A beneficial owner’s transfer of funds through banks in multiple jurisdictions, can be a red flag that assets have been secreted.  Purchasing large amounts of portable valuable commodities, hoarding cash, forming a shell company, etc, can also be red flags as mentioned by “Asset Search Indicia for Divorce, Debt Collection & Bankruptcy”.  The weight given to these red flags should meanwhile, depend on the facts and circumstances in a particular case.

It is also true that the ability to recognize red flags can be critical to a broad range of litigants searching for assets hidden via fraud or other illicit activity.  Such a litigant could for example, use red flags at a deposition to develop a line of questions about assets, liabilities and net worth.

As the list below also indicates, Financial Intelligence Units, U.S. Trustees, the IRS and U.S. banks, all rely on red flags to help uncover / interdict hidden assets:

1.  Financial Intelligence Units across the globe use red flags to detect assets hidden via money laundering, as more fully set forth by my above-mentioned post “Asset Search Indicia For Divorce, Debt Collection & Bankruptcy “.

2.  U.S. Trustees look for red flags to detect a debtor’s bankruptcy fraud / the concealment of bankruptcy estate assets.  These specific red flags are described in the U.S. Trustee Manual at 5-10.7.2 Red Flags/Common Characteristics in Cases of Concealment and False Statements.

3. The IRS uses red flags to search for undeclared revenue and hidden assets.  The IRS Manual describes the same at 25.1.2.3 (01-01-2003), Indicators of Fraud.

4.  U.S. Banks are required to look for red flags as part of their Bank Secrecy Act anti-money laundering programs, as mentioned by the Federal Financial Institutions Examination Council’s BSA / AML Examination Manual.

 (Edited October 12, 2011)

Copyright 2008-2011 Fred L. Abrams

  • Neal Stamp

    this was extremely helpful, thanks for the information.
    Neal

  • Joan Montgomery

    In the case of Elaine White and Eric Cunningham there is more to the case then meets the eye. The ex wife had a 50/50 marriage agreement that was never enforced, he failed for years to pay even minimal support despite the ex wife contributing millions to the marriage; he had a judge with a conflict of interest make the settlement a zero sum game; he blocked disclosure by claiming falsely identity fraud and using false witnesses and entering un audited financial disclosure and false, vicious affidavits, he coordinated a false police report to court stating that he did not have any accounts when in reality the day after court the banks were denying the fraudulent police report as they did not have court orders or police warrants, he arranged that no court orders to the banks were enforced, nor needed Anton Piller orders for a vicious non discloser, he alienated the only child of the marriage for money incentives; and used the media to tell a one-sided story. The victim is the former wife who he boasts he can leave without a penny by manipulating the system. Mr. Cunningham in reality is on the board of directors of a number of companies in addition to working as a lobbyist at Melrose and for a legal firm – all while deceiving the public that he only makes 17k annually – but is best friends with the Presidents and vice Presidents of large Canadian banks – and has defrauded the ex wife while claiming to the heavens that he is a “victim”.