I ran a criminal check on a workman  recently hired & found out he is a convicted felon & was in prison until 2011 ( crime-identity theft).

Of course your going to have a bummer every now and again but that's RE.. just don't want it to be your first one if you can help it.Let's say you've been arrested for suspicion of murderAre you going to take advice from a paralegal that does divorces or go find the best criminal defense attorney you can find?

@Alexander Felice - I see both points; however isn't there some sort of moral or ethical obligation to the neighborhood in which your rental units are present to not be blind to criminal activity taking place on your property?

Thirdly if tenant is approved by Homeowner association (they run criminal, credit, employment check) but I feel that tenant credit and employment history my be risky for me rent to this tenant, what would best way to reject tenant and not be on hook for RE agent fee?

Not to mention the challenge banks face with cyber security.

Second -  is there not recourse for the original criminal fraudulent action this woman took by forging signatures, etc?  

When you say "background check", do you mean the legal/criminal history report, the credit report, or both?

If there is a police report about the assault and a conviction or a guilty plea, Alabama law says it is a non-curable default if there has been a criminal assault. 

You won't be able to run a credit/criminal because there's likely no history on them.

If the investment has professional administration, you will have access to the answers to those questions, but also much deeper vetting of the sponsor that will include personal background checks covering things like bankruptcy, judgements, litigation, criminal history, and other red flags related to a sponsor that you would want to avoid, plus other items that investors rarely consider like ensuring that the properties are actually titled correctly, property taxes are paid, and insurance is current.