Asset Search Blog : Asset Search & Hidden Assets : Lawyer & Attorney Fred Abrams : Tax Fraud, Asset Investigations

In my June 1, 2009 "Asset Search News Roundup" I wrote about how national tax authorities can enter into tax information exchange agreements.  The July 24, 2009 article "Tax Transparency Is Set To Increase", also discusses these agreements, which sometimes uncover offshore assets hidden in a tax fraud.  As "Tax Transparency Is Set To Increase" and the articles below suggest, there could be an emerging trend toward the execution of more tax information exchange agreements:

• "Ireland and Bermuda sign tax agreement"

• "Germany and Liechtenstein Agree on Tax-Exchange Arrangement"

• "Belgium Has 'Substantially Implemented' Tax Standard - OECD"

• "Guernsey signs New Zealand tax exchange deal"
   

Copyright 2009 Fred L. Abrams 

• Email This
• Print
• Comments
• Trackbacks

After an at-sea interdiction, U.S. prosecutors are seeking asset forfeiture of a 26- foot yola (boat) and the nearly $1.7 million on board alleged to be undeclared currency hidden in two suitcases and a small bag.  The captain of the yola was Sergeant Juan Quinones-Rosario of the Police of Puerto Rico and its crew member was an Aguada, Puerto Rico restauranteur, Raul Bosques-Caro. 

The sergeant and restauranteur were reportedly on one of two yolas traveling on July 20, 2009, towards the Dominican Republic from Aguada, Puerto Rico.  The yolas had been spotted in international waters by patrol aircraft and were ultimately searched by federal agents.  Given the discovery of the alleged undeclared cash on the yola, the sergeant and restauranteur are both facing prosecution in U.S.A. v. Bosques-Caro, et. al. 3:09-cr-00246. 

Their three-count indictment in Bosques-Caro, alleges violations of 31 U.S.C. §§5316(a) (1) (A) (Reports on exporting and importing monetary instruments); 5332 (a) & (b) (Bulk cash smuggling into or out of the United States); and 18 U.S.C. §2 (Principals).  Asset forfeiture of $1,694,139.00 and the yola, is now being sought under 31 U.S.C. §§5317 (c) (1) (Search and forfeiture of monetary instruments) and 5332 (b) (2).  Along with a criminal complaint, a Special Agent's supporting affidavit had also been initially filed in the case.

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

"An Asset Search, Tax Fraud & Divorce" mentioned that Brian, (a former high-ranking official at the Financial Crimes Enforcement Network, who had earlier been an IRS special agent), said: "Once a tax fraud investigation starts rolling along, nobody knows where it may end up". 

Today's "Asset Search News Roundup" is similarly about the numerous individuals just arrested because a money laundering investigation ended up uncovering suspected public corruption crimes in New Jersey.  As yesterday's Department of Justice press release basically indicated, federal investigators had initially focused on some money laundering circuits.  In these money laundering circuits, five rabbis had supposedly washed monies by using charities; and / or a Brooklyn Bakery; and / or other  "cash houses".

Cash couriers, (whom I referenced in my April 13 2009 Asset Search News Roundup), also reportedly helped wash the monies across borders, between Israel and the United States.  The money laundering investigation however, eventually expanded and led to the arrests of three mayors, a deputy mayor, two assemblyman and many others, for suspected public corruption crimes in New Jersey.

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

Financial intelligence units, local law enforcement, prosecutors, etc. can visually analyze data through "link charts" like the one used by U.S. Treasury's Office Of Foreign Assets Control to depict the drug trafficking network of Medellin-based Francisco Antonio Florez Upegui:

(To Enlarge, Click On Image)

Chart: U.S. Treasury Office Of Foreign Assets Control

Governmental authorities use link charts to help discover associations or patterns in voluminous data.  Depending on the kind of investigation, a governmental authority may use a link chart to analyze: medical prescriptions, telephone toll records, cash deposits, border crossings and other things. 

Software with link charting features can even be used to help a government search for and forfeit illicit assets.  GoAML / goATR, is asset tracking software with this charting ability and is briefly mentioned at "Asset Forfeiture Goes Global".  Link charts may additionally be used in court to corroborate an aggrieved party's claim that an adversary has dissipated or hidden: marital, probate, business, or other assets. 

I relied heavily on link charts in one particular court filing to support my contention that a divorcing husband had concealed marital assets from his wife.  The divorcing husband in that case had hidden marital assets by laundering them through a "back-to-back" loan (i.e. a fully collateralized loan in which the borrower and the lender are one and the same).  He is also mentioned in my post, "Money Laundering, Marital Assets & Divorce".                           

