Mt. Gox which was once the world’s largest Bitcoin currency exchange, is also in the news. It made bankruptcy filings in Japan and the U.S. and reportedly lost virtual currency valued at $473 million.
Perhaps most important, is that Bitcoin and other virtual currency can be a major money laundering threat. This is true because with anonymity, determined criminals may exchange their illicit monies for virtual currency. As a USA Today editorial explains “drug dealers, tax cheats, money launderers and terrorists do have uses for such a currency. Bitcoin gives them a way to try to hide money or move it to places undetected.”
Moreover, a criminal’s hidden money would presumably be even harder to detect if that criminal used virtual currency like Bitcoin along with the kind of virtual office and internet bank mentioned at Wyomingcorporations.us. Continue Reading
The post “An Asset Search, Tax Fraud & Divorce” was first published at the Asset Search Blog on January 16, 2008. It is republished below as the seventh post in the “Divorce & Hidden Money” series. The post describes my investigation of a divorcing husband. While I was the divorcing wife’s attorney, I discovered the husband had hidden money offshore in anticipation of the divorce. I also suspected the husband concealed this money from the IRS in furtherance of a tax fraud.
If evidence of tax fraud is brought to the attention of a judge presiding over a divorce, the judge may report the fraud to the IRS. When the divorcing husband admitted in his affidavit that he had not paid taxes, the judge in Hashimoto v. De La Rosa, 2004 slip op. 51081(Sup. Ct. N.Y. County, June 23, 2004) reported him to the I.R.S. In Beth M. v. Joseph M., 2006 slip op. 51490 (Sup. Ct. Nassau County, July 25, 2006), the judge similarly reported a husband who testified during court proceedings that he had not filed tax returns for the years 1997 through 2001 and other times.
Multiple Jurisdictions- To obscure the true beneficial ownership of funds or other things of value, a divorcing spouse may transfer assets through multiple jurisdictions. If multiple jurisdictions are employed to hide marital assets during a divorce, efforts to valuate the marital estate can be hampered.
Foreign Bank Accounts- A divorcing spouse may park assets in bank accounts located in Luxembourg, Liechtenstein, Switzerland, etc., which are jurisdictions with especially strong bank secrecy laws. As a chart from a Financial Intelligence Unit based in Canada partly demonstrates, foreign bank accounts can too be used as the laundering links of a money laundering circuit.
Dummy Corporations / Shell Companies- These business entities are easily formed in Nevada, Wyoming, Delaware and other places where there are few reporting requirements about an entity’s shareholders, managers, etc. The dummy corporations and / or shell companies can be utilized to open nontransparent bank accounts; and funds can then be deposited with anonymity into these accounts.
Trusts - a divorcing spouse may fraudulently transfer marital assets to a trust. Depending on the circumstances, there can be different legal remedies available when this occurs. The remedies may involve using pretrial discovery and seeking a court order to set aside the fraudulent transfer of marital assets to a trust.
The August 7, 2012 complaint I filed in Florea v. Bocra claimed that Plaintiff Victoria Florea, (“Florea”), wanted to learn whether her ex-husband Francis Driscoll had hidden money or other assets during the couple’s 2007 Massachusetts divorce.
I) THE PRIVATE DETECTIVES
Private detective Nicole Bocra of Infinity Investigative Solutions then allegedly offered to investigate Francis Driscoll by conducting bank searches about him, at Puerto Rico and other foreign banks. Florea asserted that pursuant to contracts for the bank searches, she paid Bocra and/or Infinity Investigative Solutions, at least $41,200 between about December 6, 2007 through about October 24, 2008.
The complaint additionally alleged that Bocra and Gilbeau participated in Puerto Rico bank searches even though federal law safeguarded a bank customer’s privacy; and Puerto Rico banks protected bank account information from public disclosure pursuant to the Gramm-Leach-Bliley Act, at 15 U.S.C. § 6801 (a) & (b)(1).
According to the allegations of the complaint, Bocra and Gilbeau negligently used intermediaries as “backdoor channels” during their supposed bank searches of Francis Driscoll. Bocra’s and Gilbeau’s alleged use of intermediaries had supposedly created the high risk that Bocra and Gilbeau would collect spurious or stolen information from the banks. Continue Reading
Ms. Glock therefore used civil law tools in an attempt to detect any marital assets / alleged hidden monies Mr. Glock supposedly possessed. The civil law tools Ms. Glock employed included: 1) her Swiss petition to freeze a UBS bank account reportedly maintained by Mr. Glock in Switzerland; and 2) the March 18, 2013 request for judicial assistance filed at In re application of: H.M.G., U.S. District Court for the Northern District of Georgia, Index No. 13-cv-02598.
