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Investigating & Recovering Hidden Money & Other Assets

Hiding Cash By Structuring Bank Deposits

Posted in Asset Search/Fraud Investigation, Drug-Related Assets, Financial Institutions, Hidden Money, Money Laundering, Public Corruption, White-Collar Crime Generally

Bank Deposit Image

In some situations, the transfer of large sums of cash is a red flag that assets have been hidden by money laundering. Government authorities therefore require banks to report their customers who transfer or exchange large sums of cash. For example, banks in the United States are required to report bank customers who deposit or withdraw more than $10,000 in cash. The banks fulfill this requirement by electronically filing a Currency Transaction Report.

A bank customer trying to evade the filing of a Currency Transaction Report can be prosecuted for structuring, (a.k.a “smurfing”), in violation of 31 U.S.C. § 5324. Opinion blogger Radley Balko talks about some of these prosecutions at “The federal ‘structuring’ laws are smurfin’ ridiculous.” As discussed by “An Asset Search Over Corruption Proceeds,” prosecutors accused former Russian diplomat Vladimir Kuznetsov of violating structuring law(s).

At Count Two pp. 6-9 of Mr. Kuznetsov’s superseding indictment, prosecutors alleged Mr. Kuznetsov had structured deposits he made in New York City at Chase Manhattan Bank & the United Nations Federal Credit Union. The following case study also discusses structuring.¹  It analyzes how a group of criminals hid illicit drug proceeds by structuring deposits, smuggling cash & going offshore:

Image Egmont Case 06082

Image of hand with money: Africa Studio/Shutterstock.com

¹Case Study/Case Ref: 06082 Courtesy Of The Egmont Group of Financial Intelligence Units

Copyright 2016 Fred L. Abrams

Wire Fraud, Bribery & A Private Investigation

Posted in Asset Search/Fraud Investigation, Private Investigators, Public Corruption, White-Collar Crime Generally

Detective Looking Through Magnifying Glass

This is the 10th post in my series about what private investigators can and cannot do legally when searching for assets. The post discusses “K.C.” who was defrauded out of at least $500,000.00 by Patricia Walker-Halstead, a private investigator “K.C.” hired to investigate a suspected stalker. The post discusses wire fraud & bribery—which are issues that sometimes arise during an asset search or other private investigation:

“K.C.” a resident of Nebraska, thought she was being stalked. She therefore hired Patricia Walker-Halstead, (“Walker”), to investigate the alleged stalker. Between March 11, 2011 & November 28, 2012 “K.C.” made 59 payments to Walker Investigations, Walker’s private detective agency. Walker represented to “K.C.” that some of the payments would be given to “Scott.” Walker told “K.C.” that “Scott” was a Captain with the Nebraska State Patrol who could help with the investigation.

Walker even supplied “K.C.” with e-mails purportedly sent by “Scott” & represented that “Scott” was a potential romantic suitor for “K.C.” Walker however, never paid anyone at the Nebraska State Patrol named “Scott”, to investigate on behalf of “K.C.” As part of Walker’s scheme to defraud “K.C.”, Walker fabricated “Scott” &  Walker had not performed any investigation. Given all of the foregoing, federal prosecutors in USA v. Walker-Halstead charged Walker with 11 counts of wire fraud. Walker’s indictment alleged the 11 counts were based on false e-mails Walker sent to “K.C.” about “Scott.”

Walker ultimately pleaded guilty to one count of wire fraud. On April 1st, Walker was sentenced to 12 months & 1 day of imprisonment & Walker was ordered to pay restitution to “K.C.” in the amount of $500,000.00. Under a fact pattern different than what is written above, prosecutors might also consider whether someone like “K.C.” intended to have a stalker investigated by bribing the Nebraska State Patrol. Bribing a local law enforcement officer can violate the federal program bribery statute codified at 18 U.S.C. § 666. As a manual for federal prosecutors explains:

[A] charge under 18 U.S.C. § 666 may nonetheless be appropriate if the solicitor or intended recipient of the bribe is a person who acts as an agent of an organization that receives in one year $10,000 or more in Federal grant, loan, contract, or insurance funds. U.S. Attorney’s Manual, 2044 Particular Elements, Web. May 11, 2016.

Imagefile404/Shutterstock.com

Divorce & Hidden Money: Panama Charly & Helga Glock’s Search For Assets

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Divorce & Hidden Money, Hidden Money, Money Laundering

This 30th post in the “Divorce & Hidden Money” series highlights a RICO lawsuit Helga Glock commenced in 2014. The lawsuit alleges Glock pistol inventor Gaston Glock initially hid assets via shell companies supplied by Charles Ewert—a resident of Luxembourg known as Panama Charly.