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

Attempts to recover assets connected to securities fraud are the subject of this "Asset Search News Roundup": 

• Pages 27-30 of trustee Irving Picard's July 9, 2009 report, outline some of the efforts to recover offshore assets related to Mr. Bernard Madoff's Ponzi scheme / securities fraud.  So far, Mr. Madoff's offshore assets have been identified in: Bermuda, England, France, Gibraltar, Ireland, Luxembourg, Spain, Switzerland, the Bahamas, the British Virgin Islands and the Cayman Islands.  The July 9th report was also mentioned at "Madoff Trustee Tells Judge of $1.08 Billion Found for Victims" and in  "Bad News for Madoff Victims: Too Many Claims, Not Enough Money". 

• Requiring investors to return monies, (i.e. applying clawback), may be another way to recover assets arising from securities fraud, as mentioned by the article "Clawback Caused By A Ponzi Scheme".  As more fully set forth in that article, In re: Bayou Group LLC, et. al., 396 B.R. 810 (Bkrtcy S.D.N.Y. 2008), deems monies paid-out to some investors to be presumptively fraudulent and possibly subject to clawback. 

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

U.S. taxpayers who beneficially own a foreign bank account with assets in excess of $10,000, are required to disclose the same at Schedule B, Part III of their U.S. Individual Tax Return Form 1040.  These taxpayers must also separately file a TDF 90-22.1, (a.k.a. a "FBAR" form), the first page of which is shown here:

Click On The TDF 90-22.1 To Enlarge It 

 

I previously discussed these reporting requirements at "Beneficial Owners Concealing Their Foreign Bank Accounts".  One Florida resident who failed to follow said requirements as part of his abusive offshore tax avoidance scheme, was Mr. Steven Michael Rubinstein.  Mr. Rubinstein  worked in the yacht industry and recently pleaded guilty to violating 26 U.S.C. § 7206 (1) (perjury on a return / false statements).  According to his Factual Proffer Statement, Mr. Rubinstein had concealed his assets from the IRS by parking them in Switzerland.  He had hidden assets through his nominee British Virgin Island corporation, which secretly held a UBS financial account in Switzerland. 

My May 25, 2009 "Asset Search News Roundup" similarly mentioned the abusive offshore tax avoidance scheme facilitated by Florida yacht broker Robert Moran.  Like Mr. Rubinstein, Mr. Moran had hidden assets from the IRS by using a financial account at UBS in Switzerland.  He too pleaded guilty to filing a false tax return in violation of 26 U.S.C. § 7206 (1).  Mr. Moran had specifically used a nominee Panamanian corporation to maintain his hidden financial account at UBS Switzerland. 

Copyright 2009 Fred L. Abrams 

• Email This
• Print
• Comments
• Trackbacks

The "Asset Search News" for this week discusses my interview by AssetForfeitureWatch.com; Transparency International's press release about Kenyan police corruption; and the file assistant who pleaded guilty to computer intrusions in violation of U.S. privacy law.

+AssetForfeitureWatch.com provides the law enforcement community with training / support in the area of asset forfeiture.  Last Tuesday, AssetForfeitureWatch.com interviewed me for the upcoming article "Following the money trail with a professional asset hunter" which will be available at its website.

++My "September 26, 2008 Asset Search News Roundup" mentioned Transparency International's 2008 Corruption Perceptions Index.  That index ranked Kenya as having a low reputation for honesty, alongside Russia, Bangladesh and Syria.  On one of its webpages, Transparency International has also accused the Kenya Police of being the most corrupt institution in all of East Africa.

+++"Pretexting During An Asset Search" explained that U.S. privacy and other laws sometimes prohibit private detectives, information brokers, etc. from using false pretenses as part of an asset search.  U.S. Privacy laws can of course also apply to other kinds of  situations, like that Mr. William A. Celey was in.  According to a press release, Mr. Celey pleaded guilty to computer intrusions that violate  privacy laws.  Based on his one-count criminal information, Mr. Celey, (while a U.S. State Department file assistant), had illegally accessed data:

 "pertaining to the imaged confidential passport application files of various celebrities and their families, actors, models, musicians, athletes, record producers, family members, a politician, and other  individuals identified in the press".  (Criminal Information, at page 1). 

 (Edited July 13, 2009)

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

"A Domestic Subpoena / Summons In An Offshore Asset Search" describes how the IRS and U.S. Department of Justice were granted court permission to serve a "John Doe" summons on UBS AG.  This summons was supposed to help the IRS identify assets and / or undeclared revenue hidden by any U.S. taxpayers who were maintaining offshore bank accounts at UBS.

A July 1, 2008 Order had specifically permitted the IRS to serve UBS with the "John Doe" summons which is reproduced below without its attachments: 

The IRS has however, argued in U.S.A. v. UBS AG, 1:09-cv-20423, that UBS has not fully complied with the summons.  In UBS AG, the IRS claims that UBS has disclosed under the summons, just 300 bank accounts out of an estimated 52,000 belonging to U.S. taxpayers who could be tax cheats. 

As I stated in my February 27, 2009 "Asset Search News Roundup", UBS must consider Swiss bank secrecy laws, (a.k.a. professional secrecy laws), when supplying the IRS with account information pursuant to the summons.  UBS highlighted the very issue of bank secrecy laws just yesterday, when it filed its "Supplemental Declaration of Professor Isabelle Romy On Swiss Law".  It had also earlier raised this issue via the "Declaration of Professor Isabelle Romy On Swiss Law", filed April 30, 2009. 

Through these declarations, UBS argued that it would be violating Swiss bank secrecy laws if it fully complied with the summons.  The IRS meanwhile, claimed that UBS should be compelled to fully comply with the summons because UBS allegedly violated its Qualified Intermediary Agreement with the IRS, for the withholding of taxes.  (Declaration of Barry B. Shott, filed February 19, 2009).  U.S.A. v. UBS AG, is next scheduled for hearings on July 13, 2009.

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

This "Asset Search News Roundup" concentrates on the International Centre For Asset Recovery ("ICAR"), which is part of the Basel Institute on Governance.  ICAR's "Knowledge Centre" is particularly geared toward helping "asset recovery practitioners, investigators, prosecutors and policy makers worldwide".

The Knowledge Centre generally has information for domestic governmental authorities, about  forced collection proceedings when assets are hidden offshore in public corruption or other criminal schemes.  ICAR's hyperlink to "Stolen Asset Recovery: A Good Practices Guide for Non-Conviction Based Asset Forfeiture" for instance, describes how governmental authorities may interdict assets through Mutual Legal Assistance, Letters Of Request, (a.k.a. Letters Rogatory / Legal Assistance Requests), etc. 

Legal remedies similar to those mentioned above are also sometimes available at the individual level to private litigants seeking to recover assets hidden offshore.  To cite just one example, private litigants searching for assets hidden offshore in Switzerland, might pursue the remedies mentioned by "An Asset Search In Geneva".

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments
• Trackbacks

Politically exposed persons who are involved in public corruption schemes, sometimes use money laundering to hide bribes or other illicit proceeds.  Although not accused of money laundering, former Detroit city councilwoman Monica Conyers, was a politically exposed person suspected of accepting bribes.  Monica Conyers is also the wife of House Judiciary Committee Chairman John Conyers. 

The Detroit News and others reported earlier that Monica Conyers was under investigation for supposedly accepting jewelry and cash.  As was also widely reported, she recently pleaded guilty to a charge of conspiracy to commit bribery.  This bribery conspiracy was outlined in a second superseding information filed June 26, 2009.  According to Monica Conyers' plea agreement, her bribe-taking involved a wastewater treatment contract between Synagro Technologies Inc. and the City of Detroit. 

Unlike Monica Conyers, former Massachusetts state senator Dianne Wilkerson has pleaded not guilty to public corruption charges.  I first wrote about Diane Wilkerson in my November  5, 2008 "Asset Search  News Roundup".  As a second superseding indictment in U.S.A. v. Wilkerson, 1:08-cr-10345 mentions, Dianne Wilkerson is accused of violating 18 U.S.C. §1951 ("the Hobbs Act") and other federal laws.  The government is also seeking the forfeiture of Ms. Wilkerson's assets, pursuant to 18 U.S.C. §981 (a) (1) (C) and 28 U.S.C. §2461 (c).      

Furthermore, an FBI Special Agent's Affidavit relies on surveillance video / still photos to support the government's contention that Diane Wilkerson had taken bribes related to a state liquor license.  The government's still photos were highly publicized and one of them supposedly showed Diane Wilkerson on June 18, 2007 hiding a $1000 bribe in her bra.  The Special Agent's Affidavit at pp. 6-7, ¶ 15,  referred to some of these still photos as Exhibits "C" and "D":

 

 

 

 Photos: U.S. District Court File, U.S.A. v. Wilkerson

Copyright 2009 Fred L. Abrams

• Email This
• Print
• Comments (1)
• Trackbacks