Asset Search Blog : Asset Search & Hidden Assets : Lawyer & Attorney Fred Abrams : Tax Fraud, Asset Investigations

"Asset Search News Roundups" from this year on January 10, March 17, March 25, April 1, etc., raised a variety of issues related to Bernard Madoff.  My very last post, (i.e. "Will Ruth Madoff Keep Her Remaining $2.5 Million?), was also connected to him.  I again mention Bernard Madoff, among other things: 

• "Madoff gets 150 years for massive investment fraud" provides some details about yesterday's sentencing of Bernard Madoff.  His sentence was memorialized by the Court's June 29, 2009 judgment.

• Monica Conyers also resigned from the Detroit City Council yesterday, as was reported by The Associated Press.  Her criminal case will be discussed in my next article, "Public Corruption Charges Against Two Politically Exposed Persons". 

• "Efforts to Curb Foreign Bribery Lack Vigor, Report Finds" &  "The world is losing the fight against international bribery" are about a public corruption / anti-bribery report presented at an OECD  meeting in Paris.  This "2009 OECD Anti-bribery Convention Progress Report" is available at Transparency International's website. 

Copyright 2009 Fred L. Abrams

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As a Reuters article suggests, the Court made a June 26 Order which directed Mr. Madoff to forfeit $170 billion in assets.  The U.S. Attorney's Office is also no longer seeking forfeiture of all of the assets of Bernard Madoff's wife, Ruth.  It is Instead permitting Mrs. Madoff to retain $2.5 million of her assets since she has relinquished her claims to Madoff owned property under U.S. asset forfeiture laws.  

The foregoing is mentioned in a stipulation with has been filed in Court.  This stipulation explains that $2.5 million will be turned over to Mrs. Madoff once she vacates real property and surrenders her personal property.  (Stipulation, at  pp. 7-8  ¶3).  Despite exempting the $2.5 million from asset forfeiture, Mrs. Madoff may not necessarily get to keep this money.  This is true because the stipulation: 

... does not preclude any other department or agency of the United States or any other person or entity, including but not limited to the United States Securities and Exchange Commission, Irving H. Picard, Esq. as trustee for the liquidation of business of defendant Bernard L. Madoff Investment Securities LLC... from seeking to recover the funds from RUTH MADOFF.  (Stipulation, at page 8, ¶ 3).

Mrs. Madoff is therefore still subject to any claims possessed by Madoff trustee Irving Picard and many others.  These claims could arise out of Mrs. Madoff's alleged role as a wrongful transferee of funds related to Mr. Madoff's Ponzi scheme.  Mrs. Madoff for example, might have transferred millions to herself in anticipation of Mr. Madoff's arrest, as mentioned by: "Bernard Madoff & The Badges Of Fraud". 

She is also alleged to be among the beneficiaries of a corporate American Express credit card that may have been used to dissipate assets related to Mr. Madoff's Ponzi scheme.  Documents which might help show this suspected asset dissipation were attached as "Exhibit 25" to a May 5 affidavit filed for trustee Picard.  One of these documents was included in a Huffington Post article and is reproduced below. 

 

Click On Image To Enlarge

 

Copyright 2009 Fred L. Abrams

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On October 6, 2008 I wrote that an asset search  / investigation focusing on Nazi-looted art could culminate in a Holocaust-related art restitution case.  Holocaust-era art restitution cases are also going to be discussed at the "Holocaust Era Assets Conference", which starts tomorrow.  This conference is being held in the Czech Republic and  Nobel Laureate Elie Wiesel will be one of its attending delegates. 

"US lawmakers press Poland, Lithuania, on Holocaust assets" additionally explains that twenty-five U.S. legislators, (some of whom are delegates of the conference), have just executed letters in favor of restituting property stolen by the Nazis.  In New York meanwhile, the Museum of Modern Art recently moved to dismiss the Holocaust-era art restitution case of Grosz v. The Museum of Modern Art. 