Moneylaundering.com’s Editor-in-Chief Kieran Beer says at his April 11th article, that the Panama Papers represent “an unparalleled look at the…abuse of shell companies, in this case those created by Panama-based law firm Mossack Fonseca.” ¹ Like Mossack Fonseca, Charles Ewert was in the business of forming shell companies. Although based in Luxembourg, Charles Ewert was reportedly called Panama Charly because of the large number of shell companies he had formed in Panama. Charles Ewert is also one of the defendants at Helga Glock’s RICO lawsuit against her ex-husband gunmaker Gaston Glock.

The Court’s docket report shows that last month Helga Glock filed her proposed Second Amended Complaint, (“the Proposed Complaint”), in the RICO lawsuit. The Proposed Complaint asserts that Charles Ewert had supplied Gaston Glock with Panamanian shell company Reofin International S.A. The Proposed Complaint seems to basically allege that Reofin & other shell companies were used as laundering links to conceal assets in a money laundering circuit. It also seems to basically claim that assets belonging to Helga Glock were supposedly hidden from her through: lawyers; sham loans; trade-based money laundering via false invoices &/or leases.

According to allegations at the Proposed Complaint, Charles Ewert, Glock, Inc. & others were members of an alleged RICO enterprise led by Gaston Glock. The Proposed Complaint says that one goal of the alleged RICO enterprise was to deprive Helga Glock of her assets. It claims that Helga Glock detected this alleged scheme in 2011, because of her divorce from Gaston Glock & her ouster from one of Gaston Glock’s companies. Helga Glock apparently filed the Proposed Complaint to search for & recover assets Gaston Glock supposedly hid during the couple’s marriage. Earlier Asset Search Blog posts discussing Helga & Gaston Glock are “Helga Glock’s Search For Gaston Glock’s Assets” & “Helga Glock Claims Gaston Glock Started Concealing His Assets.”

¹Moneylaundring.com’s Webpage, “From The Editor: Will Panama Papers Give Governments New Backbone for Transparency?” Web. Last Viewed May 4, 2016.

Photo: NSC Photography/Shutterstock.com

Copyright 2016 Fred L. Abrams

Hiding Art Assets, Anonymity & The Panama Papers

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Divorce & Hidden Money, Hidden Money, Nazi-Looted Assets, Tax Fraud

4 28 16 Post

This post was written by Leila A. Amineddoleh, Esq., Partner & co-founder at Galluzzo & Amineddoleh LLP. As the Galluzzo & Amineddoleh website mentions, Ms. Amineddoleh “has been published extensively on issues related to art, cultural heritage, and intellectual property, and has appeared in major news outlets, including the New YorkTimes, Forbes Magazine, TIME Magazine, and the Wall Street Journal.” Ms. Amineddoleh’s post discusses how art assets may be hidden from divorcing spouses, creditors & others. It is also the 29th post at the Asset Search Blog’s “Divorce & Hidden Money” series:

In an entry that was published on this blog, I discussed the ways in which art collectors use undisclosed art holdings and valuation uncertainties to evade legal responsibilities (such as payment of tax bills of alimony to divorced spouses). Just as Audrey Hepburn’s character discovered that her husband hid his wealth in three valuable stamps in the 1963 film “Charade,” art collectors have been using their collections to hide value for years. Difficulties related to valuation arise, particularly when it becomes impossible to locate the artwork or determine the identity of the actual owner. But with breaking news about the “Panama Papers,” suspicion about art’s role in the obstruction of justice and concealment of funds has been confirmed again. Wealthy individuals are using artwork as an investment tool and they are shielding these holdings through shell companies and misleading tools. In light of these facts, the art world is once again coming under scrutiny.

The art market is one of the least regulated markets in the world, as transactions are completed without oversight, due to the nature of the trade. It is particularly shocking as the value of the art market is astronomically high. According to Art Market Report, sales of art exceeded $63.8 billion in 2015.[1]

However, there are valid reasons for anonymity in the art world. First and foremost, secrecy is guarded due to security concerns. Whereas tens of millions of dollars in cash are difficult to walk off with, artworks are usually portable.  A single lightweight canvas may be worth over $100 million, making the object vulnerable to theft. It is important to protect information about the works in private collections to limit the information available to thieves fixated on the objects.

