An Asset Search In Switzerland

Posted on October 25, 2007 by Fred Abrams
A former Criminal Intelligence Specialist at Scotland Yard confirmed that the divorcing husband was hiding millions from his wife by using nominee bank accounts in Switzerland, among other things.  The husband's true beneficial ownership of these funds had been concealed by a nominee who had used shell corporations.  The evidence suggested that the nominee had engaged in money laundering for the husband.  The nominee might have also laundered organized crime monies.
 

The above information could possibly be used during a divorce to impeach the husband at a deposition about his alleged net worth and assets.  The Swiss bank information could also be used to frame a line of questions at a subpoenaed deposition of the nominee.  As partly demonstrated by the example of a changed / sanitized letter rogatory to Obergericht des Kantons Zürich, evidence might too be elicited from bank witnesses in Switzerland.  Such letters rogatory / legal assistance requests can sometimes play an important role in an asset search, as mentioned at "Asset Search Tips For Divorce & Child Support Cases".


As my local Swiss counsel advises, making a business of parking assets in Switzerland and concealing their beneficial ownership could violate Art. 305bis Swiss Criminal Code: Money Laundering (English Translation).  The nominee might therefore also be prone to a Swiss prosecution under Art. 305bis as a security risk, assuming ties to organized crime could be shown.  In addition to 305bis, some of the Swiss laws relevant  to money laundering and / or hiding assets include:


As the foregoing suggests, a number of different legal strategies could be used in connection with the divorcing husband's assets hidden in Switzerland.  Enlisting the help of foreign investigators like the above-mentioned former Criminal Intelligence Specialist; retaining local counsel in Switzerland; and prosecuting letters rogatory / legal assistance requests; are however just some of the tools which may be part of an effective asset search in Switzerland.


Copyright 2007-2008 Fred L. Abrams
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Divorce, Child Support & Reporting Tax Fraud

Posted on October 19, 2007 by Fred Abrams
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 divorce / child support proceedings that he had not filed tax returns for the years 1997 through 2001 and other times.  The admissions made by these two divorcing spouses could possibly have led to tax fraud charges pursuant to 26 U.S.C. § 7201.


Like the presiding judges in Beth M. and Hashimoto, parties to divorce or child support cases sometimes report tax fraud to the I.R.S.  Some tip the I.R.S. by calling its tax fraud hotline at 1-800-829-0433.  Others send an Information Referral (Form 3949-A) or letter as mentioned by "How Do You Report Suspected Tax Fraud Activity?".  No matter how one ultimately communicates with the I.R.S., it is important to first consider eligibility for the Whistleblower or other reward programs described in my separate post, "Reporting Tax Fraud".  As "Reporting Tax Fraud" further explains, the kinds of activities typically reported to the IRS include: hiding or transferring assets or income;  keeping multiple sets of books; claiming personal expenses as business ones; etc. 


In some cases where there has been a tax fraud and spouses have filed joint tax returns, it may also be advisable to seek innocent spouse tax relief  as more fully described by I.R.S. Publication 971.  To examine this very issue, (and to ensure that providing a particular tip to the IRS is appropriate), a party to a divorce or child support case should always seek the advise of a knowledgeable attorney.


Copyright 2007 Fred L. Abrams
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Asset Search Indicia For Divorce, Debt Collection & Bankruptcy

Posted on October 14, 2007 by Fred Abrams
People don't typically think of the money laundering indicia when searching for hidden assets the subject of a: divorce; bankruptcy; commercial collection or other legal proceeding.  Such indicia can however be effectively used as part of an asset search even in situations where there is no money laundering.  In the United States, the indicia or red flags of money laundering are described at pages 19-23 and Appendix "F" of the Bank Secrecy Act / Anti-Money Laundering Examination Manual.  They are also described in Money Laundering Prevention, A Money Services Business Guide, at pages 16-24. 


Money laundering indicia are sometimes used outside of the United States.  For example, India's Financial Intelligence Unit relies on "broad categories of reason for suspicion"; the Belgian Financial Intelligence Unit ("CTIF-CFI") uses Money Laundering Indicators; the Swiss Federal Banking Commission has the Schedule: Indicators of Money Laundering ; and the Asia / Pacific Group on Money Laundering also uses such a list.  Recognizing the following money laundering indicia however, may lead to the discovery of assets concealed in a divorce, commercial collection or bankruptcy case:

Copyright 2007 Fred L. Abrams
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Fighting Financial Fraud At UK Banks

Posted on October 8, 2007 by Fred Abrams

In the United States, the Financial Crimes Enforcement Network regulates the customer identification procedures, (a.k.a  "know your customer rules"), at banks.  In order to clarify these procedures, the Financial Crimes Enforcement Network issued guidance in January 2004.  These customer identification procedures codified at 31 C.F.R Part 103.121, demonstrate  that there is no discretion as to what information is needed when a new bank customer opens an account.  In the case of a customer who is a U.S. person for example, the minimum requisite information includes: a taxpayer identification number issued by the Internal Revenue Service (i.e. social security or employer identification number); date of birth; residential or business street address; etc.  After obtaining this kind of information, a U.S. bank must then verify it based on a "risk-based" approach.