As I mentioned in "Laundering Holocaust-Era Loot?", Grosz is about three paintings possessed by The Museum of Modern Art since the 1940's and 1950's.  The plaintiffs' amended complaint in Grosz, alleges that the three paintings had been stolen from expressionist and Dadist painter George Grosz, due to Nazi persecution. 

Also according to plaintiffs' amended complaint: "the greatest art looting in history occurred during the reign of the National Socialists ('Nazis') in Germany (1933-1945)". (Amended Complaint, at p. 2 ¶4).  Some of this Nazi-looted art is in fact, pictured below.  It had been hidden at a church in Ellingen, Germany and was discovered in 1945 by troops of the U.S. Third Army.

 Photo: National Archives and Records Administration

Copyright 2009 Fred L. Abrams

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Ernst & Ernst Collector's Gallery owner Donald Dean Seybold, might forfeit 2000 pieces of fine art which include: paintings, prints, sculptures, plates and books.  Mr. Seybold could also end up forfeiting: a Las Vegas time share, a jeep, a sports utility vehicle and $3.2 million dollars. 

Federal prosecutors are seeking asset forfeiture of these items pursuant to 18 U.S.C. §§981 & 982; 21 U.S.C.  §853(p) and 28 U.S.C. §2461(c). This is happening because Mr. Seybold is accused of defrauding art investors in a Ponzi scheme.  Mr. Seybold's indictment claims that he made false representations to investors, that they could profit from the purchase and resale of certain art and art packages. 

The relevant art, art packages and art buyers are however, believed to have all been fictitious. (Indictment, at ¶3).  Mr. Seybold is suspected of violating 18 U.S.C. §1343, (wire fraud), by: "fraudulently us[ing] money obtained from later investors to pay off earlier investors."  (Id., at ¶¶6).  The docket report in U.S.A. v. Seybold, additionally reveals that Mr. Seybold made a June 1, 2009 pretrial discovery request to elicit information from prosecutors, about their case against him.

Copyright 2009 Fred L. Abrams

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Today's "Asset Search News Roundup" discusses yesterday's arrest and indictment of Mr. Allen Stanford, who was the subject of my very last blog post.  Just as Bernard Madoff was accused of money laundering, so is Mr. Stanford.  Mr. Stanford has among other things, been indicted pursuant to 18 U.S.C. §1956 (h) (Conspiracy to commit money laundering).  (Stanford Indictment, at pp. 45-48). 

Mr. Stanford's indictment claims that Mr. Stanford hid assets by laundering them through foreign bank accounts. (Id.).  In connection with Mr. Stanford's alleged crimes, U.S. authorities are also seeking the asset forfeiture of bank accounts in the United Kingdom, Canada and in Switzerland, including Geneva. (Id. at pp. 49-57). 

Assuming illicit assets were actually hidden by Mr. Stanford in Geneva, then Swiss statutes like Art. 305bis Swiss Criminal Code: Money Laundering (English Translation), might be relevant.  Finally, "An Asset Search In Geneva", explains some of the legal remedies which could apply to the asset forfeiture / seizure of any Stanford bank accounts maintained in Switzerland.

Copyright 2009 Fred L. Abrams

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Suspected Ponzi schemer Allen Stanford may have facilitated one of the largest financial frauds known to date.  Any receivers, investors or other stakeholders with claims against Mr. Stanford under bankruptcy or other laws, are of course trying to interdict Stanford's assets.  As I mentioned in my "March 25, 2009 Asset Search News Roundup", these competing interests of numerous stakeholders / plaintiffs can be a significant problem. 

Some of these problems are highlighted by S.E.C. receiver Ralph Janvey's April 23, 2009 Report in S.E.C. v. Stanford International Bank Ltd et. al., Index No.: 3-09-CV-0298.  The April 23rd Report explains that receiver Janvey lacked standing to intervene in proceedings related to Mr. Stanford's assets in Antigua, according to the Antiguan Court.  (Report of the Receiver, dated April 23, 2009, at page 19).  The report also stated that despite an April 1, 2009 meeting, there was no "concrete cooperation agreement" between receiver Janvey and Antiguan liquidators searching for Stanford's assets. 