Another reason to hide information is more personal. Collectors may not want to admit to selling works due to poor cash flow. Some owners are forced to sell works when facing financial hardships. Those individuals do not want this information to become public. At the same time, buyers may not want competing buyers to procure an overabundance of information about their purchases. Art is a personal passion, and something that some collectors do not want made public.

However, art is also used to hide assets, evade taxes, and unfairly withhold value from deserving parties (like creditors or divorcing spouses). This regrettable use of art was confirmed after the leak of the “Panama Papers.” In April, a Panamanian law firm, Mossack Fonseca, experienced a security breach and had over 11 million documents from internal files become public. Although illegal to assist someone in tax evasion, Mossack Fonseca specializes in establishing corporate structures to hide assets. The information in the leak confirmed the suspicion that wealthy individuals use shell companies to hide assets in contemplation of impending divorces or litigation. Continue Reading

The Panama Papers Law Firm & Potential Money Laundering Risk

Posted in Asset Search/Fraud Investigation, Financial Institutions, Hidden Money, Money Laundering, White-Collar Crime Generally

Panama Papers 4 18 16 PostLast Wednesday, prosecutors in Panama seized dozens of computer servers belonging to the Panama Papers law firm, Mossack Fonseca. The prosecutors might be investigating whether Mossack Fonseca violated money laundering laws when it supposedly helped clients hide assets offshore. A U.S. State Department report published last month analyzed how money is laundered in Panama. The report said:

Money is laundered via bulk cash and trade by exploiting vulnerabilities at the airport, using commercial cover and free trade zones (FTZs), and exploiting the lack of regulatory monitoring in many sectors of the economy. The protection of client secrecy is often stronger than authorities’ ability to pierce the corporate veil to pursue an investigation. (U.S. Department of State International Narcotics Control Strategy Report for Panama, March 2016)

Money can also be laundered in Panama by putting shell companies to work, the same way shell companies are used to launder money in other parts of the world. Assets may be secretly transferred to a shell company &/or a shell company may be used to open a secret offshore bank account. In these situations, the shell companies may act as laundering links which wash assets in a money laundering circuit.

Mossack Fonseca was apparently in the business of establishing shell companies. Businesses that establish shell companies are usually called “nominee incorporation services,” as mentioned by the November 9, 2006 advisory from U.S. Treasury’s Financial Crimes Enforcement Network. The advisory essentially reveals that shell companies & nominee incorporation services can be a money laundering risk. The webpages of Panama Offshore Worldwide demonstrate the way one nominee incorporation service works.

At “Anonymous Panama Corporation” &/or “Panama Bank Secrecy,” Panama Offshore Worldwide seems to describe how you can open a secret offshore bank account by titling the account in the name of a Panamanian shell company. Panama Offshore Worldwide indicates that if you want additional anonymity, you should staff your Panama corporation with nominee directors (i.e. stand-ins/intermediaries):

We provide nominee directors for the corporation, so your name is not actually registered in the government’s documents and therefore cannot be traced back to you.  The corporation is controlled with shares, which are registered by date at a notary and not accessible online like the directors of a corporation. (Panama Offshore Worldwide’s “Panama Bank Secrecy” Webpage. Web. April 16, 2016.)

Image: leolintang/Shutterstock.com

Copyright Fred L. Abrams 2016

The Panama Papers & Your Asset Search

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Financial Institutions, Hidden Money, Money Laundering, Public Corruption, Tax Fraud, White-Collar Crime Generally

Image For Article About Panama Papers

2008 was the first time I wrote an article mentioning hiding assets via a lawyer in Panama. The article was called “Bearer Shares & An Asset Search.” Although the facts at the article were sanitized & changed for privacy reasons, it described a divorcing husband in the U.S hiding assets from both his wife & the I.R.S. through: a Panamanian lawyer, bearer shares, a shell company & other offshore elements.

Meanwhile, there have been many articles this week discussing the Mossack Fonseca Law Firm headquartered in Panama City, Panama. These articles arise out of the investigation of Mossack Fonseca which is detailed at the “Panama Papers” website published by the International Consortium of Investigative Journalists. Among other things, the website has a page of graphs, with one graph called “The hunt for bearer shares.” This particular graph seems to suggest that Mossack Fonseca employed bearer shares to help clients hide assets offshore.

