Strauss-Kahn, Madoff Cases Help Stroz Friedberg Build Bodyguard Business

Former International Monetary Fund chief Dominique Strauss-Kahn, charged with sexual assault, has something in common with Bernard Madoff besides a rap sheet: both hired Stroz Friedberg LLC to manage their house arrest.

Not that the French economist or his lawyers had much choice. Strauss-Kahn’s legal team chose Stroz Friedberg for the job at the recommendation of the Manhattan District Attorney’s office, which said at last week’s bail hearing that Strauss-Kahn was a flight risk.

The job, which will pay Stroz Friedberg about $200,000 a month according to estimates provided to the court, is the latest high-profile assignment for the firm, which managed the house arrest of Madoff two years ago.

“We’re former law enforcement guys,” said Edward Stroz, 54, who headed the FBI’s computer crimes squad in New York before stepping down in 2000. “We have brains, some muscle. We’re not afraid of adversarial situations, and we’re not afraid to come before the court.”

While “muscle” is important, Stroz said he isn’t just in the business of renting “bodyguards.” For Madoff, there were legitimate concerns he might commit suicide, as well as whether defrauded investors might try to kill him.

Smuggling Madoff

Source: Stroz Friedberg LLC via Bloomberg

Edward Stroz, founder and co-president of Stroz Friedberg LLC. Close

Edward Stroz, founder and co-president of Stroz Friedberg LLC.

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Source: Stroz Friedberg LLC via Bloomberg

Edward Stroz, founder and co-president of Stroz Friedberg LLC.

Stroz’s people were so concerned about the possibility of an attempt on Madoff’s life that they smuggled their client out of his apartment building on the few occasions when he had to leave.

“You want to make sure people aren’t displayed where they don’t need to be,” said Stroz.

With Strauss-Kahn, the goal is to prevent him from fleeing the country. New York Supreme Court Justice Michael Obus granted the French economist and politician bail of $1 million in cash and an insurance company bond worth $5 million. Obus ordered Strauss-Kahn to wear an electronic bracelet and be confined to his residence with at least one armed guard on duty at all times.

Yesterday, Strauss-Kahn moved from a temporary apartment at 71 Broadway in Lower Manhattan to, according to police, a townhouse at 153 Franklin St. in the Tribeca neighborhood. He will be allowed to leave his residence only for court appearances, meetings with lawyers, doctor’s appointments and weekly religious services.

Former Prosecutor

“It’s a bespoke service,” said Stroz, who started the firm in 2000 with Eric Friedberg, a former federal prosecutor. Stroz said the firm structures each job to fit the court order in that case.

In 2007, Stroz Friedberg got a $30 million investment from Greenhill & Co., an investment bank. Last October, New Mountain Capital bought 50 percent of the firm for $115 million. The company now has 210 employees, Stroz said.

Stroz Friedberg, though smaller than competitors Kroll Inc. and FTI Consulting, has carved out a niche in the area of forensic investigations, said Greenhill & Co.’s Dhiren Shah, who joined the security company’s board after the 2007 investment.

“We like their business model,” Shah said. “More and more, in both criminal and civil cases, cyber issues are on the rise. We thought these guys were doing something very interesting in a very interesting market.”

Digital Lab

Stroz Friedberg started with a focus on crimes involving computers and the Internet. The firm built its own digital forensics lab to collect, identify and preserve evidence gathered from hard drives, cell phones and other devices.

Before the Greenhill investment, Stroz Friedberg had grown by building its profile in New York, and adding experienced former law enforcement professionals in markets across the country.

Stroz Friedberg was hired by the law firm representing Martha Stewart Living Omnimedia Inc. to preserve e-mails when Stewart, the company’s founder, was charged with obstruction of justice.

The Enron Task Force hired Stroz Friedberg for its trial of former Merrill Lynch & Co. bankers accused of entering into a so-called parking arrangement involving two electricity barges off the coast of Nigeria.

During that trial, forensic evidence discovered by the firm helped convince a Houston jury that one senior Merrill Lynch banker was aware that the barge deal wasn’t a true sale of assets.

Stroz said the company established its abilities to manage a complex house arrest in 2007, when it was hired to monitor the Sabhnanis, a couple on New York’s Long Island who were accused of enslaving two Indonesian house workers.

‘On the Map’

“That one put us on the map,” Stroz said, noting that the surveillance lasted more than a year and involved monitoring Internet traffic. “This is where our cyber skills came in handy.”

Anthony Valenti, who heads the firm’s business intelligence and investigations unit, ran the home detention programs for the Sabhnanis and Madoff, and is leading the Strauss-Kahn surveillance.

Stroz said it’s important for his people to maintain some level of rapport with home detention clients.

“You always want to have that,” he said. “It makes everything go better. Home detention is like jail outside of jail. That doesn’t mean you have to treat the client as though he’s in jail.”

Clinical Psychologists

Building rapport helps provide a sense of the client’s mental state while the firm often consults with clinical psychologists to better understand what a home detainee is going through, Stroz said.

“We’re one of the few firms that uses behavioral sciences,” he said.

Watching Strauss-Kahn involves traditional guard duties, too. Two days after Strauss-Kahn was released from New York’s Rikers Island prison complex, a guard in a brown suit sat in a chair in front of a stairwell across from Strauss-Kahn’s door at the Building on Broadway.

The case is People v. Strauss-Kahn, 1225782, Criminal Court of City of New York (New York County).

To contact the reporter on this story: Greg Farrell in New York at gregfarrell@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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