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Asset Search Blog

Investigating & Recovering Hidden Money & Other Assets

Private Investigators: An Asset Search By Pursuing Interviews & Tips

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Money Laundering, Private Investigators, Tax Fraud

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I do not know how many witnesses Brian interviewed while he was an IRS Special Agent or when he was a high-ranking official at U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”).  Nor do I know the number of informants’ tips Brian collected over the course of his federal law enforcement career.  I did however, watch Brian try to collect tips during the witness interview depicted below.  I first wrote about the witness interview at an Asset Search Blog post published in 2008.  I now supply this post because I believe the most effective way private investigators can search for hidden assets in some matters is through witness interviews & informants’ tips.  This is the 6th post in my series about what private investigators can and cannot do legally while searching for assets:

The information supplied by foreign-based private investigators indicated the divorcing husband hid marital assets offshore.  Evidence gathered during the divorce also suggested the husband might have committed a tax fraud in hiding the marital assets.  To try to detect any additional assets hidden by the husband, I contacted Brian.  Brian was a former high-ranking official at FinCEN and he had earlier been an IRS Special Agent.  Brian was going to lead our interview of the husband’s business associate, who we were about to meet for the very first time.  Right before the interview, Brian identified some of the federal statutes relevant to many tax fraud investigations:

  • 26 U.S.C. § 6050I, large cash reporting requirements for trades & businesses (including attorneys).
  • 26 U.S.C. § 7201, most commonly applied tax evasion statute (however requires proof of a tax liability).
  • 26 U.S.C. § 7203, failure to file a timely tax return.
  • 26 U.S.C. § 7206 (1), perjury on a return / false statements, (unlike 26 U.S.C. § 7201,  proof of a tax liability is unnecessary).
  • 26 U.S.C. § 7206 (2), perjury on a return / false statements, but primarily used against tax return preparers such as accountants and attorneys.
  • 18 U.S.C. § 371, conspiracy to commit offense / defraud the United States.
  • 18 U.S.C. § 1001, false statements made to the federal government (can apply to any material verbal or written statement, even if unsworn).
  • 18 U.S.C. § 1956, money laundering.
  • 18 U.S.C. § 1957, money laundering involving property derived from specified unlawful activity.
  • 18 U.S.C. § 1961, Racketeer Influenced & Corrupt Organizations (“RICO”).
  • 31 U.S.C. § 5324, structuring bank deposits.

I hoped that Brian and I would learn what the business associate knew about the divorcing husband’s hidden money and suspected tax fraud.  As Brian started the interview, he told the business associate: “once a tax fraud investigation starts rolling along, nobody knows where it may end up.

First Image: Ron and Joe/Shutterstock.com

Second image courtesy of Flickr (Licensed) by Tsahi Levent-Levi

Copyright 2008-2015 Fred L. Abrams

Private Investigators: Searching Law Enforcement Databases For Your Personal Information?

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

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As “A Surreptitious Search For Money Hidden In Divorce & Other Cases” explains, law enforcement databases may house confidential information about a person’s assets.  Private investigators & the general public cannot lawfully access these law enforcement databases/computers.  This is the 5th post in my series about what private investigators can and cannot do legally when searching for assets:

NJ.com reporter Vernal Coleman & private investigator Brian Willingham recently tweeted on an alleged scheme to access a confidential law enforcement database:

These tweets link to articles saying that Newark N.J. Police Captain Anthony Buono & Nutley N.J. private detective Dino D’Elia are suspected of conspiring to access a law enforcement computer/database.  According to one article, “Buono and D’Elia allegedly obtained the personal data of approximately 900 individuals, selling each set for $100.”  Mr. D’Elia &/or Mr. Buono are thought to have then possibly sold the data to private investigators &/or to data brokers.  State prosecutors have charged Mr. Buono & Mr. D’Elia with supposed violations of New Jersey’s conspiracy & computer theft laws.