At its own website, Mossack Fonseca says they are “Offshore Specialists since 1977.”  In this role, Mossack Fonseca is thought to have helped a large number of law-abiding clients transfer assets offshore for legitimate purposes. Mossack Fonseca could however, have also helped a large number of criminals seeking to conceal illicit assets. These criminals might have been tax cheats hiding undeclared revenue; corrupt government officials; & others seeking to conceal money by laundering it offshore.

Any criminals hiding assets through Mossack Fonseca will soon become known, since over 11 million documents at Mossack Fonseca were apparently hacked & leaked to the press. I suspect the hacked documents will show that assets were hidden offshore through elements commonly used to wash vast sums of money. Some of these elements are listed below & they should always be considered by anyone searching for valuable assets hidden from them.

Panama Papers Image: catwalker/Shutterstock.com

Copyright 2016 Fred L. Abrams

Compartmentalization & An Asset Search

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Hidden Money, Money Laundering, Tax Fraud, White-Collar Crime Generally

Compartments 1

How do you hamper an asset search while hiding vast sums of money across the globe? You may be able to do this by compartmentalizing your actions. Using compartmentalization to fly under the radar is nothing new. For example, terrorists in Paris compartmentalized what they did before their heinous November 13, 2015 attack. This is discussed by former FBI Special Agent Steve Cocco, at “Paris Attackers Displayed Strict OpSec, Planning and Compartmentalization.”

Ponzi schemers; high net worth divorcing spouses; money launderers; tax fraudsters & others can similarly compartmentalize their actions in schemes for hiding assets. The schemes can be as basic as parking money in a secret offshore bank account & directing the offshore bank to mail monthly bank account statements to an offshore post office box. By keeping the money & its monthly bank account statements offshore, they are compartmentalized & out of the spotlight. This makes it harder for domestic tax authorities; a divorcing spouse; a judgment creditor; & anyone else to detect the hidden money.

At earlier Asset Search Blog posts I wrote about the sham loan depicted by the link chart featured below.¹ I mention the loan again because it shows how strict compartmentalization can be employed to hide assets. As set forth at Money Laundering, Marital Assets & Divorce, the loan was used by a divorcing husband to launder both marital assets and undeclared revenue. Prior to the equitable distribution hearing in his divorce proceeding, the husband alleged he had a liability of $29 million owed to a prime bank in Germany because of an arm’s length business loan.

According to the husband, he was indebted to the German bank & had defaulted/failed to repay the loan. The supposed arm’s length loan was however, back-to-back , (i.e. a fully collateralized loan in which the borrower and the lender are one and the same). As a consequence of strict compartmentalization, the divorcing wife would not ordinarily be able to recognize that the divorcing husband was both the borrower and lender of the loan:

(Click On The Link Chart To Enlarge)

 

¹For privacy reasons, some of the facts at the link chart have been changed from the original legal matter.

Copyright 2007-2016 Fred L. Abrams

 

Searching For Assets Hidden By Lawyers

Posted in Asset Search/Fraud Investigation, Hidden Money, Money Laundering

A trailer for the “Better Call Saul” show features the dry cleaner used by TV’s money laundering lawyer Saul Goodman. For me, the trailer highlights the fact that some lawyers hide their clients’ money by washing it via laundering links in a money laundering circuit.  When lawyers wash large sums of money, the laundering links can be trusts; foreign or domestic bank accounts; shell companies; valuable real estate; etc. If a lawyer helps your adversary hide assets from you, there are basic measures for detecting assets which may help. The measures to search for these assets can include using: informants’ tips; forensic accountants; private investigators & pretrial discovery tools like the production request discussed here.

Furthermore, some Courts will order a lawyer concealing assets, to disclose those assets. As suggested at “An Asset Search Of A Lawyer Employed To Conceal Cash,” the Court might issue such an order even if the lawyer is hiding assets for a client who asserts the attorney-client privilege.  The fact pattern at the bottom of this post, (Case Ref: 06078), is from the Egmont Group of Financial Intelligence Units.  It describes how one lawyer/financial gatekeeper, laundered client monies. The following Asset Search Blog posts outline additional cases in which lawyers were thought to have hidden money:

 

06078

 

Video: Courtesy of AMC Network Entertainment, LLC.

Case Ref. 06078 Courtesy of The Egmont Group of Financial Intelligence Units

Copyright 2016 Fred L. Abrams

An Asset Search For Bribe Monies

Posted in Asset Forfeiture, Asset Search/Fraud Investigation, Financial Institutions, Hidden Money, Public Corruption, White-Collar Crime Generally

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During his corruption scheme, former congressman William Jefferson is thought to have hidden bribe monies in his refrigerator. He also apparently hid bribe monies by using shell companies formed in Delaware, Nigeria and other places. U.S. law enforcement officers were able to search for these illicit assets through search warrants and a letter rogatory seeking evidence in the Republic of Nigeria

The jury’s August 5, 2009 verdict in U.S.A. v. Jefferson, found former congressman William Jefferson guilty of hiding bribery proceeds by laundering them, as described by the 12th, 13th and 14th counts of his indictment.  The August 5, 2009 verdict and a U.S. Department of Justice press release also stated that Mr. Jefferson was guilty of soliciting bribes, honest services wire fraud, racketeering and conspiracy.

An August 6, 2009 jury verdict similarly found that about $470,000 dollars in two bank accounts were criminal proceeds subject to asset forfeiture.  Under the August 6 verdict, stock shares in suspected shell companies, (likely used as Mr. Jefferson’s nominees), could be forfeited. These stock shares were for a Nigerian company “W2-IBBS”; a Ghanaian company “International Broad Band Services, LLC”; a Delaware company “Multi-Media Broad Band Services, Inc.”; and a company in Indiana “iGate, Incorporated.”

As was previously reported by the media, investigators in U.S.A. v. Jefferson had interdicted $90,000 in a freezer on August 3, 2005, pursuant to a search warrant executed at Mr. Jefferson’s Washington D.C. home.  A search warrant of Mr. Jefferson’s congressional office had also been executed along with the one below for Mr. Jefferson’s New Orleans home.

To View The Entire Search Warrant, Click On The Above Image

A challenge prosecutors faced in U.S.A. v. Jefferson was that part of Mr. Jefferson’s corruption scheme included cross-border elements in Nigeria, Ghana and other African countries.  To acquire evidence from foreign witnesses, prosecutors sought relief in the form of mutual legal assistance.  Prosecutors also employed letters rogatory like the one available here for gathering evidence in the Republic of Nigeria.  Letters rogatory can be used in a variety of legal matters to search for assets parked offshore.  Under the right conditions, they may even be used to collect evidence from foreign bank witnesses who possess information about secret offshore bank accounts.

Illustration: Svitlana Medvedieva/Shutterstock.com

Copyright 2009-2016 Fred L. Abrams

 

Using A Production Request In Your Asset Search

Posted in Asset Search/Fraud Investigation, Bank Search, Divorce & Child Support, Financial Institutions, Hidden Money
Production Request

You might be able to access your adversary’s passport; credit card statements & phone records via a production request.

If you are a divorcing spouse, judgment creditor or other litigant, how do you conclusively establish whether or not assets have been hidden from you? You can sometimes reasonably determine this by using legal tools to search for assets. In a pending litigation, these tools might include: depositions; subpoenas; interrogatories; production requests; etc.

Below is part of a production request in the hypothetical case of “JOHN DOE.” The production request seeks access to JOHN DOE’s passport; credit cards; phone records; etc. By analyzing this kind of material one might possibly detect secret offshore bank accounts or other hidden assets.

PRODUCTION REQUEST

1.     JOHN DOE’s original passport of which FRED L. ABRAMS, ESQ. (or his representative), may possess for a period of not more than 45 minutes to photocopy and return to JOHN DOE.

2.     All paid and unpaid invoices from creditors arising from obligations incurred by JOHN DOE for the period January 1, 2011 to present.

3.     All of JOHN DOE’s telephone records, (including cell phone records), for the period of January 1, 2011 to date.

4.     Receipts and copies of airplane tickets for all air flights JOHN DOE traveled, during January 1, 2011 up to the present date.

5.     All frequent flyer miles statements relating to any air flights JOHN DOE traveled, during January 1, 2011 up to the present date.

6.     Receipts or documents relating to all hotel accommodations JOHN DOE paid for or hotels JOHN DOE stayed at anytime during the period of January 1, 2011 to the present.

7.     All records and documents relating to any transaction entered into on or after January 1, 2011 in which JOHN DOE presently has or will have a financial interest or from which JOHN DOE has received or will receive compensation of any nature.

8.     All documents related to any transaction since January 1, 2011, entered into by another person or entity for the benefit in whole or in part, of JOHN DOE.

9.     All documents showing the amount, purpose or source of all payments over $5,000.00 made since January 1, 2011, to, by or for the benefit of JOHN DOE.

10.  Copies of all of JOHN DOE’s current and previous wills and other estate planning documents. Continue Reading