Investigator Accused of Defrauding Parties in High-Profile Lawsuits

The president of a company that claims to investigate consumer complaints has been arrested and charged with falsely representing that he had evidence concerning high-profile lawsuits, according to federal authorities.

Michael Lair, president of consumerdefense.com, has been charged with wire fraud, according to Michael J. Garcia, the U.S. Attorney for the Southern District of New York, and Mark J. Mershon, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, who announced the arrest.

The federal officials said that the complaint filed in Manhattan federal court alleges that Lair perpetrated a scheme in which he sought to defraud parties in lawsuits by claiming to have proof of illegal activity by opposing counsel and opposing parties. Lair’s company purports to investigate consumer complaints and conduct research in connection with large fraud cases.

The complaint charges that in 2005 and 2006, in exchange for cash payments, Lair promised to provide information about illegal activity relevant to the litigation. Ultimately, Lair could not deliver on these promises because, it is alleged, he did not actually have the information he claimed to have. As a result of this scheme, Lair received over $80,000, according to the complaint.

According to the complaint, Lair approached lawyers or parties involved in at least two highly publicized civil cases and by claimed to have information regarding another party to the litigation. Lair requested payment of funds prior to turning over the purported evidence. Over time, as Lair failed to deliver on his promises, the party targeted by Lair ended its relationship with him. According to the complaint, one of these lawyers, who represents the former CEO of a large insurance company, was defrauded out of $75,000 by Lair.

Once Lair had defrauded one party involved in the litigation, as described in the complaint, LAIR then approached opposing counsel with the claim that counsel for the first party had hired Lair and asked Lair to take illegal or unethical investigative steps. According to the complaint, Lair asserted that the illegal or unethical investigative techniques employed by these attorneys included illegally hacking into computers, fraudulently obtaining financial records of potential witnesses, and “pretexting” to obtain individual’s telephone records. In one instance, Lair stated that he would not release evidence of these requests by opposing counsel unless he was paid $50,000. In one instance detailed in the complaint, Lair provided a forged email – which purported to be from opposing counsel asking LAIR to engage in illegal investigative techniques – to support his claims in the hopes of receiving the $50,000 payment.

If convicted, Lair, 46, of Bozeman, Montana, faces a maximum of 20 years in prison and a fine of $250,000.

The charge contained in the complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty. 06-175

Source: FBI