Private investigators like Mr. D’Elia, (who are suspected of computer intrusions), sometimes face a federal prosecution rather than state prosecution.  USA v. Buell et. al., Index No. 1:15-cr-00385 is a matter in which a private investigator faced this type of federal prosecution.  At the criminal complaint in Buell, federal prosecutors alleged that private investigator Joseph P. Dwyer bribed an NYPD officer & conspired to obtain data from a law enforcement database.  Last week federal prosecutors slimmed down the criminal charges at their complaint against Mr. Dwyer.  They did this on June 18th by filing a one-count superseding information against Mr. Dwyer, charging him with a suspected bribery scheme.

First image courtesy of Flickr (Licensed) by elhombredenegro

Second image courtesy of Flickr (Licensed) by Tsahi Levent-Levi

Copyright 2015 Fred L. Abrams

Divorce & Hidden Money: Avoiding Mistakes During An Asset Search

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

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The instant post analyzes 2 mistakes I occasionally see divorcing spouses make when they consider whether to search for marital assets hidden from them.  It is the 20th post in the “Divorce & Hidden Money” series:

  • A One-Size-Fits-All Strategy—Spouses in high net worth divorces may rely on a one-size-fits-all strategy to detect hidden marital assets.  As part of this strategy, the divorcing spouses may hire domestic private investigators & domestic forensic accountants to respectively track or valuate marital assets.  More than a one-size-fits-all strategy will however, likely be needed if assets are hidden offshore by laundering through multiple jurisdictions.  When this occurs, offshore investigators and foreign legal proceedings can become necessary.  The foreign legal proceedings may detect hidden assets and can consist of letters rogatorycompelled consent forms; or other legal tools.
  • A Wait-and-See Attitude— Many want to wait and see progress in their divorces before spending time & money searching for hidden marital assets.  It can take months to gather legally sufficient evidence demonstrating that assets have been fraudulently concealed.  Where vast sums of money are concealed in offshore bank accounts, it may even take years to collect bank account statements & account opening documents from foreign bank witnesses.   Those who adopt a wait-and-see approach can run out of time to search for marital assets.  They especially risk running out of time if they fail to adhere to the Court’s scheduling order for the divorce; & fail to search for assets during the pretrial discovery phase of their divorce.

Image courtesy of Flickr (Licensed) by Terrance DC & supplied with his permission.

Assets Hidden By Nominees, Fraudulent Transfers & Trusts

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Fraudulent Asset Transfers, Tax Fraud

Puzzle Money PhotoTo cheat you out of your fair share, your divorcing spouse, a business partner, an executor handling a decedent’s estate or someone else may hide assets from you.  As a result of an asset search or other investigation you might uncover a money trail for these hidden assets.

If you follow the money trail & locate the assets, how do you then recover them?  One way could be through a settlement with those hiding the assets from you.  You might also be able to recover the assets by pursuing available legal remedies.

These remedies sometimes include proving to the Court that assets were hidden from you through nominees (i.e. intermediaries); fraudulent transfers; &/or trusts.  To recover assets hidden these ways, you may have to demonstrate the following to the Court:

I.  NOMINEE OWNERSHIP —‘A nominee is one who holds bare legal title to property for the benefit of another.’ In re Callahan, 442 B.R. 1, 5 (D. Mass. 2010) (quoting Black’s Law Dictionary 1076 (8th ed. 2004)).  A true beneficial owner can easily hide assets by employing a nominee to make purchases &/or hold assets.  To recover these assets you may have to prove nominee ownership by showing that the owner transferred assets in anticipation of a lawsuit; that the assets were transferred to the nominee although the nominee did not pay for them; etc.  See e.g., Fourth Inv. LP v. United States, 720 F.3d 1058, 1070 (9th Cir. 2013) (six-part test for nominee ownership applied to tax lien case).

II.  FRAUDULENT TRANSFERS—If there were badges of fraud when an asset was transferred, you might be able to recover the asset on the ground it was fraudulently transferred.  The badges are used to prove fraudulent intent or an intent to hinder creditors.  A fraudulent transfer is marked by the badges when assets are transferred in anticipation of a lawsuit or liability; when assets are transferred even though there is inadequate or no payment for them; etc.  The badges are listed at Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574 (2d Cir. 1983) and additional cases discussing them are at “Badges Of Fraud In Debt Collection, Divorce & Bankruptcy.