MS. GLOCK’S MARCH 18th REQUEST FOR JUDICIAL ASSISTANCE
Ms. Glock’s March 7, 2013 affidavit filed at her request for judicial assistance, claimed Mr. Glock had earlier started hiding and moving personal and corporate assets in anticipation of the couple’s divorce. The March 7th affidavit discussed Ms. Glock’s belief that Mr. Glock was trying to transfer assets out of her reach; and that there had allegedly been a steady flow of assets out of Austria.
According to the affidavit, there were financial transfers to the above-mentioned UBS Swiss bank account and to bank accounts in Liechtenstein or Luxembourg. Also according to the affidavit, Mr. Glock had a Bermuda trust formed so that it could receive $51 million from “Glock”. The affidavit additionally referred to the “worldwide Glock Group structure” and indicated the structure was thought to be partially depicted by this chart:
From about 2006-2012, Canadian Elaine White offered an asset tracking service to her clients who were divorcing spouses, Ponzi scheme victims and others who were searching for hidden money. Ms. White apparently told her clients that she could detect offshore bank accounts which contained the hidden money they were looking for. Ms. White then supplied her clients with purported bank account information from the offshore banks.
The Statement of Facts at her plea agreement showed that instead of providing genuine information to her clients, Ms. White supplied “false and fraudulent data and fabricated bank records…” Ms. White’s asset tracking raised at least two red flags.
One divorcing wife explained to me that she believed her husband had hidden money in offshore bank accounts. This divorcing wife found a box her husband inadvertently left in the basement after he moved out of their marital residence. The box had an account opening application from one offshore bank and brochures from others.
Another divorcing wife found some correspondence at the family’s summer home. The correspondence was between her husband and the foreign attorney who helped establish the husband’s secret offshore bank accounts. A different divorcing wife found a scrap of paper on which her husband had scrawled the name of a Swiss banker and a Swiss financial account number.
The above-described matters raised the same question, how could these husbands secretly transfer funds across international borders into offshore bank accounts? Like narco-traffickers, tax evaders, terrorist financiers and others, divorcing spouses may use the following methods to secretly transfer assets:
Leonard Glenn Francis is a Malaysian national who is the CEO and owner of Glenn Defense Marine Asia, a general contractor to the United States Navy. He is suspected of using Glenn Defense Marine Asia to defraud the Navy out of an estimated $20 million. At a November 22, 2013 court filing, prosecutors argued that Mr. Francis “ has built a business empire based on defrauding the United States.”
Mr. Francis is accused of fraudulently billing the Navy while supplying its ships with marine husbanding services (i.e. fuel, tugboats, food etc.). Mr. Francis supposedly also bribed senior Naval officials with cash, lavish travel and the service of prostitutes. These Naval officials are thought to have provided Mr. Francis with secret information about criminal investigations into him; and / or they allegedly disclosed confidential defense procurement information.
The Washington Post reported that the possible involvement of two admirals in the alleged public corruption scheme, “makes the crisis the worst to tar the Navy since the 1991 Tailhook scandal, when a convention of naval aviators sexually assaulted scores of women.” A September 12, 2013 complaint filed in one of three criminal cases pending against Mr. Francis, included purported e-mails. They were allegedly sent from April 27 to May 21, 2012, between Mr. Francis and a codefendant, Mr. John Bertrand Beliveau, Jr. Mr. Beliveau has been employed as a Special Agent by the Naval Criminal Investigative Service since about 2002 and his purported e-mails are set forth below.
In 2010, German customs police discovered that Mr. Cornelius Gurlitt had travelled by train from Zurich to Munich with a large sum of cash. A subsequent investigation revealed that Mr. Gurlitt reportedly failed to file tax returns. Since Mr. Gurlitt was suspected of a possible tax fraud, a search warrant for his Munich apartment was issued. Reuters, the Daily Mail, and The Economist explained that during the execution of the search warrant, approximately 1400 paintings were discovered stashed in the apartment.
As Germany Says 590 Artworks in Munich Haul May Be Nazi Loot suggests, some of these paintings will be the subjects of Holocaust-era art restitution claims filed by the heirs of Jewish art collectors. Raymond Dowd, Esq. handles these kinds of claims. Mr. Dowd tried Bakalar v. Vavra, Index No. 05-CV-3037 (S.D.N.Y.), the first Nazi-era art case ever to go to trial in federal court. He also lectured widely on Nazi-era art restitution cases, including at Yad Vashem, Jerusalem, Israel; the Jewish Museum, Berlin, Germany; The Prague Conference on Holocaust-Era Assets, Czech Republic; the New York State Bar Association and the Association of the Bar of the City of New York.
My October 24th post “Concealing Monies In A Cayman Islands Bank Account”, supplied the fact pattern of a divorcing husband hiding funds offshore. That divorcing husband hid assets by putting a lawyer and other elements to work. The following money laundering typology ¹ similarly analyzes a scheme thought to have been facilitated by a lawyer: