Precautions to take while getting to know people?

A friend of mine has a startup. I introduce him to people at times, and he's got contacts who are useful to me too. When meeting up with such contacts, what precautions could we follow or how can we get to know if the new person we're meeting isn't doing something illegal or is into some unethical business?
In short, how can we make sure we're meeting good people?

AND

If I'm meeting someone completely new, who has no people known mutually common to us, how can I get to know this person is safe to do business with. Any tell-tale signs which should set alarm bells ringing??

The truth is, you can't know - but you can make your own ethical stance clear.

Accomplished fraudsters will look, sound and apparently act like the best of the best. Nobody will know, until one day - when it will all be obvious with our 20/20 hindsight.

And people who you trust and whose standards are impeccable can sometimes change for the worse. (The other way round can work too.)

So what should you do? For me, if I'm getting into a serious business relationship with someone, I'll already have looked for other people's views on the person I'm dealing with, and then I'll be candid that I want some formalities observed to protect us both.

Occasionally, people I've developed a great relationship with on small projects will make their excuses at that point. I'll always make the charitable assumption that the formality just isn't good for them. But we won't then be working together, at least not on that venture.

Could you honestly describe them to someone else and would that person think of them as shady? Do you find yourself making excuses for that person because you like them?

And to disagree a bit with people with some of the other answerers here, accomplished fraudsters aren't great liars, but charismatic liars, they encourage you to deceive yourself.

Any Tell Tale signs? well, does he look like leisure suit larry?

Seriously, in a world of bernie madoffs, you need to thoroughly check references before doing anything that associates you with them. I'm certain a bunch of people here have stories where business engagements went south when seemingly good people reveal their true dark side.

Upgrade your LinkedIn account and then do your own background check on them. Call up people that worked with them. Call up their previous supervisors. Do a criminal background check. If there are any tell-tale signs, they will become apparent once others start telling you what they really think.

I agree with what Jimg said.

I try to mingle and be friendly as much as I can, and let people be innocent until found guilty.

But whenever it comes down to business or anything that's important to me, I go with this tactic: Ask for a non-trivial favour and see if they deliver. Good, trustworthy people usually deliver, and sometimes over-deliver.

And I try to live as I learn :-) Best of luck!

We as individuals tend to see others as being pretty much like ourselves. Therefore if you want to attract honest, ethical, good people, be one yourself. Likeminded people will be drawn to you. Conversely, people of a different character will be put off. That doesn't mean you should be naive of course. Trust your "radar". If something doesn't feel right, listen. Background checking is appropriate in some circumstances but really, Bernie Madoff would have checked out great. You need to build up your own critical reasoning abilities.