III.  TRUSTS—IRS Talking Points say that trusts can be misused “[t]o depreciate personal assets (such as a home)”; “[t]o deduct personal expenses”; “[t]o split income over multiple entities…”; “[t]o underreport income”; “[t]o avoid filing returns”; “to wire income overseas and fail to report it”; & “[t]o attempt to protect transactions through bank secrecy laws in tax haven countries.”  If a trust is abused in these kinds of ways to hide assets, assets could conceivably be recovered from the trust.

Depending on the circumstances, you may recover trust assets by claiming the trust is only a nominee owner; or by claiming that assets were fraudulently transferred to the trust.  It may also be possible to recover assets by piercing the trust veil on an alter ego theory.  The gravamen of this claim would be that the individual hiding assets at the trust & the trust were inseparable.  See United States v. Evseroff, No. 00-CV-06029 KAM, 2012 WL 1514860, (E.D.N.Y. Apr. 30, 2012) aff’d, 528 F. App’x 75 (2d Cir. 2013) (trust assets subject to collection/can be reached under nominee ownership, fraudulent conveyance and alter ego theories).

Image courtesy of Flickr (Licensed by) Images Money/Images_of_Money

Looking For Laundered Assets As Part Of An Asset Search

Posted in Asset Search/Fraud Investigation, Divorce & Child Support, Drug-Related Assets, Financial Institutions, Hidden Money, Money Laundering

This video¹ discusses ways assets can be concealed via money laundering.  As the video observes, billions are thought to be laundered worldwide & “laundering takes place within our everyday world of routine business transactions.”

Looking for laundered assets can be critical to a successful asset search, my last post says. The video embedded above explains how the laundering works.  As more fully set forth at the video, the 3 laundering stages are known as placement, layering and integration.  The video also mentions that criminals involved in terrorist financing; drug trafficking; weapons smuggling; fraud; theft; Ponzi schemes; etc., hide their illicit proceeds by laundering them.

Criminals are not the only ones hiding assets by washing them.  Others with high-value assets, (including some divorcing spouses; judgment debtors; etc.), may conceal assets in money-laundering-like schemes.  These schemes typically obscure who the true beneficial owners of the assets are.  In other words, the schemes attempt to hide assets through a lack of financial transparency.  Companies on the Internet like Capital Asset Mgmt. Assoc. Inc. seem able to add to this lack of transparency.

Capital Asset Mgmt. Assoc. Inc’s website promotes “bullet proof asset protection” as a countermeasure to “specialized ‘Asset[sic] search’ agencies.”  One of its webpages apparently asserts that beneficial owners can conceal assets by establishing offshore bank accounts with anonymity.  It hints that one can supposedly open a bank account with anonymity in Panama “as no one will be able to find out to whom exactly has the money gone to.”  The webpage also discusses using bearer shares & nominee directors to open an apparent secret Panamanian bank account.  Meanwhile, these are the same elements some money launderers have successfully used to wash their funds.

¹Video courtesy of The Egmont Group Of Financial Intelligence Units

Copyright 2015 Fred L. Abrams

3 Ideas For A Successful Asset Search

Posted in Asset Search/Fraud Investigation, Bankruptcy Estate Assets, Divorce & Child Support, Hidden Money, Money Laundering
Photo Real Estate For Sale

An act as ordinary as buying real estate can be an opportunity to hide assets through money laundering.