As was also reported, Mr. Stanford seeks to disqualify opposing counsel Baker Botts L.L.P. -- which is one of the law firms working for receiver Janvey.  Through his motion and / or accompanying brief, Mr. Stanford claimed that Baker Botts was his attorney and that it set up the very business entities / bank involved in Stanford's alleged fraud. (Accompanying Brief, at pp. 2-4).  Mr. Stanford additionally argued that Baker Botts: "turn[ed] on its former client to dismantle and disembowel the very corporate structures and product lines the law firm created, likely using privileged information in the process.  (Id. at p. 4).

Adding to the above-mentioned complexities, is the fact that about 400 individuals or entities, (possibly defrauded out of more than $100 million by Mr. Stanford), had earlier filed their own intervenor motion and supporting paper, in S.E.C. v. Stanford International Bank Ltd. et. al.  Difficulties caused by competing interests in a different fraud case, are described by my local Swiss counsel in: "Forced Collections Against A Fraudster Like Madoff".

Copyright 2009 Fred L. Abrams

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A financial transfer through multiple jurisdictions which lacks any economic benefit, may especially be a red flag that assets have been hidden.  Although a variety of people sometimes use multiple jurisdictions to hide assets, this "Asset Search News Roundup" is about the front and / or shell companies reportedly used by the Fabio Enrique Ochoa Vasco drug trafficking network in Mexico, Colombia and the Caribbean.

According to a U.S. Treasury Department press release from yesterday, the Ochoa Vasco financial network includes the fifteen companies identified in the chart below.  Information about some other narco-traffickers can be found at: "Interdicting The Assets Of Mexico's Narco-Traffickers".

Click On Chart To Enlarge

Chart: Office Of Foreign Assets Control, U.S. Treasury

Copyright 2009 Fred L. Abrams

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Like diamonds, art can be used as a portable valuable commodity to illicitly transfer value to another jurisdiction.  The following seven Egyptian artifacts were for instance, stolen from the Bijbels Museum in Amsterdam on July 29, 2007 and then ultimately transferred to a New York City auction house: 

The seven artifacts depicted above were however, recovered by U.S. Immigration and Customs Enforcement ("ICE"), according to a May 27 press release.  ICE recovered them by working with the New York office of the Art Loss Register.  ICE similarly worked with the Art Loss Register to interdict a Pompeii wall panel fresco on June 1.  In another case resolved by ICE on June 1, Corinthian pottery was recovered.  The fresco and pottery had been separately stolen in Italy and were then transferred to New York City.  Both items are respectively pictured below:

Copyright 2009 Fred L. Abrams

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My post "Asset Search & Fraud Investigation" mentions an August 1, 2006 report on offshore tax haven abuses. Pages six to seven of that 2006 report claimed that Quellos Group LLC hid $2 billion in capital gains from the IRS.  After the report was issued, Quellos was acquired by BlackRock Inc. on October 1, 2007.

I discuss Quellos in this "Asset Search News Roundup" because a Seattle federal grand jury has just indicted ex-Quellos chief Jeffrey I. Greenstein, attorney Charles Wilk, (who has a Master's Degree in tax law), and tax attorney Matthew Krane.  As the New York Times and a June 4 Department of Justice press release explained, the indictment in U.S.A. v. Krane, et. al., Docket No. 2:08-cr-00296, arises out of a supposed tax fraud. 

If the allegations of the June 4, 2009 superseding indictment in Krane are true, then Mr. Greenstein, Mr. Wilk and Mr. Krane may have hidden assets by exploiting foreign bank secrecy laws .  The three might have also hidden assets by using multiple jurisdictions and a shell company.  These and some other asset concealment methods, are listed in "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy".

Copyright 2009 Fred L. Abrams

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