Messages can reveal sender's real agenda.

THE executive thought he had taken every possible precaution in quietly offering jobs to a group of workers at a competing firm--if they would steal their company's trade secrets for him.

He stayed off his company's e-mail and used a free AOL account. He copied his e-mail conversations onto diskettes, moving data constantly. Finally, he deleted all the evidence from his hard drive.

Or so he thought.

"I was able to show how the data came in through AOL and how he moved it around and had these different names on it," said Mark McLaughlin, an investigator for Computer Forensics International, who analyzed the data from two of the executive's laptops as part of a trade secrets lawsuit. "He settled the case immediately."

E-mails are becoming a major part of investigative trails, whether they involve criminal activity, civil lawsuits, regulatory examinations or internal malfeasance at a company.

Often more conversational and informal than paper documents, they can reveal the intent or motive of an individual under investigation--providing a critical piece of evidence needed to prove a crime was committed. They are routinely requested in lawsuits, particularly those filed by the Securities and Exchange Commission and other regulatory agencies. They also may be part of a company's internal investigation into sexual harassment and other claims.

Yet many executives and employees continue to use e-mails freely and carelessly, often unaware of how devastating they could be.

"In e-mail, they regurgitate their contemporaneous thoughts," said Cliff Hyatt, a partner at Pillsbury Winthrop Shaw Pittman LLP and former deputy assistant regional director at the SEC. "That's what makes it so potentially damaging to companies and so valuable for the government."

Major companies have fallen victim to incriminating e-mails. Last month, Boeing Co. ousted Chief Executive Harry Stonecipher after learning of an e-mail he sent to a female executive with whom he was having an extramarital affair.

Locally, a former vice president of shoemaker Vans Inc. pleaded guilty in January to fabricating e-mails in order to implicate other executives and exonerate him in an alleged bribery and extortion scheme. And Los Angeles Mayor James Hahn, who faces re-election next month, was asked last year to retain e-mails from his office as part of a federal and county investigation looking into whether city contracts are awarded on the basis of campaign contributions.

Even without criminal or civil penalties, companies facing an investigation pay thousands of dollars to have a lawyer or computer forensics investigator comb through millions of its e-mails.

"I'm involved in representing companies and individuals in SEC matters and other regulatory matters; other times, I'm in the e-mail retention and distribution business," said Hyatt. "It occupies a substantial portion of my time."

The SEC routinely asks for e-mails as part of an investigation or regulatory examination, according to Sandy Harris, associate regional director of enforcement at the SEC's Pacific Regional Office. Similarly, the Federal Bureau of Investigation often seizes the computers of a company in order to obtain e-mails. Since the late 1980s, members of the FBI's Computer Analysis and Response Team have deconstructed computer data in cases involving cyber-crimes, child pornography, movie piracy and financial frauds.

About 15 examiners at the Los Angeles bureau, several of whom are computer specialists, are dedicated to foraging through computer hard-drives and servers as part of an investigation, said Kenneth McGuire, supervisory special agent at the FBI in Los Angeles. Some even specialize in analyzing text messages and e-mail from cell phones, hand-held devices and digital video recorders.

"We could use 10 more right now," he said of the examiners in L.A. "E-mail is just critical. In some cases, more so because people tend to say more on an internal e-mail than on a phone call."

Gary Tang, public information officer for the IRS' criminal investigation unit in Los Angeles, said local agents send computer data to the lab when assisting in financial fraud investigations. "A bank statement or financial document shows numbers, but it doesn't show what the intent of those actions is," Tang said. "While on an e-mail, it shows a discussion, which could show intent."

Intent or motive is critical in most investigations. In the corporate culture of internal emails and instant messaging, investigators can retrieve communication that reflects--with documented dates and times--what used to be said across the hall or between cubicles.

Brian O'Neill, a partner at Jones Day, calls those e-mail conversations "harebrained ideas expressed at an unthinking moment." "All that is a tool for investigators to get into the heart and mind of the person under scrutiny," he said. "It's a window to someone's soul."

Those thoughts are especially instrumental in sexual harassment claims. More than a quarter of Fortune 500 companies have faced sexual harassment claims originating from corporate e-mails, according to the ePolicy Institute, a Columbus, Ohio-based non-profit organization that studies e-mail issues. In 1995, Chevron, now ChevronTexaeo Corp., paid four of its female employees $2.2 million to settle a sexual harassment lawsuit that originated when male employees sent e-mail jokes.

In the old days, sexual harassment complaints and lawsuits were handled by corroborating the stories of each employee and sifting through internal memos, photos, Post-It notes or other paper documents, said Keith Jacoby, a labor and employment lawyer at Littler Mendelson. But few people write love letters on Post-It notes, he said, while e-mail can reveal questionable content in full graphic detail.

While e-mail is often used as supporting evidence to someone's claims that fraud exists within a company, the way in which e-mail is obtained makes a difference before a judge or jury. McGuire said he often receives copies of computer hard drives from a company's computer technicians, who often fail to follow standard procedures used by forensic computer experts. "They may not have obtained what they needed in a fashion easily described for a judge or jury," he said.

Last month, Citigroup Inc.'s brokerage unit was fined $350,000 by the New York Stock Exchange for failing to screen its employees' e-mails, one of which, sent by a former salesman, contained "inaccurate and misleading information" about Guess Inc.

While many executives at public companies have become savvy about e-mail preservation and will download their electronic files on a regular basis, they seldom have enough time nor understand how to destroy e-mails effectively.

"It's typically done by someone who's not aware of computer forensic procedures," said McGuire. "Even though they delete it, they may not take precautions to make sure it's completely obliterated from the system."

In most cases, e-mail remains in the company's server. "People forget these are being maintained and there are backup copies of the e-mails that exist," he said.

In many investigations, companies cooperate by hiring an outside lawyer or computer forensics specialist to search through e-mails. E-mails that contain privileged communications are often weeded out before sent to investigators in a packaged CD.

"You have to make sure e-mail that is privileged communications--between in-house counsel and individuals--remains privileged communications," Hyatt said.

Harris, of the SEC, said the agency often requests e-mails from other businesses or accounting firms that dealt with the company in question. "If we don't believe that a party in one of our investigations has produced documents required, we have a means of enforcing a subpoena," she said.

Computer forensics specialists use software programs to search e-mails by keywords or phrases. First, they analyze undeleted e-mails that still exist in folders of the corporate e-mail system. If that doesn't work, they search deleted files on hard drives or e-mails that were sent through the Internet.

But finding a "smoking gun" e-mail doesn't always solve the crime.

"Computer forensics is not an end-all," McLaughlin said. "You have to talk to people and get a sense of what happened. We can point you in the right direction, but you must do a good investigation, too."

RELATED ARTICLE: E-mail sampler.

Rick Caruso

Chief Executive

Caruso Affiliated 

How much time do you spend using your e-mail each day?

Probably not more than 30 minutes maximum. I am not a big fan of e-mails. It's a very lazy form of communication. People say things in e-mails that shouldn't be in writing. To get into an important discussion on e-mail, I wouldn't do it. You could be in a sensitive meeting and you have a strategy that you may not want to have publicized.

Excluding spam, how many e-mails do you receive per day?

Not that many. Most people know that if they want to get a hold of me, the worst way to do it is through e-mail.

Do you check in on weekends or when you're on vacation?

I have a Blackberry. If an e-mail comes across, I'll check it. I only got the Blackberry because I had a vacation in Europe this summer.

If you didn't have e-mail to use, how would it affect your life?

I would have more time to think. I'm a believer that people need to spend quality time thinking.

Has e-mail affected your telephone habits?

No. Picking up the phone and calling somebody sets the tone of importance. Hearing the inflection in somebody's voice helps with understanding the message. It's a much more professional and gentlemanly way to conduct business. You can never replace a personal call or a personal meeting and looking somebody in the eye.

John Stoddard

General Manager

Wilshire Grand

How much time do you spend using your e-mail each day?

I probably spend 45 minutes a day reading it. Some of them are FYI type e-mails from department heads or a security report from the night crew. I'll read them and delete them. Our ownership (Hanjin International Inc.) is in Seoul Korea so there are a lot of communications done via e-mail. As we are getting ready to go home, they are starting their workday. They have a chance to review the financials.

Excluding spam, how many e-mails do you receive per day?

Sixty, I guess.

Do you check in on weekends or when you're on vacation?

On weekends and evenings, I can check it from home. I'll be looking for something special--some authorization for something I asked for--so I'll be mentally ready to deal with it come Monday morning.

If you didn't have e-mail to use, how would it affect your life?

I remember when faxes came online, it just turned our lives around. (E-mail) has done three times what faxes did.

Has e-mail affected your telephone habits?

My time on the phone has not changed at all. I call attorneys, contractors, people from the L.A. Hotel Employer's Council, a lot of local business people in local organizations that I serve with. There are a lot of internal phone calls within the hotel.

Fred Claire

Columnist and Radio Host

MLB.com

How much time do you spend using your e-mail each day?

I spend in excess of an hour. When I do my columns, I do have my e-mail address because I want the readers to have a chance to respond. And I have done some columns where I have had more than 200 responses. I answer each and every one of them.

Excluding spam, how many e-mails do you receive per day?

I get in the area of 150 and 200 and probably 70 percent of that is spam.

Do you check in on weekends or when you're on vacation?

I went to Maul for two weeks and I took my computer because I didn't want to fall behind. My Dodger training for 30 years in the (Peter) O'Malley era was we answer every phone call and every letter and try to do it that day.

If you didn't have e-mail to use, how would it affect your life?

I don't have a secretary. I'm a one-man band. I just couldn't do the things I do without e-mail. I would need an office of one or two more people just to do what I do on e-mail.

Has e-mail affected your telephone habits?

One of (my USC) students contacted me because she wanted to meet with me. Who knows how long it would have taken for us to connect by phone? She's busy as a student, I'm busy doing what I do. But we set a time via e-mail.

Charlie Woo

Chief Executive

Megatoys

How much time do you spend using your e-mail each day?

I spend at least two to three hours a day on the computer for e-mails with my offices in Hong Kong and China, suppliers, vendors and sometimes with people in my home office.

Excluding spam, how many e-mails do you receive per day?

I get 30 to 40 e-mails a day.

Do you check in on weekends or when you're on vacation?

I check e-mails on weekends and on vacations so that when I come back, I don't need to spend a lot of time catching up. I can manage my company when I'm away. Sometimes I don't sleep at night.

If you didn't have e-mail to use, how would it affect your life?

I can't imagine I could manage my business without e-mail. With the Internet, it's even more important. I can research the popularity of a product, a government regulation, legal issue and competitors' information.

Has e-mail affected your telephone habits?

E-mail doesn't replace conversation. If I have an important meeting with someone, the telephone conversation is still necessary. But the telephone bills have gone way down. It's now $2,000 to $3,000 a month--and those bills are mostly cell phones. In the past, it was $10,000 to $12,000 a month.

--David Greenberg

RELATED ARTICLE: Rules of the road.

IN the absence of a universally accepted code of etiquette, business-related e-mail usage involves both common sense and cautionary tales:

Thou shalt not e-mail sweet nothings (Boeing's Harry Stonecipher). Thou shalt not e-mail secret financial dealings (Enron). Thou shalt not e-mail what one really thinks about a stock if thou hast publicly stated something else (former analyst Henry Blodget). Thou shalt not send e-mails detailing kickback agreements (Boeing again).

"The No. 1 mistake we continue to see is people putting in writing messages they would never want to appear in public," said Nancy Flynn, executive director of the ePolicy Institute, which studies e-mail use in the workplace. She said people seem to forget that once they click "send," they have no control over where that message goes.

The experts advise e-mailers to make sure they proofread their copy--and as Joanna Krotz, author of the "Microsoft Small Business Kit" advises, "don't paste in cutesy cartoons, your toddler's artwork, your favorite epigram from college, memory-hogging graphics, wacko fonts or all the rest of the endless and poignant attempts to stand out from the crowd."

Other rules of netiquette:

DO NOT TYPE IN ALL CAPITALS, as that is considered to be shouting.

If a group e-mail is going outside the company, "it is a huge taboo to do a CC and show everyone else's e-mail addresses," said Jennifer Beever, marketing consultant with Woodland Hills-based New Incite. "There is no reason for anyone else to be able to look through that list." Type everyone's addresses in the "blind carbon copy" (BCC) line of the message, so the distribution list will be hidden. (For internal communications, it's OK to put all of the recipients' addresses in the "CC" line.)

Another overlooked part of e-mailing is subject line. Judith Kallos, author of "Because Netiquette Matters!", said they should be as short as possible, and clearly state what the e-mail is about. Not only is it a courtesy to the recipient, but in a world of increased spare, a subject-less e-mail often will be filtered out as junk, and never make its way to the recipient's inbox.

Keeping e-mails short is a rule common to most Top 10 lists. And try to keep each e-mail to one topic. "It's not a good idea to say, 'By the way, on this other topic ...'" Beever said. Divide multiple topics into different e-mails--it helps with organization, and holds people's attention. And as hand-held devices like Blackberries and Web-enabled cell phones proliferate, recipients are reading e-mails on smaller and smaller screens.

When composing an e-mail, both Beever and Kallos warn against finding a recent e-mail from the person and just clicking "reply."

"If you want to give the perception of lazy, find a previous e-mail from the party you want to communicate with, hit reply and start typing," Kallos said. Often, people forget to change the old subject heading, an indication that you haven't added the person to your address book.

One of the most vexing questions is how to start and end a business e-mail. There should be a salutation and a closing, but they tend to be more casual than in a business letter. On the other hand, "It's a little bit extreme to just launch into the text of the message," Beever said.

Start with the highest level of courtesy in the initial e-mail until it is clear the relationship dictates otherwise. And always sign-off an e-mail with some form of closing. "Best Regards" has become somewhat of a standard, often shortened to "Best."

Then there is the signature.

Long ones over five or six lines are viewed as egocentric, Kallos said. Company name, phone number and Web site link should be sufficient. "If you're going back and forth with someone over an afternoon, it's really not necessary to put in a signature line every time," Beever said.

As for when to end the stream of "Thank yous," "Will dos," "Sounds goods" and "Look forward to seeing yous," there is no standard. "If there is an action required by you, such as a confirmation, you must reply," Beever said. "But after that, there is no further action required."

No one can really object to receiving a "Thank you," Kallos said, but she admitted she has never seen someone type "You're welcome."

--Hilary Potkewitz