How can you efficiently search for and detect assets you are unaware of?  One way is to spot the red flags indicating that assets could have been hidden.  Ideally, your asset search should also:

LOOK FOR LAUPhoto Of Light BulbNDERED ASSETS—Launderers hides assets by washing them through a money laundering circuit with laundering links.  Laundering links can be shell companies; gatekeepers like lawyers & accountants; etc.  Through money laundering, your adversary may hide marital assets; bankruptcy estate assets; trust assets; assets belonging to a decedent’s estate and virtually anything else.  Even an act as ordinary as buying real estate can be an opportunity to hide & launder assets, as set forth by the Egmont Group case study available here

DETERPhoto Of Light BulbMINE BENEFICIAL OWNERSHIP—Has your adversary hidden assets by transferring them to nominees, (i.e. intermediaries), or by using nominees to make purchases?  If your adversary employs nominees to hide assets, then the success of your asset recovery may depend on whether you can show that your adversary is the true beneficial owner of the hidden assets.  Agencies including U.S. Treasury’s Financial Crimes Enforcement Network discuss beneficial ownership at their March 5, 2010 Guidance on Obtaining and Retaining Beneficial Ownership Information, No. Fin-2010-G001, at fn.2.  The Wolfsberg Group of banks’ FAQs On Beneficial Ownership, supplies its own definition of beneficial ownership.

Photo Of Light Bulb

USE LEGAL TOOLS TO SNIFF OUT A MONEY TRAIL—Tools which may help detect your adversary’s money trail are available in legal proceedings ranging from divorces to bankruptcies.  My May 18th post discusses one of these tools, 11 production requests geared toward detecting assets hidden offshore.  Depositions are another legal tool for gathering evidence about your adversary’s assets.  At a deposition, your lawyer should ask your adversary about any bank accounts; credit cards; real estate; etc.  The IRS asks these questions at its Information Collection Statement, Form 433-A.  The questions/material at the Form 433-A can be modified and used to depose your adversary about assets.

¹Money laundering case study/excerpt courtesy of the Egmont Group, “100 Cases From The Egmont Group” at pp. 17-18.

First image courtesy of Flickr (Licensed) by Images Of Money (caption mine).

Second image courtesy of Flickr (Licensed) by One Way Stock

Copyright 2015 Fred L. Abrams

Divorce & Hidden Money: Requesting Documents To Help Search For Assets Hidden Offshore

Posted in Divorce & Child Support, Divorce & Hidden Money, Hidden Money

Photo Of Passports

A divorcing spouse could conceivably hide the following types of assets offshore: bank accounts; business entities; trust funds; real estate; aircrafts & yachts; automobiles; fine art and other valuables.  Leads which may help reveal the existence of these offshore assets might be elicited from a divorcing spouse’s: passport(s); frequent flyer mile program statements; tax filings; phone bills; etc.

This 19th post in the “Divorce & Hidden Money” series supplies 11 requests for production.  The 11 requests seek disclosure of the above-mentioned kinds of documents.  The 11 requests would be served with others, upon a divorcing spouse suspected of hiding marital assets offshore.  This would happen during the discovery phase of the divorce.  After the divorcing spouse, (referred to below as “Mr. X”), was served with these 11 requests, Mr. X would hopefully turn over his passport(s), frequent flyer miles statements and the additional documents—

  1. Mr. X’s passport(s) which we may possess for 60 minutes to photocopy and return to Mr. X.
  2. All of Mr. X’s telephone records, (including cell phone records), for the period of January 1, 2005 to date.
  3. Documents relating to airplane tickets for all of Mr. X’s flights during January 1, 2005 up to the present date.
  4. Frequent flyer mile program statements relating to Mr. X’s flights during January 1, 2005 up to the present date.
  5. Documents relating to hotels Mr. X stayed at anytime during the period of January 1, 2005 to the present.
  6. All Internal Revenue Service Forms 3520, (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts), for years 2005 to the present, filed or executed by Mr. X or on his behalf.
  7. All Internal Revenue Service Forms 3520-A, (Annual Information Return of Foreign Trust With a U.S. Owner), for years 2005 to the present, executed or filed by or on behalf of Mr. X or any entity he beneficially owns.
  8. All Financial Crimes Enforcement Network (a.k.a. FinCEN) Form 114’s, Report of Foreign Bank and Financial Accounts (FBAR); or TDF 90-22.1 FBAR forms, executed or filed by or on behalf of Mr. X for years 2005 to the present.
  9. Documents relating to any foreign trusts Mr. X beneficially owned or formed or was employed by; was a grantor of; or was a beneficiary of; or was otherwise related to.
  10. Documents relating to Mr. X’s travel outside of the United States any time during January 1, 2005 to present.
  11. Documents relating to any business entity or person residing outside the United States with whom Mr. X, (or an entity he beneficially own[ed]), engaged in a business transaction, any time during the period January 1, 2005 to date.

