The spies for hire who pick the bones of corporate scandals | Espionage

The office is a bland building near Chancery Lane. Neither its position, tucked away on a quiet backroad in the City, nor its facade, an iron grey home for grey suits, seems accidental.

Founded in the US in 2003 and incorporated in the UK four years later, Nardello & Co is part of a lesser-known branch of London’s financial and legal ecosystem: corporate spies for hire.

Professionals who trade in intelligence, often drawn from legal firms, law enforcement agencies, or government. They are brought in by major companies to gather sensitive or hard to find information on anything from allegations of sexual misconduct to sanctions busting, asset tracking, or fraud and corruption.

Daniel Nardello, the company’s founder and chair, is a former US prosecutor. He’s a confident talker, opening his hands to the room like someone about to launch into a closing argument in front of a jury. Sabina Menschel, the president and chief operating officer, is a little more reserved and poised, but the pair dovetail answers with ease.

While the company’s trade often requires staying in the shadows, one of Nardello’s more recent assignments is very high profile: acting for the collapsed crypto exchange FTX. The firm was hired by the company’s new management, who took over after the arrest of its founder Sam Bankman-Fried, to track down what remains of FTX’s worldwide assets. The aim is to find out what can be picked from the bones of the failed exchange for its debtors. But the pair say confidentiality limits their candour. Eye contact alone would be enough to suggest it’s been a colourful ride.

Business pages around the world have examined in detail the colourful Neverland created by Bankman-Fried – who has been charged with using stolen funds for political donations – at a Bahamas penthouse where he and his young management team co-habited and managed the business.

Nardello is a former federal prosecutor for the US attorney’s office for the southern district of New York, spanning one of the world’s most important financial districts and one of the most influential jurisdictions in the US, where he prosecuted securities and commodities fraud. Menschel spent “a couple of years” at the FBI but for most of her career worked as an analyst at Kroll – which also provides corporate investigation services.

There are a clutch of former prosecutors and analysts within the company’s US operations, while hiring for its UK base has often focused on graduates with strong language skills. The firm specialises in fraud and corruption investigations but scans the horizon for PR disasters, too. Its website offers include “finding the skeletons in your closet – before the media does”.

The firm employs former investigative journalists, too, and has often been hired to get to the bottom of leaks to the press and related insider trading activity.

“We do a lot of leak investigations. For reasons I’m not sure I understand, we did a lot during Covid. Several of them were for media organisations,” says Nardello.

“Leaks from within media organisations,” Menschel clarifies.

“They are hard investigations. You need a lot of luck to definitively evidence who is leaking,” says Nardello.

“It’s a good example of how the traditional investigative part of the business works with the cyber-forensics businesses, Menschel says. “There’s the external piece, who is connected to whom, and then there’s the internal piece it depends a lot on the information companies have and how they do their IT and how their systems are set up. But even with computer forensics they are very difficult.”

The new world order emerging as a result of Russia’s invasion of Ukraine has opened up fresh areas of work, such as finding sanctions busters. Companies trying to work out how their competitors are undercutting prices have hired the likes of Nardello to check whether circumvention of sanctions could be involved.

Putting the “weaponising of sanctions” under the microscope is both interesting and “remunerative”, Nardello says.

While many people associate private investigators with physical surveillance, Nardello often guides clients away from those information-gathering techniques.

“It is unwieldy, it’s unpredictable, it’s expensive, and it can be very hard to do. It’s not like you have one guy following,” Nardello says.

Menschel adds: “It takes teams of people. Some guys love the idea, but it’s often that it doesn’t make a lot of sense.”

That’s not to say it never works. Nardello has set up operations that allow for it in very specific situations: teams following suspects from hotels through to a chain of flights and jurisdictions.

Deciding who to take on as a client often involves detailed discussion among the partners.

They outright refuse to do opposition research on political candidates in the US and they have turned down a lot of work from men who have been accused of sexual misconduct or misdemeanours involving children.

“Some of the stuff we’ve turned down is probably the most interesting,” Nardello says. “But often when we’re turning it down we’ve a pretty clear sense of what went down and therefore don’t want to be associated with it.”

Self due diligence – getting the scoop on yourself before the newspapers do – is a growing area.

“Sometimes we’re asked by existing boards to do due diligence on them. We’ve even looked into the children of potential board members,” Nardello says. “In one case we found out a teenage child [of a prospective board appointee] was posting white supremacist stuff on social media. Fortunately we found it in time so we took it down, because if that did come out, even though the guy himself was not involved in it, it could have been horribly embarrassing.”

The firm cannot talk about some of its best cases, but if there’s one that got away, it would be who leaked the details about a recent decision to upend Roe v Wade, the ruling that protects the right to abortion, from the US supreme court.

The US reeled after the draft opinion was leaked to Politico, and Menschel and Nardello were tempted to try to get to the bottom of the who and when.

However, officials determined that an internal investigation was the better route. More than 100 interviews later, it concluded that it could not discover the source of the leak.

“That would have been a great case to have worked on,” Menschel says.