Countering Threats: Insite Security shields its clients against kidnappers and other criminals who prey on the wealthy.
BUSINESS MANAGEMENT – PRACTICE DEVELOPMENT
SEPTEMBER / OCTOBER 2009
By CAREN CHESLER
It remains one of the most horrific kidnappings in history. In April 1992, Exxon executive Sidney Reso was kidnapped in his own driveway in wealthy Morris Township, N.J. Bound and gagged, he was put in a six-by-three-and-a-half foot wooden box, which was left in a metal storage room without ventilation or electricity. The 57-year-old father of five was left there for four days, lying in his own waste and given little more than water and vitamins. On the fifth day, his kidnappers returned to find him dead. Yet they continued to demand $18.5 million in ransom for eight weeks before finally being apprehended.
Reso wasn’t the first wealthy executive to be abducted and he certainly won’t be the last, which is why some of the country’s wealthiest families have hired New York City-based Insite Security Inc.
The firm’s CEO, Chris Falkenberg, a former Secret Service agent and litigator, counts celebrities, such as Martha Stewart and Ralph Lauren, as well as movie stars and hedge fund managers among his clients. The firm has so many clients in hedge-fund heavy Connecticut, it opened a four-person office in Greenwich. Falkenberg founded the firm in 2002.
“I think the most important thing we do is prevent kidnappings and respond to them,” Falkenberg says. “It is the number one threat because it is exactly the type of crime focused against our client base. Our clients have an enormous amount of money and, therefore, they are attractive to kidnappers.”
His firm, which employs law enforcement veterans who formerly worked for the Secret Service, the Federal Bureau of Investigation and the U.S. Marshals Service, as well as several police departments, has about a dozen clients for which it provides security services on a retainer basis.Monthly fees range from $8,000 to $12,000. The firm also performs discreet services, such as installing home security systems, which could cost $40,000 to $60,000.
The range of services Insite provides varies, depending on the client’s level of risk. An executive with a company that does animal testing or sells fur, for instance, faces a higher risk, as do executives who have received a lot of publicity because of their wealth or been involved in a high-profile termination of an employee, according to Falkenberg.
Kidnapping, however, is a threat to anyone with a lot of wealth. Kidnappings are on the rise internationally, experts say, partly due to organized crime activity in countries such as Brazil and Russia, and the drug trade run out of countries such as Mexico, where kidnapping has become a lucrative criminal activity. That’s made border states like Arizona, Texas and California greater security risks, says Falkenberg.
Apparently, Connecticut has its risks as well. In 2003, billionaire hedge fund manager Eddie Lampert was kidnapped at gunpoint while leaving work. Several ex-convicts found Lampert, who at the time owned the $9 billion private investment fund ESL Investments Inc., by going into the prison law library in jail and typing in “richest guy in Connecticut,” Falkenberg says. They nabbed him at work after seeing that he went in every Saturday and parked in the same spot that had his name on it. He was held for ransom for two days before talking his way out of it.
Falkenberg feels one of the benefits his firm brings to clients is the ability to respond to such situations on a moment’s notice. Law enforcement agencies, in contrast, may not act with urgency until they’ve established whether a kidnapping has occurred, he says.
To help prepare for kidnapping situations, Falkenberg recently hired the FBI’s former lead hostage negotiator, Christopher Voss. Experts say the first 24 hours of a kidnapping are considered the most crucial, in terms of keeping the victim alive, Falkenberg notes. The presence of Voss will assist the firm when it needs to act quickly, he adds.
“Given that so many of our clients are U.S.-based, and so many [domestic] kidnappings result in homicides, we just can’t not have that capability in house,” Falkenberg says.
Voss says kidnappings are like Russian roulette. Most of the time, victims are unharmed. But when something does go wrong, the results can be disastrous. In the U.S., he feels victims face heightened risk because kidnappers are more concerned about covering up their tracks.
“In the U.S., we have an extremely robust law enforcement community, and kidnappers are afraid they’re going to get caught. And they’re not only going to get caught they’re going to do an extremely long time in jail,” Voss says. “Outside the U.S., they’re pretty sure they won’t get caught.”
The firm hasn’t yet had to deal with a kidnapping, but Falkenberg believes it may have prevented one. He had a client in New York whose child may have been a potential target. According to school officials, a man was asking questions about the client’s child. But once Falkenberg’s firm put the man under surveillance, he disappeared.
