Blackmail and the CEO

You got up yesterday morning and went to the front door of your house to take in the morning newspaper. That's when you saw it. A sealed manila envelope with your name typed on the label. You figured that it must be work-related, so you opened it. When you did, what you saw made your heart jump. Inside was a plain piece of paper with these typed words: 'I Know What You Are Doing. Shame On You. Stop The Cheating And The Lies Or I Will Tell The World. You Will Be Disgraced. How Could You Hurt So Many People?'

That was yesterday. Somehow you made it through the day hoping that it would just go away. But when you woke up today there was another envelope with another note. This one said, 'How Many People Have You Hurt? What About Her Husband? What About Her Kids? It Must Stop Now Or I Will Tell The World.' To compound the concern, when you got to work and checked your private e-mail account, there was an e-mail from a strange account, saying the exact same thing. This was all too much for you and you made the decision to tell your long-time personal business lawyer. After you tell her the story, your business lawyer immediately says that this is beyond her expertise and brings in her partner, a white-collar specialist with experience in high-profile matters. But now what?

The Options

The white-collar specialist explains that you have two options. First, you can simply call the police and report what has happened. The notes and e-mails you received violate New York's law against coercion because they seek to prevent you from engaging in conduct through threats to expose a secret. N.Y. Penal Law
' 135.6. Moreover, both you and the lawyer are concerned that the person ' whoever he or she is ' was bold enough to actually approach your house on successive nights and leave envelopes at your door, and that he or she somehow got the address of your personal e-mail account.

Despite these concerns, you do not like this option very much. You know that if you go to law enforcement, there is a better than average chance it will leak to the media at some point. That would be a disaster. You also recognize that there have been no threats of bodily harm either to you or your family, so going to law enforcement at this point may not be absolutely necessary. You feel that you may have to go to law enforcement at some point, but not yet.

The lawyer says that another option is to hire a private investigator to try to figure out who is behind the notes. The lawyer explains that the private investigator likely would stake out your home for the next few days to see if the person tries to leave another note at your door. He also says that you should hire a former FBI profiler to study the communications you have received in order to create a list of possible 'suspects' who fit the profile the profiler develops. You also need a computer forensics expert to try to determine the source of the e-mail. The upside of this approach is that if the private investigator can figure out who is behind the notes, the problem may go away quickly and quietly. The downside is that private investigators do not have the kinds of investigative tools available to law enforcement, and you could be investing a lot of money in a process that does not make the problem go away. Whichever option you pick, the lawyer says, you also need to hire a crisis communications manager and prepare for the worst. You decide to give the private investigator route a try.

Should You Tell a Company Representative?

One of the issues you raise with the lawyers is whether you should tell someone at your company what is happening. On the one hand, you are very sensitive to how a public attack on you may affect the company, and you understand the company's need to prepare in advance for such an attack. On the other hand, you are not exactly excited about having to share such an embarrassing fact of your personal life with anyone you work with.

The lawyers say this is a very difficult question to answer. Although the questionable behavior has nothing to do with your business dealings but is limited to your personal life, everyone recognizes that the well-being of the company is closely tied to your personal reputation and standing in the community. The lawyers' best guess, based on the communications you have received, is that public revelation of your affair is not imminent. That is because the communications say the affair will be disclosed if you do not terminate the relationship. This seems to imply that no disclosure will occur if you do end the relationship. Thus, the lawyers say they feel you can justifiably wait a while before telling anyone at
the company.

You appreciate the lawyers' advice but you overrule them. While you think they are technically right, you feel that your duty to the company goes beyond what is legally required. And so you make the difficult decision to tell the company's General Counsel what is happening. Interestingly, after you drop the bombshell on the General Counsel, she thanks you for your candor but says that, in her view, no action is necessary by the company at this moment. She asks to be kept in the loop, however, and says that if things start to take a turn for the worse it will be necessary to advise the Chair of the Board of Directors and bring in a crisis communications manager to handle the situation. You say you understand and you walk away from the meeting relieved that, at least for now, your personal life has a chance of remaining personal.

The Investigation and Its Resolution

Over the next few days, your team of investigators breaks the case. The profiler you hired concludes that the sender is someone in your personal ' as opposed to your business ' life, in part because of the 'hurt' reflected in the communications and the concern expressed for your lover's spouse and children. The fact that the sender delivered the notes to your home and sent e-mail to your personal, instead of your business, account also suggests that the author is someone who feels connected to your personal life.

