Threat-Rich Environment

Threat-Rich Environment

Personal security specialist Paul Jaeb is building a business around the security needs of the prominent and affluent.

Paul Jaeb, private eye, is mining a new, potentially rich niche for his services. Over the years, his corporate clients had asked for personal services on the side—looking into potential scams, performing background checks on household staff, providing security tips for foreign travel in risky locales. He realized his company, the Heartland Investigative Group, which he had built into the largest investigative firm in the Midwest with a core staff of 10 and a field network of 75 investigators, could leverage 25 years of experience to provide a high-touch, personalized service.

So Jaeb started his Private Client Group in 2014 to supplement Heartland’s core $4 million investigative business. With an eye to cap the group at 100 clients, he has already attracted 25 with a service that directly targets those with the most to lose.

There’s a growing industry nationwide built around providing residential, digital and personal security to the nation’s most affluent and prominent people. “People are becoming more aware that they are more vulnerable,” says Michael Julian, a San Diego-based private investigator and U.S. ambassador of the World Association of Detectives. “High-net-worth people are a bigger target.”

Locally, Jaeb’s group seems to be the only firm in the boutique security arena. Jaeb guesses there are 600 or so private investigators in the state, and notes that most are one- or two-person shops that specialize in particular areas, such as surveillance or fraud investigation, whereas Heartland’s scale allows it to occupy a variety of niches. “We’re big in our business, among the top 2 to 3 percent of agencies by size,” Jaeb says. “I can’t name our main competition locally because the others are too small to compete with us.”

Very few investigative firms have the qualifications and staff to meet the growing demand to provide specialized services that meet the security needs of high-end clients. Jaeb also had the smarts to be the first in the area to target the emerging market. “Paul is one of the pioneers,” says Jimmie Mesis, editor in chief of PI Magazine, a bimonthly international trade publication. “He’s an excellent investigator, but excellent investigators go out of business because they don’t know how to run a business,” Mesis says. “Jaeb has been a tremendous entrepreneur.”

It’s a potentially lucrative niche. “High-income earners are always a good target for any private investigator,” says Don Dunn, principal of R & D Agency, a firm in Burnsville with a staff of 17 investigators that specializes in fraud investigations. “They have unique needs and can pay your fees.”

Jaeb’s no Sherlock Holmes as played by Benedict Cumberbatch. Nor is he a parody of self-doubt à la Guy Noir. Seated in a black leather armchair at Heartland’s St. Paul offices, there is nothing rumpled or disheveled about him. Jaeb is confident, articulate and relaxed, dressed stylishly business-casual in a blue button-down shirt and black dress slacks. With graying hair trimmed close to his sides, a small goatee and black wire-rimmed glasses, the 51-year-old, who has spent his entire professional life as an investigator, resembles a software engineer or financial analyst more than a stereotypical private eye.

Heartland charges no enrollment fee to enlist in its Private Client Group, and it bills clients at an hourly rate ranging from $150 to $300, depending on the service. It does offer a $5,000–$15,000 comprehensive preventive security package exclusively to members of the Private Client Group, called Project Avert. The fee includes a thorough assessment of residential security risks, cyber-theft of personal and financial information, and threats while traveling, as well as recommendations on how clients can better protect themselves. It also includes around-the-clock access to the “bat phone,” a dedicated line that is answered by Jaeb or one of his associates.

A call came in on it from Sweden one Saturday at 6 p.m. A client’s 24-year-old nephew had called from a business trip in Miami, said he had been arrested for a car accident and needed $1,500 to make bail immediately or he would be transferred to a rougher jail. He said he had not been able to reach his parents.

Jaeb’s firm contacted a private investigator in his Miami network who drove to the jail and determined that the nephew was not there. He found him instead at a Burger King near the hotel where he was registered. The young man confessed he had a gambling problem and had lost all of his money at a casino. Jaeb’s firm kept him under watch for several days until his parents flew into Miami from Stockholm.

Crimes such as identity theft, home burglaries and muggings affect people in all walks of life, but the wealthy have more to lose when they are the victims, and they’re often targeted due to their affluence or prominence. “The losses can be staggering if someone breaks into your place in Boca Raton [because they know] you have a Warhol,” he says. “The higher you go up on the food chain, the greater your exposure.”

Still, when Jaeb surveyed 30 individuals from the Twin Cities whose net worth exceeded $10 million to get a clearer idea of their security needs, he was surprised by their lax approach to personal security and their general exposure to risk. They might have a home alarm but not use it. Or their home computer network had no firewall. “I was startled by the naiveté,” he says. “Our job is to mitigate those risks.”

Bursting the complacency bubble

Jaeb fights the preconception that affluent or prominent people who live outside the limelight, far from the coasts, are secure as a consequence of the obscurity.

He makes clients aware of the risks with personalized breakdowns of crime in their neighborhoods and educates about ways to protect their homes, their assets and their families. Cathy Paper, principal of the St. Paul marketing firm RockPaperStar and mother of three teenage children, paid $5,000 for Heartland to do a risk assessment of her home. In her 30 years of business and personal travel, she admitted she had never used a hotel safe. “He told me, ‘You’re setting yourself up for all kinds of theft,’ ” she says. “He helped me develop a healthy level of pragmatic paranoia. It opened my mind that I need to be more proactive about these things as a working professional and as a parent”—sentiments Jaeb seeks to instill in members of the Private Client Group.

A group client who asked to remain anonymous contacted Jaeb’s firm for protection from a stalker who had threatened the client (and whom the client believed was contracted by a spouse). Jaeb’s team met with the police and with the spouse. They also made sure the client’s home was secured. The client has not seen the stalker for six months. “They were able to tell me how to keep me and my child safe so we didn’t act too quickly and cause heightened threats,” the client told TCB. “I would highly recommend them to anyone who needs personal security.”

The wealthy are more frequent targets of scams than the less affluent are, and some of those scams can be quite sophisticated. In one instance, a client asked Jaeb to look into a Silicon Valley startup seeking a $200,000 investment. The person soliciting the money had befriended the client’s daughter and had Skyped the client from its “offices” at a business incubator. Jaeb discovered the company didn’t exist and that the incubator was fake. His client kept his money. “We stop deals like that all the time,” Jaeb says.

Well-practiced at vetting corporate job recruits, Heartland translates that experience to Project Avert with background checks on everyone from the pool maintenance guy to the leader of a church mission trip to Guatemala. Before one client hired a caretaker to live on his property, Heartland uncovered a theft charge in the applicant’s background. In another instance, a client was concerned about his daughter’s potential prom date and asked Jaeb to check out the 20-year-old college student. Jaeb found a sexual assault charge on his record. The daughter didn’t go to prom.

When clients travel, especially on business or for charitable purposes to countries without strong governmental and security infrastructure, Heartland offers general cautionary tips such as not to stray from the beaten path. It also provides specific nuanced information on which hotels might not be safe or special signage to look for in cabs to know they’re legitimate. Before a client’s recent trip to Rwanda, Jaeb called a contact there and was able to provide warnings about the activity of certain gangs and a recent assault on three British citizens.

Keeping tabs

Within the dense international network Jaeb has developed over the years is a U.S. network of 50 young people from 15 to 25 years old, whom he relies on to keep him abreast of the latest apps, drugs and scams directed at college students. Jaeb disseminates what he gleans from them as part of a monthly newsletter delivered exclusively to his Private Client Group. He’s been able to tell them about Yik Yak (a phone and web app that allows anonymous connections within a five-mile radius), “Mr. Nice Guy” (synthetic marijuana) and ecstasy tablets stamped with the latest pop culture images (Supergirl at the moment). “Clients love that,” Jaeb says, “because it’s a quiet way they can hear about things their kids won’t tell them.”

His clients’ greatest concern, regardless of income level, is their children’s safety. Jaeb offers teens coaching in how to protect their reputation online and also addresses more serious threats. Not long ago, he received a call from a couple in Seattle whose 23-year-old daughter had disappeared the day before her wedding. Jaeb tapped his Seattle contacts and discovered that her fiancé—whom the parents had not liked—had been arrested for possession of methamphetamine. They also found mention on her phone about Amtrak and St. Paul. Jaeb and a partner headed to the Amtrak station. When the train from Seattle arrived, he quickly spotted a strung-out young woman who matched the missing daughter’s profile. He managed to talk her into going to a drug treatment center.

Business typically comes through a private investigator’s door only after a breach in someone’s personal security, so selling clients on a proactive approach through Project Avert is not always easy. Such business is heavily dependent upon referrals. “Everybody knows a lawyer, but nobody knows a private investigator,” Jaeb points out, so he has cultivated relationships with financial advisors, lawyers and bankers. They send him the majority of his 400 to 500 new clients annually.

Cautious expansion

Not long after founding Heartland in 1991, Jaeb had tried to set it apart as the premier provider of investigative services. He was busy but not making much money. A mentor told him, “With price, quality and service, you can only sell two to be profitable. You’re selling all three.” So in 1997 Jaeb doubled his rates yet remained busy. Profitability increased from the low single digits to margins in the neighborhood of 15 percent. “I discovered there’s a piece of the marketplace that’s always going to buy the premium service and quality,” he says. “I’m proud of the fact that we are the most expensive investigative and consulting firm in the Midwest.”

In September, Jaeb completed the sale of his company to American Security & Investigations LLC, the largest independently owned full-service security agency in the Midwest, known primarily for its uniformed guards. Heartland moved its offices to American’s headquarters in St. Paul’s Midway neighborhood but remains an autonomous unit within the larger company. Though he would not disclose the purchase price, Jaeb did say the biggest benefit has been the support services American provides, such as accounting, human resources and collections. “They’ve alleviated a lot of backroom pressure,” he says. “We have been able to eliminate a lot of overhead.”

The acquisition also opens the door for expansion into midsize markets like Madison, Wisconsin, Des Moines, Iowa, and Omaha, Nebraska, where American Security is already established. Jaeb sees Heartland thriving in these markets that resemble the Twin Cities, with Fortune 500 companies and a pool of quiet wealth: “We’re looking to expand with cautious, organic growth.”

It remains to be seen whether Heartland will be able to replicate its success in other markets. One advantage Jaeb has enjoyed in the Twin Cities is that he has been able to trade on the trust people put in him as a local, having grown up in New Hope and graduated from the University of Minnesota. “You could not be successful in this market,” he says, “if you blew in from New York or Denver.”

For the moment, he is content running things here, building his Private Client Group and thriving on the variety of his caseload. “Every week something new and fascinating happens,” he says. “I can’t imagine ever getting out of this.”

John Rosengren is an award-winning local author. His last TCB byline was a look at the businesses of cyclist Greg LeMond.