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

"The Americans & Swiss Target The Kleptocrats" contains an article discussing the Swiss “Federal Act on the restitution of politically exposed persons’ assets".  This act could be passed next month by the Swiss Parliament.  It would be used to freeze bribery proceeds or looted assets which some dictators and other politically exposed persons might transfer from a foreign state into Swiss bank accounts.

Even if a foreign state fails to make a mutual legal assistance treaty request to forfeit any illicit assets owned by a politically exposed person, said assets could still be frozen pursuant to the act.  As local Swiss counsel practicing in Zurich recently advised, "Basically the act provides that if, in the context of a failed state, the country in question can no longer make proper legal assistance requests, money seized in Switzerland from former rulers of that country can be returned anyway, if necessary by being given to some relief organisation." 

The act's sixth article creates a presumption that a politically exposed person possesses illicit assets based on the assertion that the same has sudden unexplained wealth and lives in a state believed to be corrupt:

 Art. 6 Presumption of illicit origin

<¹>The illicit origin of the assets is presumed when the following requirements are met:

a. The assets of the person who has the power of disposal of the assets is subject to a significant increase in comparison to the public function exercised by the politically exposed person, and
b. The level of corruption in the State of origin or of the concerned politically exposed person was manifestly high during the period in which the public function was performed.

<²>The presumption is reversed if evidence of lawful acquisition of the assets is demonstrated with preponderant plausibility.

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A Van Gogh goes missing; articles about asset recovery basics; and Barclay's Bank:

1. Egyptian authorities are trying to recover a Van Gogh that went missing on Saturday after it was stolen from the Mohamed Mahmoud Khalil Museum.  The museum houses a fine art collection worth at least $1.2 billion and the the Van Gogh's theft is described at "Van Gogh $55 Million `Poppy Flowers' Theft in Cairo Blamed on Lax Security".
   
    
2. Divorcing spouses, judgment creditors, domestic tax authorities, etc. can all be claimants relegated to an asset search / an asset recovery effort against beneficial owners fraudulently concealing assets.  Articles I have published regarding asset recovery basics include: "Asset Search Indicia For Divorce, Debt Collection & Bankruptcy"; "Recognizing Hidden Assets, The Red Flags"; "An Asset Search In Geneva"; & "A Primer For Gathering Financial Intelligence".
   
    
3. Barclays Bank PLC has agreed to forfeit $298 million according to U.S. Treasury's Office of Foreign Assets Control and the U.S. Department of Justice.  At paragraphs 5 & 6 of the settlement agreement available here, Barclays admits it sometimes concealed the identities of bank customers who were subject to U.S. sanction programs.  Barclay's investment banking division had meanwhile, recently been the financial advisor, the restructuring agent and sole bookrunner for FDIC's $233 million dollar sale of commercial mortgage-backed notes, as explained by a press release.

Copyright 2010 Fred L. Abrams

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"A Tax Fraud & Identity Theft From Miami" & "Bearer Shares & An Asset Search" described money laundering schemes partly facilitated through Cayman Islands' bank accounts.  On the one hand, some financial investigators report to me that during 2010 the Cayman Islands continue to be an extraordinary money laundering risk. 

Cayman Islands' lawyers and bankers on the other hand have told me that anti-money laundering efforts have changed things there.  New York attorney and private investigator Richard Horowitz has lectured in seventeen countries about money laundering, terrorist financing, etc.  He gives his perspective on money laundering in the Cayman Islands, at the following article:   

 

  

"Money laundering and financial crime: The Cayman Islands in a global perspective", Copyright © 2010 Cayman Free Press Ltd., reprinted with permission.

Copyright 2010 Fred L. Abrams

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The August 14th "Asset Search News Roundup" mentions money laundering:

1. So far this summer the Financial Action Task Force published evaluations of the anti-money laundering efforts undertaken by Brazil, India and Saudi Arabia.  The Financial Action Task Force is a leading anti-money laundering organization, as described at "Anti-Money Laundering Bellwether Seeks Transparency Across The Globe".
    
2. Britian's Financial Services Agency has issued an August 2nd "Decision Notice" fining the Royal Bank of Scotland Group £5.6 million, (i.e. $8.9 million dollars), for acting in derogation of the 2007 Money Laundering Regulation.*  The Royal Bank of Scotland Group was accused of failing to identify bank customers subject to the UK's terrorist sanction list.  Reuters wrote about the fine and more information about it is available here.
    
3. The link chart below supplied by U.S. Treasury's Office of Foreign Assets Control, shows the alleged Zambada Financial Network.  The chart and its accompanying press release raise the question of whether suspected Sinaloa drug cartel leader Ismael Zambada-Garcia laundered assets through two companies believed to be his nominees, Mexico Arte y Diseno de Culiacan S.A. de C.V. and Autotransportes JYM S.A. de C.V.

*Money Laundering Regulations 2007, is reproduced under the terms of Crown Copyright Policy Guidance issued by HMSO.

