Context-Aware Technology Goes to Court

Cataphora sifts employees' digital communications on and off the job for signs of conspiracy to cover up company wrongdoing—or to initiate a scam

By Rachael King

Residents of Virginia, Florida, and Louisiana knew something was amiss when their new homes began smelling of rotten eggs. They grew alarmed when family members started developing respiratory and other health problems. After an investigation, the U.S. Consumer Product Safety Commission found a correlation between homes built with drywall made in China and higher levels of a gas that can cause a range of problems, including shortness of breath.

Consumers have brought class action lawsuits against manufacturers and importers of drywall from China. As they investigate, attorneys representing consumers will need to answer a key question: Did companies and their employees know the potential hazards of the materials they sold?

Cataphora, a software company founded in 2002 and based in Redwood City, Calif., is helping one group of plaintiffs search for the answer. Cataphora's software can track employee behavior that might indicate some form of wrongdoing. It's able to detect such patterns as e-mails unexpectedly written in a foreign language or unusual amounts of time spent on phone calls or offline communication.

In court cases involving corporations, lawyers for plaintiffs often struggle to determine which employees knew that fraud or some other illegal activity was happening. Reconstructing the context surrounding the event can be painstaking as investigators wade through thousands or even millions of e-mail messages. The task has become even more challenging in recent years as new forms of communication—instant messaging, text messages, or social media postings—have become more pervasive. That means it's less likely for investigators to find a single "smoking gun" e-mail message or memo.

Context helped Cioffi and Tannin

Cataphora's software overcomes this challenge by correlating and analyzing different types of communications to try to create context. "In the time we've been in business, the average size of e-mail text has shrunk about 50%," says Elizabeth Charnock, CEO of Cataphora, a maker of software that helps organizations understand complex employee behavior patterns by analyzing electronic communications.

Using software to track the larger context around employee relationships can be used to incriminate—or acquit—defendants. Bear Stearns hedge-fund managers Ralph Cioffi and Matthew Tannin were found not guilty of fraud and conspiracy on November 10. The government had tried to prove that e-mails they sent to each other indicated a much bleaker picture of their funds than the messages they were giving investors, who ultimately lost $1.6 billion. Charnock says jurors looked beyond the text of the e-mails and into the broader context of their communications. In that context the e-mails sounded more confused than conspiratorial, the defense successfully argued.

Cataphora's software also can analyze interrelationships on social networks to find close social ties between employees and to look at a company's so-called shadow social networks. These are the hard-to-detect, yet tightly bound groups that form among people with similar interests and backgrounds. "The org chart doesn't necessarily reflect the way people are working," says Carol Rozwell, vice-president and distinguished analyst at research firm Gartner (IT).

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