“There can always be an innocuous excuse for behavior, but we didn’t think that was the case here. So we increased security, and the surveillance ended,” Falkenberg says. “One of the frustrating things about selling these services is that, unlike an investment advisor, we can’t prove a negative.”
Aside from kidnapping, the biggest issues clients face are home invasions and confidence games perpetrated by the people around them, Falkenberg says. For example, the firm had two ultra-wealthy clients whose college-aged sons were preyed upon by women who wanted their money. The parents had grown suspicious of the women, but their sons, who were so flattered by the women’s interest, refused to end the relationships.
Falkenberg’s firm discovered that both women had created a web of lies, about their identities, their college majors, and various other basic facts. The men ultimately terminated the relationships.
The women likely found the men in one of the college yearbooks created for entering freshmen, Falkenberg says. In general, he says, the less information that’s available about his clients, the safer they are.
“These days, there’s so much information out there about people, specifically the wealthy, that it creates security issues for them,” Falkenberg says. “Even if they make huge efforts not to draw attention to themselves, like those who vociferously guard their privacy and don’t talk to the media or take credit for their charitable foundations, they still end up in media reports on the very, very wealthy, like the Forbes list.” Some of the biggest breaches in security occur when people voluntarily give up information, he notes.
Falkenberg, who served on the security detail for the first President George Bush and then for President Bill Clinton during his 1992 presidential campaign, recommends that the wealthy keep public information about themselves vague, business-oriented and impersonal. The wealthy should be guarded about where they live, whom they know and what they do for hobbies, he says. The firm also does thorough background checks on anyone working for his clients, from nannies to landscapers.
Many of his clients, particularly hedge fund managers who have acquired enormous amounts of wealth early in life, find they and their children are living in a bubble. One of the firm’s challenges is allowing clients to live somewhat normal lives while looking out for their security.
“They’ll have a security infrastructure, but they don’t want to see or have to worry about it,” Falkenberg says. “It’s not so easy to do that.”
What makes it even harder is when clients are resistant to his security efforts. He once had an interior designer balk at the prospect of putting smoke detectors on the ceilings of each room, suggesting instead that they be put in closets. The wife of one of his clients asked that the unsightly surveillance cameras in the backyard be tucked away so far into the bushes that it rendered them useless.
The most resistant family members, he says, are children, who are warned not to put intimate details on social networks such as Facebook and MySpace. Many simply refuse to comply.
Risks don’t just occur at home, he notes. The ultra-wealthy have to be careful, perhaps even more careful, when they travel.
“When you show up and get off a Global Explorer – a $15 million private jet – people look at you differently,” he says. What predators see, he says, is opportunity.
Falkenberg had a client whose five-member family was traveling through one of the former Soviet republics 18 months ago and was detained at an airport by border officials who were apparently looking for a payoff. After six hours of detention, Falkenberg says the family was freed after his firm “negotiated” with the officials.
“We used contacts we developed in advance of the trip,” Falkenberg says, adding, “And maybe there was some payment of compensation to someone. And maybe not.”
Falkenberg says he’s seen an increase in requests for security services related to overseas tourism and business travel. It’s not surprising. Security experts say Americans traveling internationally face increased risks today to not just their safety but also their health. For that reason, Falkenberg’s firm recently partnered with a company called WorldClinic to provide emergency medical care to its clients. With a network of 4,000 doctors outside the U.S., WorldClinic provides around-the-clock medical care to clients who suffer serious illness or injury while traveling abroad.
Falkenberg believes people should hope for the best and prepare for the worst. Anne G. Donohoe, who works for Falkenberg’s public relations firm, KCSA Strategic Communications, can vouch for that. She was recently preparing for a trip to the Tuscany region of Italy when she received a call from Falkenberg, who told her to become acquainted with the plane’s exit routes and to wear sneakers on the flight, in case she has to run. He told her not to take the sneakers off until the plane is at cruising altitude, and because she was staying in a 200-year-old villa, he warned her to locate all of the exits in the building in case there was a fire.
“I told him, ‘You’re scaring me.’ And he said, ‘Great. Have a nice trip,’” Donohoe says. “Now when I travel, I keep a flashlight on me, in case there’s a power outage.”