**Chart: U.S. Treasury's Office of Foreign Assets Control

Copyright 2010 Fred L. Abrams

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American and Swiss officials are ramping up their efforts to recover assets hidden by corrupt foreign politically exposed persons commonly referred to as kleptocrats.  A few of my thoughts about this are included at MoneyLaundering.com's August 6th article "U.S., Swiss Initiatives to Recover Looted Assets Likely to Bring Banks More Subpoenas, Regulatory Scrutiny ":  

         

"U.S., Swiss Initiatives to Recover Looted Assets Likely to Bring Banks More Subpoenas, Regulatory Scrutiny", Copyright 2010 Alert Global Media, reprinted with permission.

Copyright 2010 Fred L. Abrams

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425 pounds of hidden marijuana; Transparency International; and the defenses to a clawback lawsuit; are discussed at the August 5th "Asset Search News Roundup":
  

• Federal agents at a U.S.-Mexican land crossing interdicted more than 425 pounds of marijuana on July 24, 2010.  As "Marijuana Encased in Cement Seized by CBP" explains, the marijuana had been concealed in the shipment of concrete lawn furniture partly shown below.
  
  
  

• Along with its news release dated July 28th, Transparency International released its sixth annual progress report.  The report rates countries on their performance under The OECD Anti-Bribery Convention and highlights the problem of corrupt politically exposed persons.
  
   
• "Madoff trustee could sue 1,000 Ponzi victims" refers to the new clawback lawsuits Madoff trustee Irving Picard is expected to commence.  These lawsuits could be filed against investors who benefited from Madoff's Ponzi scheme by acquiring so-called "false profits".  Investors subject to clawback in the aftermath of a securities fraud, sometimes assert that the Court lacks in personam jurisdiction in their case.  Other possible defenses to a clawback lawsuit are that an investor acted in good faith, made an exchange for value, or was a secondary, tertiary, etc. transferee.
   
   

Copyright 2010 Fred L. Abrams

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"$20 million airline-ticket fraud aided by hotel workers, prosecutors say" mentioned that suspected identity thieves and their supposed co-conspirators were indicted for allegedly using stolen credit card information to purchase airline tickets.  These tickets are believed to have been sold on the U.S. black market at steep discounts to airline passengers. 

A July 9th press release describing the indictments quoted a U.S. prosecutor as saying: 'What began as a local law enforcement investigation ultimately exposed an extensive nationwide black market for airline tickets.'  The U.S. black market is of course not the only way airline passengers might acquire tickets connected to alleged credit card frauds. 

Jamaican authorities for example, are investigating Montego Bay, Jamaica resident Andrew Hemmings, about his possible acquisition of Spirit Airlines' tickets during a suspected credit card fraud.  To obtain evidence about this alleged fraud originating in Jamaica, Jamaican authorities issued the following legal assistance request / letter rogatory:
 

Copyright 2010 Fred L. Abrams

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This "Asset Search News Roundup" features France's richest woman; a retired Orlando police officer; and actor Wesley Snipes:
 

1. "Police question French heiress over scandal" reports that France's richest woman, L'Oreal heiress Liliane Bettencourt, is suspected of hiding assets from French tax authorities.  Among other things, French authorities are believed to be investigating whether the heiress could have concealed as much as $100 million by laundering through two Swiss bank accounts.
    
2. Retired Orlando, Florida police officer Amy Bretches was convicted on July 21st of money laundering.  Her indictment alleged that she unlawfully acquired FEMA monies, hiding them via financial accounts / a certificate of deposit.  The jury's July 21st verdict sheet filed in Ms. Bretches' case, shows she was acquitted of one money laundering charge and found guilty of two.
    
3. Hollywood actor Wesley Snipes lost his appeal this month when his tax fraud conviction was upheld.  Mr. Snipes had been convicted in 2008 of violating 26 U.S.C. § 7203 by failing to file tax returns for the years 1999, 2000 and 2001.  He faces thirty-six months in prison, as discussed by a decision from the Eleventh Circuit Court of Appeals.
   
    
(Click On The Image To Read The Court of Appeals Decision)

 Copyright 2010 Fred L. Abrams

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My July 11th "Asset Search News Roundup" mentioned that U.S. prosecutors were investigating HSBC since some U.S. taxpayers were suspected of using foreign HSBC bank accounts to facilitate tax frauds.  Swiss prosecutors meanwhile, are separately investigating whether former HSBC employees Hervé Falciani and Georgina Mikhael had illegally accessed bank customer information at HSBC in Geneva.   

According to a July 9th Bloomberg.com article, the two former HSBC employees may have violated Swiss bank secrecy laws by allegedly trying to sell confidential HSBC bank customer information.  This information reportedly included the names of thousands of HSBC customers who might have used foreign HSBC bank accounts to hide assets from domestic tax authorities across the globe. 

Furthermore, approximately 1500 of these HSBC customers may have hidden assets from the IRS in their foreign HSBC accounts.  What might the IRS do to elicit financial evidence from HSBC, regarding these 1500 suspected tax cheats?  As explained at "Concentrating On Assets Concealed By Cross-Border Elements", one way the IRS can try to gather foreign evidence is by serving a "John Doe" summons. 

If the IRS does serve HSBC with a "John Doe" summons, the IRS would conceivably gather financial evidence about the 1500 and other suspected tax cheats.  The IRS has relied heavily on "John Doe" summonses as a countermeasure against tax frauds with cross-border elements.  As of December 2008, the IRS had issued more than 150 "John Doe" summonses in connection with its Offshore Credit Card Program.

Copyright 2010 Fred L. Abrams

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