Copyright 2015 Fred L. Abrams

Image Courtesy Of Flickr (Licensed) by Baigal Byamba

Data Brokers Searching For Your Assets, Bank Accounts & Other Personal Information?

Posted in Asset Search/Fraud Investigation, Bank Search, Privacy Laws

As the Federal Trade Commission, (“FTC”), video depicted above reveals, data brokers (a.k.a. “information brokers”) and some other private sector businesses sell your highly personal information.  The video says for example, your location, interests, prescriptions and medical history may all be “shared or sold.”  Pages 22, 24, 34 & Appendix B-5 of a May 2014 FTC report similarly indicate that data brokers can search for your financial information including: where and when you open a bank account; estimated household income; the assets you own; loan history; credit card use and tax return transcripts.

The video shows how private sector businesses can collect your personal information through “mobile, social media, free internet search and more.”   A March 9, 2014 60 Minutes episode entitled “The Data Brokers” sheds light on this situation.  The 60 Minutes episode explains your computer’s browsers and your mobile devices permit businesses like data brokers to follow your click stream.  Stated differently, private sector businesses are able to employ browsers and mobile devices to mine data and harvest your personal information.

According to the 60 Minutes episode, the end result is that people “are making dossiers…about individuals” and “[t]he largest data broker is Acxiom, a marketing giant that brags it has, on average, 1,500 pieces of information on more than 200 million Americans.”  If you are not already convinced that the private sector’s collection of your personal information violates your privacy, perhaps Senator Richard M. Burr’s recent speech will convince you.  As the transcript available here demonstrates, the Senator suggested during his speech last week that your private sector grocery store collects more information about you than the National Security Agency does.

Video courtesy of the Federal Trade Commission

Copyright 2015 Fred L. Abrams

Divorce & Hidden Money: How To Conduct A Low-Cost Asset Search

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

Low cost asset search photoMy last 2 posts discussed asset recovery tools such as recognizing red flags & using compelled consent forms.  Assets might also be recovered as a consequence of researching public records.  This 18th post in the “Divorce & Hidden Money” series focuses on how one can perform a low-cost asset search by digging through public records/databases:¹

I.  Real Estate Searches

Some government databases provide free real property searches, like New York City’s Automated City Register System (“ACRIS”).  ACRIS supplies searches about real property owners in New York City by a party’s name, parcel identifiers (such as borough, block and lot numbers), etc.

II.  Lawsuits

A divorcing spouse’s assets held in the form of personal injury or other type of legal claim, (if any), can sometimes be uncovered via court databases.  Although limited to New York State courts, eCourts is a free database.  After signing up for an access code, PACER enables one to conduct searches of federal courts nationwide.

III.  Corporate & U.C.C. Searches

Free government websites including New York’s http://www.dos.state.ny.us/corps/ may provide ownership or other useful information about duly licensed New York businesses/corporations.

IV.  United States Patent & Trademark Office

Patents and trademarks can be researched for free at http://www.uspto.gov/patft/.

V.  Comprehensive Searches

LexisNexis offers “SmartLinx” which is a fee-based service for attorneys, government authorities, etc.  It can be used to search domestic public records.  Records regarding real property, motor vehicles, telephone numbers, can often be accessed.

 

¹The instant post contains material courtesy of  L.L. Jones, Concealing Assets In Bankruptcy: What Are the Consequences And How Do Trustees Find The Assets?, Association of the Bar of the City of New York (Presentation: April 24, 2008).

Image courtesy of Flickr (Licensed) by Images Money

Copyright 2008-2015 Fred L. Abrams