I should do is carry the bad cigars in one pocket and the good ones in another. I can't stand giving a good smoke to someone who doesn't appreciate it."

Dietl is talking cigars as he drives uptown in his BMW 740i. He's heading to Rao's, the East Harlem Italian restaurant where Mafia legends such as Lucky Luciano once dined, and where Dietl entertains clients and friends at his front table at least once a week. Tonight's entourage includes the actor Chris Norton, a screenwriter, some "business associates" and, later in the evening, a tall, attractive blonde woman Dietl would only identify as an "acquaintance." On the wall by the bar, amid the photos of celebrity diners, is a shot of Dietl with President Bush, who appointed him co-chairman of the National Crime Commission in 1989. "I did security for Bush at the 1992 Republican National Convention," he says proudly.

Bo Dietl exudes what fellow detectives call "bragging rights." As a street cop in the 1970s and '80s, he cracked some of New York City's most publicized homicides. Working during his off hours and outside his beat, he developed leads that resulted in the capture of two thugs who had raped and tortured an East Harlem nun. Three years later, in 1984, he helped collar the culprit of the "Palm Sunday Massacre," in which eight children and two adults were found shot dead in their apartment. By age 35, he'd made more than 2,000 arrests and was mugged more than 500 times, posing as a subway drunk in a decoy unit. The rest of the Bo Dietl story--the subject of the upcoming Stephen Baldwin film, One Tough Cop--is by now well documented. Dietl's Dirty Harry tactics didn't ingratiate him with police officials. He once impersonated a judge and humiliated a defendant in a mock trial. And his off-hours gambling fueled suspicions that his private life encroached on his job. Dietl retired in 1985 following an ankle injury he suffered on vacation that would have required him to take a desk job. He co-authored a book about his life on the force, One Tough Cop.

Today, Dietl operates his own private investigative agency, called Beau Dietl and Associates. He started out solo from his home in Queens, and in 12 years has turned his practice into a $10 million-a-year enterprise based in Manhattan. He's lent bodyguard muscle to a slew of celebrities, among them, Charlton Heston, Paul Simon and Richard Pryor. And he's handled security for political conventions and foreign dignitaries such as the royal family of Saudi Arabia.

Dietl's staff includes former New York City police detectives, retired FBI and DEA agents, and organized-crime busters. Like most private eyes, his operatives have taken their share of matrimonial jobs: hunting for undeclared assets or snapping the proverbial caught-in-the-act shot of an adulterous spouse. But in the past few years, the corporate market has exploded. More than 70 percent of the firm's revenues now stem from white-collar crime investigations such as fraud and embezzlement, he says.

In a case for a major brokerage house, for instance, Dietl's sleuths discovered a massive fraud ring operating out of the firm's wire transfer department. "We uncovered a scheme where someone was working in the wire room who was connected with an organized crime family in New York," he says. "This guy had set up a $25 million off-the-books wire transfer to a European bank. We uncovered the evidence and notified the FBI."

Another big job came with a 1995 lawsuit against Banker's Trust, in which the bank's clients sued to recover billions of dollars lost in bad derivatives trades. Dietl was hired by the bank to investigate the plaintiffs' claims and backgrounds. He came back with a 35-page report showing that more than 30 other banks were involved in the sale of the securities and that Banker's Trust's clients were well aware of the risks. "Our investigation proved there was over $1 trillion in losses with other financial institutions," he says. "We deflected much of the liability from our client."

This year, Dietl formed a partnership with a hologram company to offer a high-tech tracking service for apparel manufacturers concerned about black market sales of their goods. The holograms, placed inside clothing labels, contain information about the product's point of origin, its distribution route and intended market. It's a system, Dietl says, that will enable companies to investigate corrupt links in their manufacturing facilities and sales networks. The holograms, he notes, are like an "authentic seal of approval."

Like the kind he gives to real Cubans. If his clients are smokers, he will often close a deal over a good cigar. He developed a fondness for cigars four years ago when longtime friend Frankie Pellegrino, the owner of Rao's, offered him one that he now recalls only as "some Caribbean brand." Dietl started playing golf and found he enjoyed a smoke between rounds. Now he smokes at least two cigars a day, usually after meals. When he moved his office into Manhattan last year, he ensured the windows opened in his 35th-floor suite before signing the lease. "I don't smoke in my office," he says. "But I think I should have that right."

Lighting up in public is another right Dietl defends. "I was at the U.S. Open," he recalls, "and I had magnificent seats. I'm outside and I can't comprehend how come I can't smoke a cigar in an open stadium. The breeze is blowing. Hey, it's offensive to people? How could it be offensive if the wind's blowin'? What about my rights? I mean give me a break."

Dietl doesn't temper his speech when talking to reporters, which has made him a media darling. He comments regularly on Don Imus' morning radio show. And he's appeared in 10 movies, often playing--what else--a homicide detective. "I'm a natural," he quips. In his latest, Dead Man's Curve, the producers wanted Dietl to smoke a cigar. "They offered me some shit cigar, but I turned it down," he says. "I said, 'If I'm going to smoke on-screen it's going to be a good cigar.' So I pulled out a Cuban and took the label off."

Dietl maintains that he only smokes Cubans. Montecristo No. 2s are a favorite, but he's also fond of Partagas Lusitanias because "they're very big and very strong." At Rao's, Dietl hands out Hoyo de Monterrey Double Coronas to his guests. He knows they're the kinds of guys who discriminate against a cheap cheroot. "The worst thing in the world is if I give you a cigar and you fuckin' take two puffs and put it in the ashtray," says Dietl. "I'll take it, snip off the end, and put it back in my pocket. That bothers the crap out of me."

Thankfully, no one at the table is so obtuse. The Monterreys are fresh and robust. They have a smooth draw and a slightly nutty aroma. The tall blonde, now perched on Dietl's lap, takes a few puffs from his half-smoked Corona and sighs throaty approval.

"I ain't got much," Dietl says with a laugh as the party breaks up. "But one thing I got is juice!"


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