Hiding / Smuggling Cash

Posted on March 31, 2008 by Fred Abrams
Nathan Vardi's Forbes.com article "Cash Is King", describes some of the ways funds can be transferred during money laundering:
  • Wire Transfers
  • Credit Cards
  • Prepaid Cards
  • Digital Currency (i.e. E-Gold)
  • Cash
"Cash Is King", also mentions that cash is hard to trace.  In some cases illicit cash can of course still be detected.  This is particularly true at border crossings, where the cash smuggler may pretend to be just an ordinary airline passenger or motorist.  Law enforcement use a variety of methods to detect cash smugglers, as set forth by the Financial Action Task Force in its February 12, 2005 report, "Detecting And Preventing The Cross-Border Transportation Of Cash By Terrorists And Other Criminals (Copyright © FATF/OECD. All rights reserved)". 


As the Financial Action Task Force report mentions, law enforcement can detect smuggling through: canine units, personal interviews, declaration forms, x-ray and other screening methods.  The Financial Action Task Force also has its IX Recommendation, which describes the countermeasures effective against cash smugglers. Perhaps most surprising however, is the extraordinary amount of illicit cash which is sometimes hidden and subject to detection. 


For example, in my November 1, 2007 post "Forfeiture  &  The DEA's Asset Search", I described a conversation I had with a DEA retiree about the Zhenli Ye Gon case.  "Forfeiture & The DEA's Asset Search" explained how Ye Gon had been suspected of concealing over $207 million dollars of drug proceeds in his Mexico City home.  Based on paragraph 20 of the attached Special Agent's affidavit, that November post mentioned that Ye Gon had been accused of hiding over $200 million in compartments, false walls, closets and suitcases.


Copyright 2008  Fred L. Abrams
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Money Laundering Typologies

Posted on March 20, 2008 by Fred Abrams
A licensed private investigator from Arizona advised that he had a good track record in finding  hidden assets and / or locating bank accounts.  He however, contacted me wanting to know the best way to learn more about money laundering (18 U.S.C. §§1956 & 1957) and structuring / smurfing (31 U.S.C. § 5324).  One good way to learn about money laundering and other white-collar crimes, is to read money laundering typologies.  


As explained at the end of my post Terrorist Financing, Money Laundering & Financial Intelligence Units, money laundering typologies are sometimes used by law enforcement and regulators to develop countermeasures against emerging criminal trends.  Although"100 Cases from the Egmont Group" arises from data collected by the Egmont Group from the 1990's, it is still relevant today.  In "100 Cases from the Egmont Group" there are for example, descriptions of the following laundering methods:

  • Concealment within existing business structures
  • Misuse of legitimate businesses
  • Use of false identities, documents or straw men
  • Exploiting international jurisdictional issues
  • Use of anonymous asset types
The Financial Action Task Force also publishes money laundering typologies.  Its February 29, 2008 Terrorist Financing Typologies Report, (Copyright © FATF/OECD. All rights reserved), explains some of the methods terrorists use to raise and then transfer illicit funds. In addition to the foregoing, the Egmont Group and the Financial Action Task Force publish many money laundering typologies at their websites.


Copyright 2008 Fred L. Abrams
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Suing When Marital Assets Are Hidden In Divorce

Posted on March 10, 2008 by Fred Abrams
On February 28, 2008, I posted about RICO lawsuits which had been filed against those suspected of hiding assets related to divorce.  Those suing over hidden marital assets however, more typically file lawsuits pursuant to the Uniform Fraudulent Conveyance Act, rather than RICO. In New York, those filing such suits proceed under the local codified version of the Uniform Fraudulent Conveyance Act, N.Y. Debt. Cred. Law. §§ 270 - 281.


One example of how the N.Y. Debt. Cred. Law can be used to sue those suspected of hiding marital assets, is Bloomfield v. Bloomfield, 721 N.Y.S. 2d 15 (1st Dept 2001).  In Bloomfield, the plaintiff filed suit pursuant to N.Y. Debt. Cred. Law §§  273 & 276 against both her estranged husband (defendant Marshall Bloomfield), and his brother (defendant Matthew Bloomfield).  Plaintiff's complaint essentially alleged that the defendants had frustrated her effort to valuate the marital estate by hiding marital assets at the time of her divorce from defendant Marshall Bloomfield.

  
Courts however, may also sometimes use N.Y.Civ. Prac. L. & R § 1001(a) to join a person or business entity, (suspected of fraudulently transferring marital assets), to an already existing divorce case:

§ 1001. Necessary joinder of parties. (a) Parties who should be joined.  Persons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants.  When a person who should join as a plaintiff refuses to do so he may be made a defendant.


As discussed by Solomon v. Solomon, 136 A.D. 2d 697 (2d Dept 1988) and Schmidt v. Schmidt, 99 A.D. 2d 775 (2d Dept 1984), Courts can apply N.Y.Civ. Prac. L. & R § 1001 to those who are the  transferees of marital property.  Furthermore, according to dictum by the Court in Jackson v. Brinkman, 2006 slip op 50015; 814 N.Y.S.2d 561 (Sup. Ct. Kings County, January 6, 2006), a divorcing spouse can lose the right to recover a marital asset if he / she neglects to join a wrongful transferee of marital property to a pending divorce.


Given all of the foregoing, one might possibly proceed against those suspected of hiding marital assets just like the  plaintiff had in Bloomfield-- by filing suit pursuant to the NY. Debt. Cred. Law.  Yet another option might instead be to join those hiding assets to a pending divorce, as the transferees of marital property pursuant to N.Y.Civ. Prac. L. & R § 1001(a); Solomon; and Schmidt. 


Copyright 2008 Fred L. Abrams
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