Armed with that information, you, your lawyers and your investigator developed a list of people in your personal life who could claim to be 'hurt' by your actions and therefore be considered 'suspects.' One of the people on the list was the husband of the person with whom you were having the affair. Your investigators asked for permission to talk directly to your lover, and you agreed. When they talked to her, she told them that she and her husband share a desktop computer at their home. The investigators asked if they could come to her house while her husband was at work and make a mirror image of the hard drive of their shared computer. She agreed, but only because she believed it would disprove your investigators' suspicions.

The review of the hard drive is what cracked the case. In a file contained in his computer directory were copies of e-mails that you and your lover had exchanged over the years, that she had saved for sentimental reasons, and that her husband had copied to his own computer directory. And, more tellingly, stored in a file in his computer directory was the e-mail sent to you from the strange account, that the husband had bcc'd to himself. Confronted with this evidence, the husband confessed that he had learned of the affair and dreamed up this scheme to end the affair and save his marriage. He had no desire to tell anyone; he just wanted his wife back. Crisis over. Reputation saved.

Conclusion

The scenario played out in this article is just one possible response to a blackmail threat directed at the personal life of a corporate CEO. Each situation must be assessed on its facts and no two situations are alike. Whether a CEO faced with such a situation should go directly to law enforcement, or should advise company personnel, is a judgment that must be made on a case-by-case basis.

Steven F. Reich, a member of this newsletter's Board of Editors, is co-chair of the Criminal Defense and Investigations practice group at Manatt, Phelps & Phillips, LLP, and is chair of that firm's New York Litigation practice. Cristina M. Posa is an associate in the firm's Criminal Defense and Investigations practice group.

The scenario: You are the well-known CEO of a publicly traded New York-based company. You and your wife are 'A-Listers' on the charity circuit and sometime subjects of stories in the society pages and on entertainment television. Your meticulously crafted, wholesome-as-apple-pie image is that of a devoted husband and father of three children. Your ability to craft such a public image (with the help of expensive PR specialists) has been integral to the success of the company you run, which has carefully wrapped its own business and image around you.

What nobody knows is that you have been having an affair for years with a married woman with kids of her own. If this became public, not only could it spell ruin for your image, but could make your company fodder for late-night comedians. 'Well,' you have told yourself at least once a week since you started the affair, 'stop worrying. No one will ever find out.' That seemed an okay answer until yesterday, when you learned that somebody indeed has found out.

How It Works

You got up yesterday morning and went to the front door of your house to take in the morning newspaper. That's when you saw it. A sealed manila envelope with your name typed on the label. You figured that it must be work-related, so you opened it. When you did, what you saw made your heart jump. Inside was a plain piece of paper with these typed words: 'I Know What You Are Doing. Shame On You. Stop The Cheating And The Lies Or I Will Tell The World. You Will Be Disgraced. How Could You Hurt So Many People?'

That was yesterday. Somehow you made it through the day hoping that it would just go away. But when you woke up today there was another envelope with another note. This one said, 'How Many People Have You Hurt? What About Her Husband? What About Her Kids? It Must Stop Now Or I Will Tell The World.' To compound the concern, when you got to work and checked your private e-mail account, there was an e-mail from a strange account, saying the exact same thing. This was all too much for you and you made the decision to tell your long-time personal business lawyer. After you tell her the story, your business lawyer immediately says that this is beyond her expertise and brings in her partner, a white-collar specialist with experience in high-profile matters. But now what?

The Options

The white-collar specialist explains that you have two options. First, you can simply call the police and report what has happened. The notes and e-mails you received violate New York's law against coercion because they seek to prevent you from engaging in conduct through threats to expose a secret. N.Y. Penal Law
' 135.6. Moreover, both you and the lawyer are concerned that the person ' whoever he or she is ' was bold enough to actually approach your house on successive nights and leave envelopes at your door, and that he or she somehow got the address of your personal e-mail account.

Despite these concerns, you do not like this option very much. You know that if you go to law enforcement, there is a better than average chance it will leak to the media at some point. That would be a disaster. You also recognize that there have been no threats of bodily harm either to you or your family, so going to law enforcement at this point may not be absolutely necessary. You feel that you may have to go to law enforcement at some point, but not yet.