The United Kingdom similarly has rules for checking the identities of its bank customers.  For example, the regulatory body for the financial services industry in the United Kingdom, (the Financial Services Authority or "FSA"), has published its know your customer rules in Discussion Paper 22, at pages 9-13.  This past July, the FSA also published a consumer leaflet mentioning these rules, "Just the facts about proving your identity".  The FSA's leaflet explains that UK law requires an identity check when a new customer opens a bank account and that checking identities helps prevent money laundering, identity theft and terrorist financing.  It further advises that: "Neither the FSA nor the law sets out how firms should check identity.  In most cases firms will follow guidance produced by an independent industry body, the Joint Money Laundering Steering Group".  According to the Joint Money Laundering Steering Group, a number of different documents can be used to prove identity such as a: passport; photo-style driver's license; letter from a social worker or care home manager verifying identity; etc.  As of August 31, 2006, the FSA had also replaced its Money Laundering Sourcebook with the guidance now found in its Senior Management, Systems and Controls Sourcebook, at SYSC 3.2.6 et. seq. 


There will however soon be regulatory change with respect to how a bank identifies its customers in the United Kingdom. This is true because the United Kingdom's new Money Laundering Regulations 2007 come into effect on December 15, 2007.  These regulations obligate banks to apply a standard of due diligence, (as determined by a risk-based approach), when they check a new customer's identity.  In many cases, banks will also be required to identify the true beneficial owner of funds.  Since the United Kingdom's rules for identifying bank customers are about to change, I wanted an expert's opinion.  I then called "Mr. London", who has vast experience in the methods used to hide assets as a former vice president of a major global bank in the United Kingdom.  Mr. London knew all about how banks checked their customers' identities, especially because he had been responsible for his bank's financial fraud and money laundering investigations.


During our phone conversation Mr. London expressed his belief that, (despite the prospective change in regulation), money laundering, terrorist financing and other financial fraud would likely continue to increase throughout the United Kingdom.  He also suggested that 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.  Since crimes like money laundering and terrorist  financing often extend beyond just one nation's borders, I was left to wonder just what this meant for all of us.


Copyright 2007 Fred L. Abrams

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Bankruptcy Fraud, Money Laundering & Hidden Assets

Posted on October 5, 2007 by Fred Abrams
According to page nine of the 2005 U.S. Trustee's Annual Report:  "Every year since 1996, more than one million individuals and businesses have filed bankruptcy, making  the bankruptcy caseload the largest in the federal court system".  Since it detects and combats bankruptcy fraud, the U.S. Trustee Program is a critical part of the bankruptcy court system.  According to its June 2007 Report to Congress, the U.S. Trustee Program referred 925 criminal cases for prosecution in 2006.  This was a 24 percent increase from the 744 criminal referrals made by the Trustee Program in 2005. 


One kind of  fraud the Trustee Program is concerned with occurred when husband and wife Terry and Susan Brunning hid assets and laundered money the subject of their 2002 Chapter 7 bankruptcy case.  As their June 3, 2003 indictment explains, the Brunnings were suppose to disclose all their assets at the time of their Chapter 7 bankruptcy so that the bankruptcy court trustee could then liquidate the same for the benefit of creditors.  The Brunnings however instead hid over $1 million dollars in accounts at: San Diego National Bank; Abbey National Treasury Limited in the Isle of Man, Great Britain; and at Lloyds Bank, PLC in London.  The Brunnings had also concealed a $155,000 promissory note; a 1981 Rolls Royce; a 1990 Jaguar; and their 57-foot sailing yacht.  According to their indictment, the Brunnings had even concocted the fictitious creditor "Donna Kerns", in an effort to falsely claim the monies from the bankruptcy trustee's sale of their $155,000 promissory note.

On October 23, 2006, Terry Bruninng was finally sentenced to thirty-three months in prison plus three years supervised release after pleading guilty to two counts of 18 U.S.C. § 152 (Concealment of assets; false oaths and claims; bribery), and one count of 18 U.S.C §157 (Bankruptcy fraud).  At that same time, Susan Brunning similarly pleaded guilty to one count of 18 U.S.C § 152, and was sentenced to a prison term of six months plus three years of supervised release.


Copyright 2007 Fred L. Abrams
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