An Israeli-born businessman who owns a contracting company in Atlanta has sued Alpharetta-based LexisNexis Risk Solutions over claims one of its financial compliance platforms provided erroneous information saying he had been fined for tax evasion and suspected of diamond smuggling in Israel.

Despite proof from the Israeli government that the reports were for a different man, LexisNexis has refused to correct its records or even respond to his complaints, according to a lawsuit filed last week in Fulton County.

Because the company says its Bridger Insight background checks are not covered by the Fair Consumer Reporting Act, the complaint said plaintiff Ziv Gal had no recourse but to sue in state court to have the erroneous information wiped from the company's data banks.

According to the complaint filed June 11 by G. Taylor Wilson with the office of libel and defamation practitioner L. Lin Wood, Gal was the majority stockholder of MGS Contracting last year when it launched an Employee Stock Option Plan.

The company retained New York-based Aegis Fiduciary Services, which specializes in ESOP plans, to oversee the process. Aegis, in turn, used the Bridger platform to run background checks as part of its due diligence.  

“Lexis claims that it 'and Bridger Insight are the industry leaders in [Office of Foreign Asset Control], Bank Secrecy Act, and USA PATRIOT Act compliance solutions' and that '[t]he tools they offer should be an integral part of any organization's anti-terrorism and money laundering compliance program,'” the complaint said.

Bridger ran two background checks on Gal, and in each “Lexis published the false and defamatory accusation” that Gal was ordered to pay 120,000 Israeli shekels, or more than $33,000, “for smuggling and tax evasion. He was suspected of smuggling diamonds in commercial quantities in 2011.”

The report said the diamonds were valued at 2,385,676 shekels, or more than $660,000.

Informed of the report, Gal contacted Israeli authorities, and received a letter from the “Office of Investigations, Intelligence, Drugs and Catches” stating that the person named in the Bridger report was not Gal.

According to the complaint and attachments, Aegis had correctly entered Gal's identifying information into the database that returned the erroneous results, but, when some of the identifiers were omitted, the data identified another man, Ziv Orr Gil, who was born the same year.

Last July, Gal's former lawyer “politely requested corrective action from Lexis attorneys via telephone, and soon after, via e-mail,” the complaint said. “Despite assurances, Lexis's attorneys failed to take any action and became nonresponsive.”

In January his current counsel, delivered a “demand for corrective action pursuant to the FCRA as well as a demand for a retraction of the false accusations made to Aegis in the background checks.”

Gal got an automated response that month saying his file request had been received, but a followup from Lexis “did not contain any information pertaining to the Bridger Insight platform or the background checks,” the complaint said.

“Lexis never implicitly or explicitly acknowledged its false and defamatory background checks, and never advised Mr. Gal whether Lexis took any steps to disassociate Mr. Gal from the criminal records shown in the background checks,” it said.

The Lexis Risk Solutions website says Bridger Insight services “are not provided by 'consumer reporting agencies,' as that term is defined in the Fair Credit Reporting Act … and do not constitute 'consumer reports,' as that term is defined in the FCRA.”

“Due to the nature and origin of public record information,” it says, “the public records and commercially available data sources used in reports may contain errors.”

The complaint said Lexis is using that exclusion to avoid providing remedies for erroneous reports available to consumers through the FCRA.

“Because Lexis claims that Bridger Insight reports are not governed by the FCRA, it does not invest the money or resources necessary to ensure compliance with the FCRA, including an opportunity for consumers to object to false reports and to have false information corrected,” it said.

“The background checks caused consternation with Aegis regarding acting as fiduciary, caused a delay in completing the transaction, and the transaction was only completed upon Mr. Gal obtaining the Israeli confirmation letter.”

The complaint seeks an injunction ordering Lexis to “issue a conspicuous retraction to Aegis” and “take all reasonable measures necessary steps to ensure that Mr. Gal is no longer falsely associated with the false and defamatory accusations made against him in the background checks.”

It includes a count for defamation and demands for unspecified damages and attorney fees.

In an email, Wilson said that it was only after the “delay and mortification that goes along with being accused of diamond smuggling and tax evasion” that the ESOP was completed. “Mr. Gal is entitled to relief for these issues, but the primary issues in this case will be using discovery power to get to the root cause of the false information and to see it corrected to prevent future issues from arising.”

“Background checks are pulled on consumers in any number of contexts,” Wilson said, such as employment and professional license applications. “Because LexisNexis has not been transparent with Mr. Gal about how this mistake was made and has seemingly failed to take any steps to correct its error, litigation and its discovery power is the only way to ensure that Mr. Gal is not confronted with these false accusations the next time around.”

“The bigger picture in this case is the obvious potential for harm to consumers when consumer reporting agencies can skirt responsibility to the very consumers on whom they compile information,” he said.

In response to queries to LexisNexis and Risk Solutions Associate General Counsel Glenn Brown, a spokeswoman said there would be no comment on the pending litigation.