The lawyer says that another option is to hire a private investigator to try to figure out who is behind the notes. The lawyer explains that the private investigator likely would stake out your home for the next few days to see if the person tries to leave another note at your door. He also says that you should hire a former FBI profiler to study the communications you have received in order to create a list of possible 'suspects' who fit the profile the profiler develops. You also need a computer forensics expert to try to determine the source of the e-mail. The upside of this approach is that if the private investigator can figure out who is behind the notes, the problem may go away quickly and quietly. The downside is that private investigators do not have the kinds of investigative tools available to law enforcement, and you could be investing a lot of money in a process that does not make the problem go away. Whichever option you pick, the lawyer says, you also need to hire a crisis communications manager and prepare for the worst. You decide to give the private investigator route a try.

Should You Tell a Company Representative?

One of the issues you raise with the lawyers is whether you should tell someone at your company what is happening. On the one hand, you are very sensitive to how a public attack on you may affect the company, and you understand the company's need to prepare in advance for such an attack. On the other hand, you are not exactly excited about having to share such an embarrassing fact of your personal life with anyone you work with.

The lawyers say this is a very difficult question to answer. Although the questionable behavior has nothing to do with your business dealings but is limited to your personal life, everyone recognizes that the well-being of the company is closely tied to your personal reputation and standing in the community. The lawyers' best guess, based on the communications you have received, is that public revelation of your affair is not imminent. That is because the communications say the affair will be disclosed if you do not terminate the relationship. This seems to imply that no disclosure will occur if you do end the relationship. Thus, the lawyers say they feel you can justifiably wait a while before telling anyone at
the company.

You appreciate the lawyers' advice but you overrule them. While you think they are technically right, you feel that your duty to the company goes beyond what is legally required. And so you make the difficult decision to tell the company's General Counsel what is happening. Interestingly, after you drop the bombshell on the General Counsel, she thanks you for your candor but says that, in her view, no action is necessary by the company at this moment. She asks to be kept in the loop, however, and says that if things start to take a turn for the worse it will be necessary to advise the Chair of the Board of Directors and bring in a crisis communications manager to handle the situation. You say you understand and you walk away from the meeting relieved that, at least for now, your personal life has a chance of remaining personal.

The Investigation and Its Resolution

Over the next few days, your team of investigators breaks the case. The profiler you hired concludes that the sender is someone in your personal ' as opposed to your business ' life, in part because of the 'hurt' reflected in the communications and the concern expressed for your lover's spouse and children. The fact that the sender delivered the notes to your home and sent e-mail to your personal, instead of your business, account also suggests that the author is someone who feels connected to your personal life.

Armed with that information, you, your lawyers and your investigator developed a list of people in your personal life who could claim to be 'hurt' by your actions and therefore be considered 'suspects.' One of the people on the list was the husband of the person with whom you were having the affair. Your investigators asked for permission to talk directly to your lover, and you agreed. When they talked to her, she told them that she and her husband share a desktop computer at their home. The investigators asked if they could come to her house while her husband was at work and make a mirror image of the hard drive of their shared computer. She agreed, but only because she believed it would disprove your investigators' suspicions.

The review of the hard drive is what cracked the case. In a file contained in his computer directory were copies of e-mails that you and your lover had exchanged over the years, that she had saved for sentimental reasons, and that her husband had copied to his own computer directory. And, more tellingly, stored in a file in his computer directory was the e-mail sent to you from the strange account, that the husband had bcc'd to himself. Confronted with this evidence, the husband confessed that he had learned of the affair and dreamed up this scheme to end the affair and save his marriage. He had no desire to tell anyone; he just wanted his wife back. Crisis over. Reputation saved.

Conclusion

The scenario played out in this article is just one possible response to a blackmail threat directed at the personal life of a corporate CEO. Each situation must be assessed on its facts and no two situations are alike. Whether a CEO faced with such a situation should go directly to law enforcement, or should advise company personnel, is a judgment that must be made on a case-by-case basis.

Steven F. Reich, a member of this newsletter's Board of Editors, is co-chair of the Criminal Defense and Investigations practice group at Manatt, Phelps & Phillips, LLP, and is chair of that firm's New York Litigation practice. Cristina M. Posa is an associate in the firm's Criminal Defense and Investigations practice group.