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:
A divorcing spouse may combine a number of elements in one scheme to hide marital assets. Bearer shares can be one of these elements, as more fully set forth at my post Bearer Shares & An Asset Search. Bearer shares are negotiable instruments that for example, give their possessor ownership rights in a business entity.
There is no central registry of ownership for the bearer shares and the name of their owner does not appear on the face of the bearer share certificate. Among other things, the bearer shares permit an individual to secretly own a shell company and use it to open bank accounts with complete anonymity. The divorcing husband the subject of Bearer Shares & An Asset Search, had secreted millions in a Cayman Islands bank account maintained by a Panamanian shell company.
The Panamanian shell company was controlled by the divorcing husband and his business partners. As the diagram from Bearer Shares & An Asset Search depicts, the divorcing husband hid millions by combining elements consisting of a Cayman Islands bank account, a Panamanian shell company owned via bearer shares and a lawyer who secreted the husband’s bearer shares in a stock custody account:
How can a divorcing wife or husband uncover a concealment scheme combining a number of elements? These schemes can sometimes be detected through the use of civil law tools, financial investigators, etc., as described by my post A Primer For Gathering Financial Intelligence.
During ultra-high net worth divorces, one party can conceal vast sums of money from the other by going offshore. Stated differently, divorcing spouses may hide their wealth by utilizing cross-border elements, as money launderers do. The Financial Action Task Force mentions these elements at a F.A.Q. webpage which says “[l]arge-scale money laundering schemes invariably contain cross-border elements.”
Cross-border elements can include foreign bank accounts and nominees. Expensive stamp or coin collections, fine art and antiquities are sometimes secretly purchased offshore or transferred there. Valuable real estate bought in a foreign jurisdiction might also be possessed with anonymity by titling it in the name of a paramour or other intermediary. In anticipation of a divorce, yachts, airplanes, luxury automobiles, diamonds and jewelry may too be hidden offshore.
Foreign trusts or foundations, shell companies, sham loans, fraudulent conveyances and offshore credit or debit cards, can also play roles in these cross-border schemes. The article Hiding Millions From Your Ex Gets Harder, Thanks To Offshore Tax Crackdown discussed the suspected use of offshore elements by a divorcing husband, Alaskan plastic surgeon Michael D. Brandner. At the time of his divorce, Dr. Brandner may have parked assets in Central America to hide them from his wife of 28 years.
Among other things, Dr. Brandner could have used a shell company to open a secret bank account. He too might have converted over $3 million into five cashier’s checks and then secretly transferred these funds to Central America. Anchorage Doctor Accused of Hiding Millions During Divorce explained that if guilty of the wire fraud charges he faces, Dr. Brandner could be sentenced to 20 years of prison and fined $250,000. The case pending against Dr. Brandner is known as USA v. Brandner, United States District Court for the District of Alaska, Index No. 13-cr-00103. Prosecutors in the case are also seeking asset forfeiture. To read Dr. Brandner’s indictment, click here.
Google finance says that since 1993, Mr. Ty Warner’s company Ty Inc. “produced more than 370 different Beanie Babies with colorful names such as Feder Bear (current) and Cheeks the baboon (retired).” Google finance reveals that Mr. Warner creator of the Beanie Babies, parlayed his profits into his purchase of a half-dozen luxury hotels. Mr. Warner is a billionaire, with a net worth of 2.6 billion as of September 13th.
As outlined by a press release and his criminal information, Mr. Warner was accused of utilizing Swiss bank accounts to hide undeclared revenue from the IRS. At his arraignment hearing last Wednesday, Mr. Warner pleaded guilty to tax fraud. The Chicago Tribune reported that Mr. Warner told the judge at the hearing ‘I apologize for my conduct. It’s a terrible way to meet you’.
Throughout its five seasons, Breaking Bad highlighted the ways narco-trafficker Walter White and his co-conspirators hid the illicit proceeds of their made-for-TV crimes. Breaking Bad could even be considered a case study of how determined criminals and others hide assets. For example, at Problem Dog, Season 4, Episode 7, Walter and his wife Skyler faced the dilemma of trying to conceal $7 million in drug profits, by laundering it through their A1A Car Wash.
During Mandala, Season 2, Episode 11, Skyler’s boss Ted Beneke admitted to hiding nearly $1 million in undeclared revenue from the IRS. In furtherance of this tax fraud, Ted had cooked the books of his company, Beneke Fabricators. At Caballo Sin Nombre, Season 3, Episode 2, Walter’s partner Jesse Pinkman seemingly washed $400,000 through the cash purchase of his parent’s home. In Gliding Over All, Season 5, Episode 8, Skyler disclosed she rented a storage unit to conceal a hoard of cash. At the end of Crawl Space, Season 4, Episode 11, Walter was also shown next to some illicit cash he had earlier secreted beneath his house:
Another is Terry L. Gilbeau, (“Gilbeau”), who is president & manager of Checkmate Investigative Services Inc., (“Checkmate”). Checkmate advertises at checkmatereports.com, as “asset search specialists”. Subsequent to the alleged events outlined by the lawsuit, Gilbeau became a member of the State Bar of California; and he apparently maintains websites at gilbeaulaw.com and rocklinduiattorney.com.
Although the Gramm-Leach-Bliley-Act requires Puerto Rico banks to protect bank account information from public disclosure, Florea’s lawsuit alleged that Bocra and Gilbeau gathered Driscoll’s purported Puerto Rico banking information through intermediaries. The lawsuit claimed that from about January 2008 through at least May 2009, Bocra supplied this supposed banking information to Florea. Continue Reading
The very last paragraph of my post Fighting Financial Fraud At UK Banks, featured a former vice-president of a global bank who indicated: “there was little standing in the way of a determined criminal because of the ‘complicity or misfeasance’ of many banks and the use of nominees to open bank accounts.”
A U.S. Department of Justice May 16, 2013 press release also discussed Fredrick. This press release described a suspected tax fraud allegedly facilitated by the use of undeclared foreign bank accounts and nominee entities. The Fredrick indictment mentioned the supposed nominee entities and Swiss and other foreign banks: